The old cliché about the difficulty of turning an aircraft carrier
around applies to changing the way government deals with investing in
information technology, according to two recent reports.
Federal agencies need to change course in handling IT spending
quickly, particularly in reversing the inertia behind longstanding conflicts
between chief information officers and chief financial officers over the
procurement of IT resources, according to Research Director Shawn McCarthy, who
authored the IDC Government
Insights report.
Government IT managers need to loosen their longstanding
attachment to unproductive legacy systems and focus on the advantages of newer
technologies -- especially the cloud and mobile platforms, suggested Research
Director Rick Howard, author of the Gartner report.
ration
Despite past conflicts between finance and IT staffs, federal IT
spending has been robust -- although it should remain largely flat, at about
US$78 billion per year for the next few years. However, budgetary demands to do
more with less almost certainly will create tension between the CIO and the
CFO.
"When it comes to where information technology money should
be spent, the goals and motivations of a CFO can differ from those of a
CIO," McCarthy said.
With the tightening of government budgets, the role of the CFO has
expanded, he noted. The CFO now has a central role in determining how the
taxpayers' money is spent. However, that can -- and often does -- lead to
clashes with the IT staff, who have in-depth expertise on utilizing technology.
In the future, collaboration between the two will be required in
the productive acquisition and deployment of IT, McCarthy said.
To reconcile the differences between IT staffs and financial
managers, federal government departments and major agencies should continue the
trend to "consolidate multiple, lower-level CIO offices into a single,
more powerful agency-wide CIO," McCarthy suggested.
That would lead to a more focused and coherent approach to IT
management. The process also would simplify collaboration between the CIO and
CFO by reducing or even eliminating diffuse communication between multiple
low-level IT staff members and the CFO.
Another major factor for improving collaboration is for each side
to recognize the sea change in IT management that has resulted from the
maturing cloud and shared service environment.
IT managers, especially the CIO, must jettison the idea that the
IT department has control of IT equipment, facilities and programs, and is the
sole owner, provider and guardian of those assets.
Especially in the procurement function, where CIOs and CFOs are
most likely to tangle, managers need to "move IT procurement away from
systems purchasing and management and toward IT services management,"
McCarthy said.
This approach is based on a realization that IT departments don't
have to own and operate IT resources to be effective. Instead, IT departments
need to act as internal advisors and facilitators to provide guidance to
agencies in how best to utilize available technologies to meet agency goals and
citizen requirements.
Sometimes that might involve actual on-site resources, but
increasingly it will involve the IT staff acting as an expert intermediate to
match up agency needs with appropriate capabilities, such as private sector
cloud providers.
Similarly, CFOs must shed any behavior in which they purport to
"know it all" when it comes to cost-effective IT. They may have a
good knowledge of IT costs from their own exploration of vendor offering
pricing points and from reviewing budget data.
However, they most likely don't know it all in terms of what is
effective in the application of IT resources. That expertise resides, and still
should reside, with the CIO staff.
"Often the IT team doesn't understand the agency's budgeting
process, while the finance team doesn't understand the agency's IT
systems," McCarthy said.
A good starting point for collaboration is for both departments to
buy into the process of jointly developing a business approach for deploying IT
resources, McCarthy suggested. CFOs who seek to logically influence IT planning
should require the development of strong business plans to justify new IT
expenditures. The objective of the process is for both teams to agree on the
purpose for which the IT spending is required, and then to work out the procurement
approach to implementing the plan.
"The business-focused collaboration that is needed today
includes protecting the interests of each other and supporting the business
needs of the other. The discussion should not be about fixing failures, it
should be about how technology can be leveraged to meet the organization's
strategic objectives," McCarthy said.
The CFO can be instrumental in establishing a business context.
"Often the IT people are reluctant to give up control, so
it's the CFO who becomes the driver here to introduce budget realities and ask,
for example, about what older machines are costing us money," McCarthy
told the E-Commerce Times.
The CFO can directly or indirectly begin the consideration about
using newer technologies, he said, by "initiating the conversation on what
alternatives are available."
Slipping
the Yoke of Legacy Systems
IT managers should establish an innovation budget to formally
facilitate digital experimentation and to build strong working relationships
with other digital leaders, within and outside an agency, recommends the
Gartner report.
As with military planning, IT managers need to be wary of making
investments designed to win the last war while failing to anticipate the
conditions of the next one, it suggests.
"There is a risk that circumstances such as deferred
infrastructure investments are forcing government CIOs to 'renovate the core'
of IT at the expense of deploying new user-centric systems and services, such
as CRM, industry-specific applications and enterprise applications, all of
which rank low on the priority list," Howard noted.
The next challenge is to achieve full exploitation of both cloud
technology and mobile platforms, he said, noting that the cloud has matured to
the point that it should be the first option of any potential IT investment.
"Gartner believes that IT vendors are moving fast in the direction
of cloud-based service models, and government agencies are becoming more
comfortable with cloud-based solutions for reasons of subscription pricing and
increased business agility," Howard wrote in the report.
"We recently predicted that by 2015, 50 percent of all new
independent software vendors will be pure SaaS providers. This trend will
challenge traditional procurement practices and expose government procurement
channels to a more diverse array of small and midsize businesses than has been
the case in the past," he pointed out.
"Government CIOs should begin with the default assumption
that a public cloud option will be selected when re-engineering current
business processes or designing new mobile services that are augmented by
context-aware interactions," Howard advised.
In principle, every new investment or service, on every dimension
-- including infrastructure -- should "incorporate the most advanced
position," rather than rely on what has worked in the past, he added.
"With cost, value and security as top considerations, the
most advanced position available to government CIOs is delivering services on
public cloud, unless there is a reason not to," Howard said.
So too with the mobile world, which has moved from an interesting
IT option to a nearly essential requirement. The Gartner study makes the
following recommendations government IT managers:
- Make mobile the
foundation of your digital government channel strategy;
- Increase mobile
access to more business applications;
- Focus on mobile
user experience design and the effectiveness of end-to-end processes
involving a device and its context;
- Build a
"Have we maximized contextualization opportunities?" step into
all planning.
One major objective is to make sure that the value proposition of
any investment fully recognizes the benefits of advanced technologies.
"The challenge is less about developing adequate cost-benefit
and return-on-investment tools for IT investments and more about the discipline
required to apply them consistently when measuring project performance or
benefits realization," Howard told the E-Commerce Times.
Standard methods, including ROI, key performance indicators and
similar tools, are still workable. However, the changing landscape of technology
also introduces modifications in value analysis.
For example, by using digital and mobile technologies, an agency
could significantly improve the number of online queries it could handle from
citizens. That improvement is a transactional benefit with a measurable cost --
and benefit.
On the other hand, the value of improved technologies that lead to
more accurate government weather reports through improved analytics is not
easily captured in conventional budget terms but is still significant.
"In the digital/mobile age," said Howard, "both are
integral to creating measurable value."
