OMB to agencies: Measure IT costs, savings from e-gov

By Jason Miller

Connecting state and local government leaders

| August 9, 2006

With the pressure mounting from Capitol Hill to prove how much money e-government is saving agencies, the Office of Management and Budget yesterday directed agencies to begin measuring those reduced costs.

When measuring costs, OMB wants government and contractor data including personnel, material and supply, and other costs such as facilities, maintenance, repair, travel and training.OMB also will request the first set of cost savings and cost avoidance in November as it collects data for the annual e-government report to Congress, Evans said. And the rest of the time, OMB expects to collect data twice a year.

With the pressure mounting from Capitol Hill to prove how much money e-government is saving agencies, the Office of Management and Budget yesterday directed agencies to begin measuring those reduced costs.

In a memo from Karen Evans, OMB's administrator for IT and e-government, agencies by Sept. 30 must begin measuring costs savings by developing baseline cost estimates and identify projects that are due to be replaced, shut down or modified because of an e-government or Line of Business Consolidation initiative.

'With the E-Government initiatives deployed and operational, and the LOB initiatives underway, we are currently realizing the goals of improved citizen services, and increased efficiency and effectiveness,' Evans said. 'We must now concentrate on identifying and realizing the cost savings these initiatives are providing on a governmentwide basis.'

One of the main criticisms of e-government from the Hill is the inability to show the value or savings for the money the agencies are spending on the projects.

But through this initiative, which OMB tested at three agencies earlier this year, the administration hopes to better 'realize the cost savings or cost avoidance through the retirement or replacement of legacy systems and/or decreased operational costs,' Evans said.

OMB is requiring agencies perform three tasks:

Identify systems that are due to end or be severely modified. These include payroll or travel systems and, in some cases, financial management systems.
Develop baseline cost estimates by Sept. 30 for each investment identified under the first task. OMB is providing agencies with a cost measurement framework to capture current and future costs. Evans said OMB expects this exercise to take about 45 days to complete.
Measure actual costs of the investments on an ongoing basis, starting no later than Sept. 30.

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