When Government Gets It Right: How Federal IT Leaders Can Deliver Greater Value

The stereotype of government agencies—inefficient buyers of overpriced services and obsolete technology—may not be as deserved as it once was. Even state Departments of Motor Vehicles, often held up as the poster child of government bureaucracy and inefficiency, have become streamlined with newer technology and easier-to-use, online services.

The shift began to happen in earnest in 2014, when Congress passed the Federal Information Technology Acquisition Reform Act (FITARA), a law that represented the first major overhaul of federal IT in nearly 20 years. FITARA makes it easier for the government to control costs, not by cutting services, but by making agencies more efficient.

This year, in response to FITARA, the TBM Council, advocates of the emerging practice of Technology Business Management; the Office of Management and Budget; and the Deputy Administrator for E-Government and Information Technology came together to create the IT COST Commission Report, showing how the U.S. government could achieve nearly $6 billion in technology cost savings and improved efficiency.

According to the Commission’s report, about 75 percent of the FY2017 budget for federal IT spending is devoted to operations and maintenance—just maintaining the status quo—with only about 25 percent of the budget dedicated to development, modernization and enhancements.

Whether in a public or private organization, when a CEO asks “what are we spending on IT, what’s it for and what good is it doing us?” the answers are often buried. A key part of success is a standardized IT costing taxonomy, a basic tenet of TBM, which creates a standard language for describing what IT delivers, what it costs and provides benchmarking data that tells you whether you’re doing it better than—or as well as—your peers.

The IT COST Commission report makes 21 distinct recommendations for federal agency CIOs, from benchmarking significant IT tower and sub-tower costs on an annual basis to better aligning reporting between the CIOs and CFOs of each federal agency office and the OMB. Ultimately, the goal is to help public sector CIOs transform their organizations from overseeing IT maintenance to becoming a key enabler and transparent broker of services.

To take a deeper look at what the IT COST Commission’s recommendations mean for public agencies, read this ISG white paper, co-authored with my colleague Paul Schmidt, TBM and the Public Sector: An Overview of the IT COST Commission and FITARA. Or contact me directly to discuss how ISG can help.

About the authors

Alex-Paul works closely with enterprise leaders, IT finance managers and IT business unit leaders to help implement the discipline of Technology Business Management (TBM) into their organizations and optimize their enterprise IT. He advises both commercial and public sector organizations on the adoption of TBM programs, designs fact-based analytical strategies and supports broader IT transformation initiatives. His development of a strategic TBM multi-dimensional framework addressing people, process, data, analytics, technology and strategy is part of ISG’s industry-leading set of market best practices and methodologies. His thought leadership has been featured in CIO Review, MiddleMarket Executive and the TBM Council’s book The Four Value Conversations CIOs Must Have with Their Businesses.

Paul Schmidt advises clients across industries on information technology and digital strategies, optimization and outsourcing. He has deep experience in global operations and creative approaches to business growth, including captive operations, joint ventures, build-operate-transfers, and mergers and acquisitions. He recently helped a global consumer packaged goods organization save more than 40 percent by realigning its captive, joint venture and offshore operational strategies worldwide. Paul also assisted a major retail company redesign its global customer digital model to improve quality and increase transparency for executive decision-making. Prior to ISG, Paul served as CEO of a number of software and technology start-up companies.