Government // Leadership
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4/5/2012
11:09 AM
Rob Preston
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Federal IT Savings, Or Old-Fashioned Spending Shuffle?

Fed CIO Steven VanRoekel is making fiscal headway, but we need to see those billions saved actually fall to the bottom line.

Federal CIO Steven VanRoekel maintains that over the past three years, the federal government "has done much in adopting private sector practices to triage broken IT investments, reduce the IT infrastructure footprint, and innovate with less." But by his own account, it hasn't done enough.

So last week, VanRoekel and Office of Management and Budget director Jeff Zients introduced PortfolioStat, a series of annual, data-based reviews of agency IT projects (more sweeping than the previous TechStat program), as well as a new requirement for fed agencies to develop consolidation plans for commodity IT services. All good--as long as these measures actually produce meaningful spending cuts rather than just shuffle federal IT dollars around.

In a memo announcing the two initiatives, VanRoekel calls out the Department of the Interior, which he says will realize $100 million in annual savings (on an IT budget of about $1 billion) from 2016 to 2020 "by modernizing IT infrastructure and aligning resources to improve customer service." Furthermore, he estimates that IT spending reviews already carried out at Interior have rendered $11 million in "cost avoidance" and $2.2 million in "redirection." Again, will any of that money drop to the bottom line?

The fact that Interior's fiscal 2013 IT budget is pegged to decline by $28.6 million--2.9%--compared with the previous year's budget is a positive sign. But let's see if the agency's annual IT budget falls by anywhere near $100 million between 2016 and 2020.

VanRoekel is quick to point out that fiscal discipline is returning to federal government IT. After growing at a ridiculous compound annual growth rate of more than 7% between 2001 and 2009--pretty lean years for private sector IT organizations--federal IT spending has come in flat ever since. Still, at about $80 billion in aggregate, the federal IT budget could use a haircut. Instead, for every IT dollar budgeted to be saved next year at the likes of Interior (down $28.6 million), Housing and Urban Development (down $97.2 million), and Justice (down $102 million), an additional dollar will be spent at the likes of Agriculture (up $79.9 million), Veterans Affairs (up $216.1 million), and Treasury (up $358.7 million).

The same week in which VanRoekel and Zients rolled out PortfolioStat and urged IT consolidation, it was business technology as usual for half a dozen other federal agencies, as the White House unveiled an initiative under which Defense, Homeland Security, Energy, and a handful of other agencies will spend an additional $200 million on big data R&D. At a news conference, agency representatives "seemed more intent on talking about their unique initiatives and less focused on how they could collaborate with other agencies," noted my colleague Doug Henschen.

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Granted, some of their big data programs are agency-specific, but Henschen couldn't help notice that "amid the din of acronyms and price-tag-unknown projects, the same terms kept coming up: data volume, data variety, modeling and algorithms, data visualization, making information actionable, and so on." It smelled a lot like the kind of "duplicative" IT that VanRoekel and Zients are hoping to root out.

For all the talk about the government adopting private sector best practices, few people in Washington have shown they have the stomach or will to make the kinds of really hard decisions that companies make all the time--the kind that cut budgets rather than just keep them from expanding. Agency CIOs are apt to take their spending cues from the capital's politicians and career bureaucrats, for whom fiscal responsibility remains an alien concept.

Consider the federal budget histrionics this week. As part of his rebuke of the plan put forth by Wisconsin Congressman Paul Ryan, which proposes deep cuts in entitlement programs in an attempt to whack trillions of dollars in spending through 2022 from the Obama budget plan, the president claims to have already "eliminated dozens of programs that weren't working." But according to a Wall Street Journal editorial on Wednesday, "the savings from these eliminations amount to less than 0.1% of the budget, or less than $100 million." That is, they're all show, no substance. Not that the Republicans were penny pinchers during the last administration. Far from it. During the eight years George W. Bush was in office, the national debt doubled to more than $10 trillion because of spending increases and tax cuts.

Ah, a billion here, a billion there and pretty soon you're talking real money.

VanRoekel and his predecessor, Vivek Kundra, have done well to identify $4 billion in "cost avoidance" and "redirection" as a result of the TechStat program. Begin to lop those billions and more from future budgets, and we'll be more impressed.

InformationWeek's 2012 Government IT Innovators program will feature the most innovative government IT organizations in the 2012 InformationWeek 500 issue and on InformationWeek.com. Does your organization have what it takes? The nomination period for 2012 Government IT Innovators closes April 27.

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Andrew Hornback
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Andrew Hornback,
User Rank: Apprentice
4/5/2012 | 6:22:24 PM
re: Federal IT Savings, Or Old-Fashioned Spending Shuffle?
This can't be a zero-sum game - everyone has to be working together to go in the right direction.

Politics aside, the business of government still has to get done - that business costs money, but optimizing the spend should be a major priority for all governmental organizations.

And while the idea of collaboration between departments and agencies is great, I doubt that it will be all that effective until those in charge of the collaboration are given budgets to work with - governmental organizations don't tend to listen to folks from outside of their department until money is involved.

Andrew Hornback
InformationWeek Contributor
JerryJ
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JerryJ,
User Rank: Apprentice
4/6/2012 | 7:08:36 PM
re: Federal IT Savings, Or Old-Fashioned Spending Shuffle?
As someone close to the problem (but not a Fed), I have to agree that there is ample room for efficiency improvements in government IT. But, don't focus only on the cost of IT. Focus, too, on realizing a return on investment that lowers the total cost of the agency, not just IT. Benchmarks by Hackett have shown that companies that spend MORE on IT than their peers also spend LESS on other business functions, and by more than enough to cover the higher IT costs.

Congressional law (Clinger-Cohen Act) and OMB policies require that federal government projects go through a selection process to ensure those with the greatest benefit are funded. How about favoring projects that a hard dolloar ROI, not "cost avoidance" or "soft savings." If a project is proposed to save labor, then lay somebody off when the system is in place. If a data center consolidation project is to reduce facilities cost, then reduce the agency's budget...don't hide it elsewhere.
EVVJSK
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EVVJSK,
User Rank: Apprentice
4/6/2012 | 7:11:34 PM
re: Federal IT Savings, Or Old-Fashioned Spending Shuffle?
"At a news conference, agency representatives "seemed more intent on talking about their unique initiatives and less focused on how they could collaborate with other agencies," "
Must be taking their queue from Congress in general !
EVVJSK
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EVVJSK,
User Rank: Apprentice
4/6/2012 | 7:20:05 PM
re: Federal IT Savings, Or Old-Fashioned Spending Shuffle?
" everyone has to be working together to go in the right direction"
You are likely correct. Unfortunately, the model these agencies have is infighting between House and Senate (and within both parties within those groups) as well as between Congress and Whitehouse (even the Judicial branch got into it this week). As with these agencies, when you merely cut off funding (i.e. tax reduction that took place in 2001 and 2004) you pit agency against agency as well as citizen against citizen for what is left over. Problem was, when tax breaks were decided(which was mildly popular and very litle risk for any office holders at the time), there was no corresponding legislation that reduced spending (that WOULD have been unpopular and likely would have limited terms for those who were not limited by passing tax breaks). What has been happening for the last 3 years is trying to close the barn door after the cattle have been let out.
Divegeeky
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Divegeeky,
User Rank: Apprentice
4/25/2012 | 8:12:09 PM
re: Federal IT Savings, Or Old-Fashioned Spending Shuffle?
The problem I have with these numbers only oriented transformations are that they lose sight of the real issues behind transformation. The fact is that the Department of the Interior operates many remote locations that will not benefit from realignment or even worse will lose their only on-site technicians due to the regionalization of IT support. The main issue with the tranformation goals is that they are attempting to place models of successful corporate or Department of Defense tranformations into agencies that operate with significantly reduced infrastructure capabilities.

You cannot expect to use the carbon copy corporate model of centralization of IT assets to the real world operations of the Department of the Interior. Yes, savings need to be realized however more savings will be realized in realigning those positions related to management and oversight rather than focusing on regionalizing or centralizing support operations.
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