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Federal CIO Vivek Kundra needs to rein in the government's ever-growing IT operations. He could learn a few things about cost management from private sector CIOs.

John Foley

December 17, 2009

4 Min Read

Federal CIO Vivek Kundra, InformationWeek's Chief Of The Year, is off to an impressive start in his effort to expose more government data to the public, to make government IT projects more manageable, and to hold agency CIOs more accountable. But one thing's missing from Kundra's agenda—a laser focus on cutting costs.

Kundra must develop a detailed plan, and tools to monitor and manage progress, to not only make federal IT more efficient, but also to start reducing the federal IT budget, which stands at a whopping $76 billion and has done nothing but rise for the past 20 years. The government's recently launched IT Dashboard is a step in the right direction, but it's hardly enough. While the IT Dashboard

shows how much money is going to the government's big IT projects and which ones are at risk of going over budget, it's not as good at highlighting where money is being saved.

In a recent blog post on the Obama Administration's Open Government Directive, Beth Noveck, U.S. deputy CTO and director of the White House's open government initiative, invites the public to hold the administration's "feet to the fire" by coming up with qualitative and quantitative metrics to measure the progress of open government. Noveck offered more than a dozen examples of what those metrics might look like, but not one had to do with saving taxpayer money. Here's a suggestion: Show the costs associated with open government activities and correlations between those activities and savings, and incent everyone involved to join openness and financial responsibility at the hip. While the "trajectory" of IT spending is "always increasing," says Input analyst Deniece Peterson, the rate of growth is slowing. Last year, Input's five-year (2008 to 2013) forecast of federal IT spending had it chugging along at a compound annual growth rate of 4.1%, but this year it's at 3.5%. My colleague Bob Evans put a bold challenge on the table earlier this year when Kundra took the job: Reverse direction entirely, and cut billions from the federal IT spend. Proponents of Government 2.0 foresee deep collaboration between the public and private sectors, and one area where Kundra and other government IT execs might look for inspiration from corporate CIOs is in delivering new and innovative technologies and tech-based processes and products with budgets that are flat or declining. Private sector CIOs are doing that by consolidating data centers, virtualizing servers and desktops, embracing alternative software and licensing models--and in many cases reallocating some of the money previously spent on legacy systems maintenance to bold new initiatives. They're driving the old 80/20 ratio (80% of funds spent on keep-the-lights-on operations and 20% on new development) to 70-30, 60-40, and beyond. Government agencies have something similar in the requirement that they designate money as going toward "steady state" IT projects vs. those that involve development, modernization, or enhancement. But it's the business mentality that's missing--a survival instinct even, the one that drives corporate IT to belt-tighten its way to success. The master of driving excess cost out of IT is Hewlett-Packard CIO Randy Mott, who refined the art at Wal-Mart and Dell before joining Hewlett-Packard several years ago. Last year, Mott shared with InformationWeek his strategy for cutting HP's IT spending from 4% of revenue to 2% of revenue, generating $1 billion in annual savings. Mott is a stickler for metrics that help in making the decisions that drive that kind of efficiency and savings. Which leads me to this thought: Might Vivek Kundra learn a thing or two about IT cost management from Randy Mott? Mott is a member of InformationWeek's editorial advisory board, and we would be happy to make the introduction. President Obama, in announcing Kundra's appointment, called on his CIO to "lower the cost of government operations" and to help ensure that government is running as efficiently as possible. Those are important goals, but they're not the same as lowering the cost and improving the efficiency of the government's monumental and ever-growing IT operations. If Kundra really wants to make his mark, he will do that, too. John Foley is editor of InformationWeek Government. Follow me on Twitter.com/jfoley09 and let me know what you think at [email protected]. Our "A New IT Manifesto" report looks at a variety of new approaches and technologies that let IT rebels take on a whole new role, enhancing their companies' competitiveness and engaging their entire organizations more intimately with customers. Download the report here (registration required).

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About the Author(s)

John Foley

Editor, InformationWeek

John Foley is director, strategic communications, for Oracle Corp. and a former editor of InformationWeek Government.

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