Just yesterday a last-minute agreement has been found to prevent the US from defaulting on their debt, while Europe is still swept by increasing financial worries triggered by the situation in Greece and Ireland, which may spread to other countries too. Sluggish economic growth and the need for formidable reductions in public spending will pose major challenges to both policy makers and government executives for the foreseeable future.
In recent posts I have covered the importance of becoming smarter at using dollars spent on IT, but the debate on the critical value of IT during difficult times continues. I’d like to quote excerpts from a conversation involving a number of analysts, where different viewpoints have emerged. As usual for Gartner blogs, the statements in this post do not constitute established Gartner positions, but just offer an insight on different viewpoints: it is the very process of comparing and contrasting these positions that leads us to the positions that we share and base our client advice upo
Point: IT spending should be increased
“The portion of government spend on IT over the next three years along with the total spend on IT services should increase, and perhaps dramatically, rather than be cut.
This because it will continue being an elastic good (where total demand increases as unit costs fall) and that will remain true mostly because it is the prime catalyst for the productivity improvements desperately needed to close budget gaps.”
Reinforcing the point: IT spending should be increased and business savings reinvested in IT
“Indeed total IT budgets should be preserved (or even increased) despite ongoing budget constraints, if government is to become either “smart” or able to “do better with less”. Line items and cost centers should be reallocated within IT budgets to reflect different sourcing options and/or accelerate consolidation initiatives or shared services capabilities. But to seek overall reductions in IT and expect that somehow government will magically become more efficient and effective in the short term is naive or worse.
Reinvesting back into IT budgets a portion of any savings that result of increase IT-driven business efficiencies is essential to ensure the ongoing acquisition of modern IT products and services while inoculating against the obsolescence of IT in the future”
Counterpoint: Challenges ahead require radically new approaches to IT to spend less and create business savings
“The position that suggest a relation between increased IT spending and overall productivity increase is well established. CIOs, vendors and analysts – although with a very different spin – have been claiming this for quite some time and there is anecdotal evidence that IT creates public value. On the other hand, for how naive it might look like, a position advocating both increased impact and reduced IT cost is both controversial and interesting to explore.
There are many ways IT can become more transformative and cost less. Clever use of public cloud, crowdsourcing, citizen developers, engagement of smaller suppliers, PPPs are all steps in that direction.
This is one of the discontinuities that we should explore to help clients deal with the “new normal’ of furloughs, debt defaults and financial crises.”
Our debate will continue for a while, and we may even bring it on stage at one or several of our future events, as well as report its outcomes in future research notes.
It would be interesting to hear from a broader community, including this blog’s readers, what is the sentiment about this point-counterpoint.
Which side are you on and why?