Monday, October 2, 2017
Government has the chance to cut costs while also streamlining operations, if agencies embrace a continuous innovation model.

Guest bloggers: Mike Conger and Michael Preis, IBM Global Business Services.

Recent advances in IT modernization methods and tools will help the federal government increase efficiency, reduce costs and enhance digital services. These enhancements include cloud computing, cognitive solutions, cyber security and agile solution development. However, complex agency processes and rapidly aging IT infrastructure hinder government from taking full advantage of these capabilities. Government resources are further challenged by the need to allocate a significant percentage of agency budgets to aging IT.

Given the recent strategy for government-wide IT modernization, as well as progress toward new legislation that would address modernization funding, agencies can move quickly to transform and modernize IT, lowering burdensome operations and maintenance (O&M) costs and reallocating funds to mission enhancing capabilities.

Government challenges

Former U.S. Federal CIO Tony Scott estimated that $3 billion worth of federal IT equipment will reach end-of-life status in the next three years. Additionally, according to the Government Accountability Office, more than 75 percent of IT spending in 2016 was allocated to the O&M of legacy systems that already are, or are rapidly becoming, obsolete. The Technology CEO Council (TCC) – a group of leading IT industry CEOs -- recently released a report, “The Government We Need,” outlining how government can improve services and reduce costs by more than $1 trillion over 10 years, by successfully implementing commercial best practices. Assuming a shift of only 5 percent of approximately $65 billion on O&M IT spending, the government could cut O&M costs alone by more than $110 billion over the next decade.

The U.S. government understands the potential benefits given its recent proposal for an IT modernization fund to drive progress across the government. Recently, the White House Office of American Innovation was established and launched the American Technology Council to address government modernization needs. The ATC was tasked with coordinating the recently published Report to the President on Federal IT Modernization. The report identifies ways to enhance cybersecurity posture, modernize IT, and create a robust partnership between government and industry.

A key shortcoming of many IT modernization initiatives is the lack of a correlation between IT and mission. IT modernization initiatives should include the clear definition of goals and targeted metrics to measure progress, allowing the government to course-correct and adjust plans in an agile fashion. Effectively measuring progress will help agencies apply modernized IT platforms and services, operate programs more effectively, improve performance and lower costs for citizens.

The federal government must address some key challenges to achieve the level of success and the equivalent pace of transformation that commercial enterprises achieve. Today, government infrastructure, systems and applications are rapidly aging and widely distributed across an estimated 4,300 data centers and hosting sites.This creates complex operational and management challenges, unnecessary redundancies and increased security risk. It’s particularly problematic given today’s constrained budgets and the allocation of funds necessary to meet today’s operational demands. Today’s high O&M cost burden also hinders government organizations in meeting evolving business and operational needs and reduces their ability to enhance mission value by deploying advanced, modern solutions in a more rapid and agile fashion.

The TCC report identified the disparity in operational costs between the private sector and the federal government. Presently, the federal government spends approximately 30 percent on operations that support mission delivery, according to studies conducted over many years. In contrast, efficient private-sector organizations spend roughly 15 percent for similar overhead. Additionally, many agencies struggle with high IT operational and management demands while also attempting to transition to modern technologies and solutions and maintain operational status, availability and security of critical systems.

These and other challenges must be addressed to mitigate today’s budget constraints, achieve mission goals, improve operational performance and reduce costs. Additional key challenges include:

  • Significant duplication and redundancy of solutions;
  • Increasing demands for robust security and data privacy;
  • Lack of acquisition models that enable cloud-based software as a service offerings, or that separate capital expenditures from operational expenditure;
  • Inability to leverage data that supports decision making while missions demand synthesis and analysis of data across agencies;
  • An aging workforce and loss of expertise in legacy technologies as workers retire; and
  • Obstacles to accessing new technology and innovation.

How can government and industry respond to the challenge?

Federal agencies can take advantage of the same IT modernization benefits realized in the commercial sector. Agencies recognize the need for IT modernization and are looking at options for allocating additional funding in this area. The Modernizing Government Technology Act would provide funding for agencies to upgrade and modernize aging agency technologies. And agencies already are aggressively moving forward with cloud initiatives, reducing the significant cost burdens of operating traditional and costly data centers. IT modernization is a core component in reducing this operational cost disparity by upgrading aging infrastructure, migrating to cloud solutions, utilizing modernized application architectures and technologies, and making better use of data through analytics and cognitive solutions. Collectively, these and other IT modernization and transformation solutions can help the federal government achieve tremendous operational cost reductions by applying today’s proven technologies.

A continuous innovation model is critical to enable IT modernization success and to drive technology insertion, innovation, operational improvement, and change in a timely fashion. Such a model, complimented by appropriate organizational change management and governance, can be used to continuously assess performance, identify opportunities to innovate and rapidly build solutions that scale. The government also will strengthen the foundation for continuous innovation and improvement by identifying and prioritizing modernization and transformation opportunities for investment, integrating priorities into budget planning cycles and applying appropriate measures to track success.

A continuous innovation model - complimented by agile delivery approaches and well-planned, bold and innovative modernization investments - will allow the government to overcome challenges in the current environment, transform itself into a modern, efficient enterprise, and embrace ongoing technological change. A summary of recommended solutions follows:

  • Cloud transformation: Continue cloud transformation initiatives, consolidate data centers, upgrade infrastructure, migrate applications to cloud service providers and utilize cloud managed services and more cost-efficient platforms.
  • Cybersecurity: Enhance the government’s cybersecurity posture and strengthen networks and infrastructure cybersecurity solutions. Employ a robust security model to identify, assess and prioritize risks. Aggressively mitigate security risks, applying the appropriate cybersecurity standards and technologies while ensuring security policies, architectures, and technologies are modernized to address evolving network and data security needs. Modernize incident detection and prevention capabilities to detect vulnerabilities and malicious activity in a near real-time manner to actively address on-going security threats.
  • Optimize application portfolios: Assess application portfolios and evaluate applications based on business needs. Retire duplicative and obsolete legacy systems wherever possible and replace systems with modern technologies on more cost-efficient platforms.
  • Enterprise services: Expand the use of government-wide, reusable enterprise services, including enterprise services, in acquisitions and procurement, financial management, payroll management, human resources, e-mail, collaboration solutions, additional back-office services, etc.
  • Increase automation: Increase agility and automation via use of life-cycle management solutions, cloud provisioning, operational and business process automation, automated testing. Employ devops and agile solutions, delivery methods and tools.
  • Adopt cognitive solutions: Employ cognitive solutions and predictive analytics to deliver enhanced and informed decision making, transformation and optimization of operations, automation of business processes, innovation of government services, and enhanced speed, quality and efficiency of services to citizens.
  • Automated data collection and analysis: Broaden use of automated data collection techniques and tools to rapidly synthesize, normalize, and analyze data and make information available in a near real-time fashion. Utilize the data with analytics and cognitive solutions for enhanced and informed decision making.
  • Enhance interoperability: Expand interoperability and compatibility across systems, applications, databases, platforms and devices.
  • Internet of Things (IoT): Expand use of IoT for infrastructure and cloud-based monitoring, performance-based maintenance, predictive application maintenance, uptime guarantees and asset management. Enhance the monitoring and operational performance of devices, networks and applications by embedding IoT capabilities into solutions to improve operations, drive customer engagement and enhance government services to citizens.
  • Industry: Continue to partner with the private sector, adopt industry best practices and technologies and expand use of commercial off-the-shelf and open source technologies.

Our next blog post will provide additional details regarding how IT modernization can address today’s challenges, how federal agencies can get started with such initiatives and how a continuous innovation model will facilitate dramatic improvements. We hope the ideas presented here, and in related reports from the IBM Center for the Business of Government, will help to inform agency decision making and present further opportunities to innovate, transform, and modernize government organizations.



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