Watchdog finds Toronto spent $11 million on software it never used – including for employees who had quit

The City of Toronto has spent almost $11 million on software it didn’t use, including more than $1 million for program licences that were assigned to inactive employees, according to a municipal watchdog.

 

The wasted public spending on programs such as Microsoft365 and Adobe Acrobat was revealed in a report released Monday by Toronto auditor general Tara Anderson that detailed her office’s probe into the city’s IT management practices. It determined the city lacked “a clearly defined … plan to manage the city’s software licences and subscriptions.”

 

The auditor wrote that the findings were important because the city is spending more every year on software as it upgrades from older programs that are run on its own computer hardware, to a “software as a service” model under which it pays subscriptions to cloud-based applications.

“It is important to maximize the value of the city’s investment in software and ensure that acquired software licences and subscriptions are carefully planned, managed, and deployed in a timely manner,” she wrote.

According to the report, which will be debated at next Monday’s audit committee meeting, the city spent $235 million on software acquisitions, maintenance, and support between 2019 and 2023. Over a similar period, the auditor identified $10.9 million that went to unused licences for five applications, mostly between 2020 and 2024.

 

Anderson reported that while the city bought licences in bulk in an effort to save costs, those financial benefits were sometimes undermined by delays to city projects that caused software to go unused.

 

For instance, in 2021 the city bought 10,000 licences for Microsoft M365 (formerly Microsoft Office), at an annual cost of $5.1 million. That was despite a 2018 estimate from Microsoft that the city’s network could only handle 6,000 users and would need to be upgraded.

 

The auditor found that in the first year of the agreement, more than 90 per cent weren’t used, and in the first nine months of the second year, more than half weren’t used. The unused subscriptions over that period cost $6.9 million.

 

City staff said they were unable to deploy the licences sooner because of the network constraints, a decision to reprioritize the M365 deployment during the pandemic and staffing shortages in the technology division. Although staff said the software would yield up to $27 million in productivity savings over five years, the auditor found the expected benefits weren’t realized during the delayed rollout, and there was no reliable way to track them.

 

The auditor also determined that the city had spent $1.4 million on licences assigned to employees who had left the city or were on long-term leave, which she said was not only costly but posed a security risk.

Her report made 10 recommendations, such as determining whether the costs of licences could be deferred if their deployment dates were delayed and automating the process for disabling former employees’ accounts.

 

Audit committee chair Coun. Stephen Holyday (Ward 2, Etobicoke-Centre) called the report’s findings “very upsetting,” particularly because the auditor has flagged similar concerns before. The report noted that 12 recommendations from previous software-related audits had yet to be fully implemented, and most of them were more than five years old.

 

“I think we should ask better of our public service,” Holyday said. “This is $11 million that could be put to better use.”

 

He added that if staff “have to go back to using a paper ledger, they should do that, if that’s what it takes” to avoid wasteful spending.

 

In a statement, Russell Baker, Toronto’s manager of media relations, said the city acknowledged the auditor’s findings “and is committed to improving value for money.”

 

He said many of the problems identified in the report were the result of COVID-19 delays to programs that have since been launched, and the city “is working to improve the process of setting up and closing” software accounts.

 

 

 

 

 

This article was first reported by The Star