Containing Costs the IT Way

Governments are in financial crisis, Ohio included. Simply put, we have run out of money. Tax revenues  have dropped as property values have tanked and household incomes dwindled. Falling prices for stocks and real estate have further injured previously underfunded public pension plans. Unemployed workers have increased the demand for welfare and Medicaid services. This year, Ohio faces a 300 million dollar shortfall in its budget and unlike the Feds, we don't have the luxury of printing dollar bills and living on credit. Our state leaders must find practical ways to aggressively cut waste and make the government that we have "lean and mean." One of the best ways to do this is through Internet Technology (IT). Below is an interview with my husband, Chris Howard, addressing this issue. We hear a lot of emotional rhetoric from partisan and nonpartisan groups. Now let's starting talking REAL solutions.

Tell me briefly about your job

I am a Chief of Research at Gartner, a technology research and advisory firm. I am responsible for setting and executing a high-value research agenda for technology professionals within the public and private sectors. In my job, I travel extensively worldwide and interact with clients at all levels of leadership. I have worked with various levels of government in North America and Europe.

What are the common differences you see between private companies and government agencies? Why do those differences exist? Are there differences in management and employee mindsets? Do you approach these groups differently?

Public and private sector organizations have different primary drivers and motivators. Whereas profit and competitiveness are primary for most companies, cost containment and accountability are crucial for government. In a sense, they both have similar stakeholder responsibilities: corporation to its shareholders (and others); government to the citizens. The essence of the difference is that corporations exist to generate wealth. Governments exist to govern.

Governments and corporations both consume information technology (IT). Over the past several decades, each have spent billions adding software, hardware, networks, data centers, and staff to create and support the IT environment. The result for each is a complex, expensive, poorly-understood collection of equipment and functionality where money can leak out in a torrent. The growth of the IT environment should be controlled by effective standards and vendor management policies. Unfortunately, and this is especially true in governments, standards often don’t exist or are not enforced. As a result, complexity compounds, fragmented contracts add cost, and change becomes more difficult to implement. Uncontrolled complexity creates additional cost and this, ironically, is an internal governance issue.

In IT, there are a handful of mindsets, common in both public and private sectors. Some people are constantly curious and always learning: searching for better ways to craft solutions. Others are what we call “lifers”: people who attach themselves to a particular technology or system and ride it out into retirement. Lifers are resistant to change because they perceive it as a threat. Those who remain open and curious are more likely to embrace change but are also more likely to take maverick steps that require management support and intervention.

Another similarity between corporations and governments is the often fractured nature of business lines/agencies. In large organizations, silos develop that are aligned with lines of business, product, services, or some other function. As a result, you may have multiple groups that are doing very similar things, but collaboration is limited and difficult. The more fractured the environment, the harder it will be to effectively serve the needs of the customer/citizen.

Provide examples of ways that you were able to help a government body save money.

In my work as an advisor, I help executives spot the opportunities for consolidation in their environment and counsel them on dealing with political issues that will arise. At the end of the day, the discussion is not about technology solutions: those are pretty straightforward. Most inertia in organizations is caused by culture, habits, and broken relationships.

Most governments worldwide, at all levels, are working on shared-services solutions that consolidate common functions across agencies. This involves reaching consensus on what can be made common and reusable. It is complex work, and requires analysis of existing workflows to determine where redundancies can be collapsed. It is a balancing act: not everything should be centralized, and agencies need some level of autonomy to be effective.

Computing infrastructures are also candidates for consolidation. Using new virtualization technologies and emerging cloud computing capabilities, governments can reduce their spending on data centers. Some of my government clients are making decisions about whether to build new data centers or retrofit their existing ones. In many cases, older government facilities are not appropriate for new data center architectures and they should build a modern facility that incorporates new approaches to power, heating, and cooling. In the long run, such a facility will save them money. In the near term, governments should start by reducing the number of physical servers and replacing them with virtual machines running in their existing data centers.

Consolidation and computing infrastructures come together in effective ways. The Canadian Federal Government, for example, built a completely virtualized infrastructure for shared services that supports most agencies. Virtualization allows for quick provisioning of computing power at lower cost than traditional methods. In this scenario, everyone wins: standards and policies mandate use of the shared infrastructure, turn-around time for new functionality is accelerated, and cost (and technology sprawl) is contained.

Why is the move to e-government just a surface solution?

E-government is an important strategy. It places more control in the hands of the citizen as they interact with their information and services. It also potentially reduces “customer service” costs and personnel. The challenge with e-government is that it may not go deep enough. Truly effective e-government requires refactoring of the underlying systems to create integration and consolidation. Most of these legacy systems were put in place before the concept of citizen self-service (or the internet for that matter) existed. Human workflow will also need to be refactored to support a more integrated environment.