In March 2012, the OMB introduced the PortfolioStat process, with the next deadline for federal agencies to deliver plans set for Aug. 31.
While a series of two-hour quarterly meetings have been quietly occurring between the Office of Management and Budget and the 26 agencies to document progress, most federal CIOs have found one of their biggest challenges is calculating the cost savings resulting from their efforts. The OMB created the PortfolioStat program to address the large amount of redundant, low-priority technology investments within the federal government, but agencies are still struggling to meet this end-of-month deadline. Here is why:
The OMB is targeting a savings goal of $2.5 billion, but the GAO is claiming that number is too low and should be more like $5.5 billion. Although these numbers for IT savings are quite far apart, and might even seem impossible, they aren't when applied to comparable systems in the private sector. That is because the requirements outlined in PortfolioStat only represent a subset of what most successful commercial companies do within their IT roadmap. That, not surprisingly, is why private businesses have an advantage over public technology advances.
[Want more on how the government is trying to eliminate waste? Read White House Directives Emphasize IT Effectiveness.]
Let's take a closer look at the PortfolioStat mandate and what is involved.
What it is: Efficiency by removing redundancies. Agencies are tasked with using an evidence-based approach to review their IT portfolio, with an eye to exposing obsolete or duplicative data, applications, and business processes, as well as other IT investments that are no longer aligned with agency missions.
Why it matters: Taxpayer savings by cutting costs. PortfolioStat is the means by which agencies can assess their IT portfolio management process and uncover and eliminate costly IT redundancies. The purpose is for agencies to reuse existing services and encourage use of inter-agency shared services to reduce waste and cut IT costs within the agency.
How to get there: The PortfolioStat process is divided into five phases.
1. Baseline data gathering. Agencies need to conduct a high-level survey of their IT investments to baseline the maturity of agency portfolios.
2. Analysis and proposed action plan. Using the gathered portfolio data, agencies need to identify wasteful or duplicative investments, procurements, commodity IT areas, or all three.
3. PortfolioStat session. A PortfolioStat session is a face-to-face, evidence-based review of an agency's IT portfolio with the OMB.
4. Final action plan implementation. The anticipated cost savings and portfolio improvements realized through the PortfolioStat session must be communicated from the COO to the agency.
5. Lessons learned. The process established by the PortfolioStat memo will be an annual requirement for all agencies to continually assess the maturity of IT portfolio management and maintain momentum.
Even with this checklist and the use of leveraging a configuration management database tool to meet requirements, agencies still are getting only a narrow picture of their IT universe. This is why obvious redundancies might not appear so obvious and the cost savings is less significant. Why do agencies with taxpayers typically fare worse in efficiency and cost savings than companies with investors or shareholders? The answer comes down to greater visibility.
Commercial organizations scrutinize every IT dollar spent or potentially spent, and they do so through the sharp lens of an IT portfolio management system. When it comes to requirements of collecting data, private sector organizations are able to define business processes and map assets to processes while associating costs to everything. Companies are able to see costs all the way down to the hardware layer and the components that drive business processes. When factoring in the analytics view of how the private sector can quickly see overlapping business processes, cross-layer dependencies, and unused applications, the visibility to explore "what-if" scenarios becomes easy. Companies can visualize different cost-savings strategies by retiring old systems and better using shared services.
So how can the public sector embrace private sector approaches when it comes to achieving PortfolioStat compliance? They can achieve greater visibility by using the most advanced IT portfolio management tools for agencies to readily calculate true costs savings and make it defensible. This approach is the key to achieve the level of analysis needed to make significant agency-wide changes that will truly affect cost savings, reduce waste, and eliminate redundancy to make every taxpayer proud.
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