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US Federal Government: Axing IT to Save IT?

by Andrea Di Maio  |  June 28, 2010  |  5 Comments

In an executive memo issued today by OMB Director Peter Orszag (see his blog post), the US Federal Government announced three important measures:

(1) Peter Orszag is directing all executive departments and agencies are to stop issuing new task orders or procurements for all financial system modernization projects – an area of persistent problems – pending review and approval by OMB of new, more streamlined project plans.  Financial system modernizations projects in the federal government have become too large and complex.  By setting the scope of projects too broadly rather than focusing on essential business needs, federal agencies are incurring substantial cost overruns and lengthy delays in planned deployments.  Compounding this problem, projects persistently fall short of planned results once deployed. […] Across the government, there are approximately 30 financial systems projects that are affected by this policy. The total cost expended on these projects is anticipated to be $20 billion over the life of these projects, with an approximate annual spend of $3 billion. OMB expects this new process to result in a significant reduction in these amounts.

This is certainly interesting. While freezing spending for one year does not mean to cancel projects, it is a clear wake up call for major IT deployments and their vendors (see a few references to impacted vendor on this Bloomberg article)

(2) the Federal CIO will undertake detailed reviews of the highest-risk IT projects across the Federal Government. Agencies will be required to present improvement plans to the CIO for projects that are behind schedule or over budget. Where serious problems are identified and cannot be corrected, further actions should be taken, including potential adjustments to Fiscal Year 2012 agency budgets. Within 30 days, the CIO shall issue guidance on how this review process will be conducted.

These amount to about $10 billion worth of projects that were reviewed earlier this year and showed high risk levels.

(3) OMB’s Deputy Director for Management Jeff Zients will develop recommendations, within 120 days, for improving the federal government’s overall IT procurement and management practices.  These recommendations will address the root-causes of problems plaguing federal IT projects and focus on proven best practices from inside and outside the federal government.  They will include higher standards for project management practices and personnel, additional mechanisms for holding managers accountable for project results, and more rigorous review processes

The purpose of this third initiative is to ensure that practices for procurement, contract and project management improve. The OMB will review experiences from other tiers of governments and other countries to learn what works and what doesn’t.

The OMB is getting serious on scrutinizing IT. The Federal CIO Vivek Kundra started with making IT spending transparent through the IT Dashboard, continued with in-depth project reviews called TechStat Accountability Sessions, and now has the power to pull the plus – or seriously restructure – major projects.

With President Obama having asked agencies to reduce their budgets by five percent in 2012, Vivek Kundra and OMB may be fighting the ultimate battle to salvage IT from this or even further cuts. If all people see about IT are budget and schedule overruns, not only IT will be axed by five percent if not more, but the IT-savvy Obama administration will reach mid term with insufficient credibility.

The time left is not much, but measures are bold. We shall see how many projects will be canceled, delayed or just mildly restructures. If  in the next few months the administration will prove to be serious about making IT work and link IT to agency and whole-of-government priorities, odds are that they could buy enough credibility to scale up other high-profile initiative such as whole-of-government cloud computing.

The next few months will also accelerate the tension between incumbent IT contractors and the new kids on the blocks that are (almost) pure cloud players.

By all means, it is going to be interesting to watch.

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Category: public-value-of-it  

Tags: cost-cutting  us-federal-cio  

Andrea Di Maio
Managing VP
19 years at Gartner
33 years IT industry

Andrea Di Maio is a managing vice president for public sector in Gartner Research, covering government and education. His personal research focus is on digital government strategies, open government, the business value of IT, smart cities, and the impact of technology on the future of government Read Full Bio

Thoughts on US Federal Government: Axing IT to Save IT?

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  3. […] data: For democracy’s sakeUK Public Data Principles Case study: Maryland Dept. of EducationU.S. Federal Government: Axing IT to Save It?Digging Into the Details – Facebook Community MetricsDiscussion – Who’s on the […]

  4. Philip Allega says:

    The DoD is reflecting this as well since Congress has required DoD to develop new IT Acqusition process in 270 day (much of this can be seen in P.L. 111-84, The National Defense Authorization Act for Fiscal Year 2010 SEC. 804. IMPLEMENTATION OF NEW ACQUISITION PROCESS FOR INFORMATION TECHNOLOGY SYSTEMS).

    Unfortunately, this is short sighted and has no focus upon the long term impact of these investment decisions. Cutting, delaying or making a purchase decision today has an impact upon the future.

    One opportunity to consider is the projection of future risk taken by today’s choices concerning projects cut, delayed, invested in or not invested in. Without the use of future risk, it’s just a balancing act of time and money and political force to pick project “A” over project “B”.

    Certainly, future risk is subjective; but, the choice to invest in a particular project is also fraught with uncertainty. One is never 100% certain as to how it will work and how much it will cost until the investment is in production.

    It would be beneficial for any organization to add future risk of today’s choices to rise above today’s resource allocation challenges.

  5. […] For democracy’s sake UK Public Data Principles Case study: Maryland Dept. of Education U.S. Federal Government: Axing IT to Save It? Digging Into the Details – Facebook Community Metrics Discussion – Who’s on the […]

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