With an agreement between Democrats and Republicans to avoid the so-called fiscal cliff not yet in sight despite a fast-approaching deadline, it is fair to assume that government CIOs and IT leaders in the US federal government will have to deal with cost reductions as a key priority.
The long tail of the fiscal cliff, which implies a combination of tax hikes and automatic budget reductions, is likely to impact other government tiers as well as governments in other countries, as a consequence of its recessionary effect.
I do remember when, between 2007 and 2008, a group of Gartner government analysts worked on what would have been the very first piece of a long series of research notes on cost optimization (Cost Cutting in IT to Cope with the Economic Slowdown – client access required) in response to the consequences of the Global Financial Crisis. Throughout 2008 and 2010 we got plenty of public and private sector client inquiries on the topic.
Cost optimization remained an important issue throughout 2011 and 2012, but we are already seeing an increased focus in the federal space, in anticipation for what might happen next year.
Many of the approaches to reduce IT costs are the same: better vendor management, extending useful life for equipment, consolidating and sharing assets and services within and across agencies.
However technologies have evolved. The impact of enterprise-ready, consumer-grade mobile devices and applications, the use of social networking across the organization and not only for communication and public affairs purposes, and the increasing availability of cloud-based services that leverage global-class infrastructure to provide economies of scale cannot be ignored.
Those who are confronted with budget constraints today have more options. More of the same (such as shared services or procurement consolidation) will certainly help, but some of the new options may challenge the status quo or the common wisdom. For instance, as I wrote in How the Cloud is Affecting Government CIOs and Shared Services (client access required).
The increasing availability of commercial cloud services offerings will challenge both the value proposition of shared-service organizations to agency CIOs, and also the value proposition of agency IT organizations to their business users.
Interestingly enough this research note received lower ratings than usual from our readers. I am still wondering whether this is because it is conveying an uncomfortable message about the new balance between enterprise and consumer technology and between business and IT.
Despite individual opinions and preferences, the challenges ahead in case the US go over a fiscal cliff – but equally in Europe if the situation with huge sovereign debts is not alleviated or in other regions as a consequence of a global slowdown of the economy – are serious enough to command the examination of all possible options to make government services and operations affordable and sustainable in the years to come.