To survive tight IT budgets, focus on results, analyst says

Federal IT managers need to shift the conversation from reducing IT costs to helping agencies make government work more effectively in the current climate of budget constraints and deficit-cutting politics, a Gartner analyst told an audience of government managers.

“The answer doesn’t rely on how to take money out of the IT budget — the 3 percent of government spending,” Rishi Sood, vice president of market research for Gartner. Instead, the answer lies in making the other 97 percent of federal operations — education, health care services delivery, and transportation, the real business of government — work more effectively, he said.

Agency IT managers need to shift from a focus on IT cost optimization to business cost optimization in their dealings with agency directors and program managers, who are asking IT managers to help meet short-term budget issues, Sood told federal IT managers Oct. 25 during a keynote address at a government symposium sponsored by Information Builders in Washington, D.C.

The goal is to achieve joint operational and IT cost savings that impact the business of government operations and foster innovation and operational restructuring, Sood said. As a result, agency IT managers should be asking how they can use analytics to get more information about the operations within their organizations. They should be using analytic software to determine how effective individual programs are so resources can be shifted to ones that are most effective.

Discussions must revolve around how agencies can use self-service technologies to lower costs for face-to-face interactions between agencies and customers. Additionally, agency managers should focus on systems and services within their organizations that can be turned off so those investments can be reallocated to areas of the organization that are more effective.

“This is what we are talking about as business cost optimization of government service delivery,” Sood said. He said Gartner will release a report at the end of October that will guide agencies through the steps needed to shift the conversation from IT cost optimization to business cost optimization.

“Clearly it isn’t easy,” he said. The easy part is working to achieve a 5 to 15 percent reduction in IT spending; the harder part is getting agency directors and managers on board. It is difficult to convince them that IT investments are going to lead to savings over the long term, he said. The best way is to focus on pilot projects in very specific areas such as self-service technologies or automation of labor-intensive areas, where agency IT managers can demonstrate savings and use these successes to negotiate for future funding.

“The plain fact is we cannot continue to operate across government as we did 10, 15, 20 years ago.” The budget, standardization of technology and understanding of how to deliver better service-level agreements against individual service-line metrics, are pushing organizations to work cohesively in a shared-services organization, Sood said. This also is difficult at the moment because shared-services organizations act more like a centralized IT departments rather than a true shared-services organization. However, as in case of the commercial sector and state and local governments, the only real way civilian agencies are going to maximize federal IT dollars is to work with some of the shared-services leaders across the federal government.

Sood also said that cloud and data center consolidation represent important strategic shifts in how to manage IT as a whole but need to be viewed through a government lens. The cloud is the single most definitive issue the federal government has faced over the past 18 months. The cloud-first policy initiated by former federal CIO Vivek Kundra has been a precursor strategy helping agencies to understand how to approach cloud computing, an on-demand model that lets users pay only for the computing resources they use.

However, cloud is not a panacea for all of the federal government’s ills. It is another arrow agencies can put in their quivers of IT management practices, he said. Agencies might find that putting applications focused around productivity and e-mail are well-suited for the cloud but more program-centric and mission-critical applications need to stay on-premise or be outsourced through a direct relationship with a vendor.

In the case of data center consolidation, the government needs to think more in terms of reshaping the data center than about numbers. If the focus is on reducing 2,500 data centers to 1,500, that will not help the government achieve its consolidation objectives. “Co-location is not the right answer,” Sood said. Rather, the focus should be on maximizing utilization of data centers across the board and ensuring that agencies are getting the right pricing and availability for their systems.