The federal government is expected to spend nearly $90 billion on IT this year, yet transparency into how that money is spent and benchmarking to verify how well it’s spent have been has been hard to come by.
Last year, the IT Cost, Opportunity, Strategy and Transparency (IT COST) commission was formed, bringing together private and public sector IT leaders to create recommendations for better understanding and managing federal IT spending. Created by the Technology Business Management Council (TBM), IT COST’s goal was to adapt TBM’s taxonomy and toolkit for Fortune 500 IT spending for a government audience.
The council began meeting monthly last April and in late July of this year presented its report at the U.S. General Services Administration. The group presented 21 recommendations including a defined set of best practices and standards for federal CIOs to improve transparency, reduce waste and increase the efficiency of IT spending. The report is a response to the Federal IT Acquisition Reform Act (FITARA) of 2014, which paved the way for new efforts to control spending by creating requirements for improving acquisition and operation of Federal IT assets. FITARA gives agency CIOs more authority over IT resources throughout their agencies, with a goal of greater cost transparency, efficiency and cost savings.
IT COSTS’s report estimated that the U.S. government could save $5.8 billion a year while improving efficiency and modernizing systems if these recommendations are followed. GSA CIO David Shive said on his blog in advance of the meeting with IT COST that the TBM approach will be critical to “delivering better value and savings for our customer agencies, making a more sustainable government and leading with innovation.”
CIO.com talked to Todd Lavieri, president of Information Services Group, one of six private-sector partners named to the IT COST Commission, about the process of developing the report, the biggest opportunities for improving federal IT spending, and the two big areas in which federal IT has the private sector beat.
CIO.com: What was involved in arriving at these recommendations over the past year?
Todd Lavieri, president, Information Services Group: The development of 21 recommendations as provided in the IT COST Commission Report was achieved through the collective effort of four separate workstreams. Each workstream team is a mix of private sector experts and partners with public sector representatives.
The “fact” workstream defined a common cost taxonomy for all federal IT cost identification, estimation and reporting. The “IT investment framework” worksteam focused on understanding the costs of capabilities, activities, deliverables and supporting services by IT investment. The “financial framework” workstream focused on understanding aggregated cost and colors of money of IT capabilities and supporting services. The “federal policy and data requirements” workstream summarized all summarize all federal policy, standards, guidelines, circulars and data and reporting requirements related to IT costs.
ISG focused on the Financial Framework workstream to define a set of recommended federal TBM metrics and potential benchmarking opportunities (both inter-agency and against non-government organizations) in collaboration with the GSA and the Department of Interior.
Each workstream met as a separate project team throughout the course of November 2015 to March 2016 and came together as a collective team for a formal readout in May 2016 in Washington, DC. The final Report was issued in July.
CIO.com: Is difficult to apply private sector IT best practices to federal IT?
Lavieri: The financial framework workstream that we led had two primary goals: develop a framework for TBM metric and benchmarking activities, and recommend an initial set of metrics for use facilitating governmental and commercial comparisons.
Given ISG’s breadth and depth of commercial metrics available based on our experience working with clients on benchmarking and sourcing transactions, it was a straightforward exercise for our team to pool together an initial mix of metrics that we find most valuable for our clients. The TBM taxonomy (an approach to aggregating IT financial and operational data), is based on the standard taxonomies that ISG uses to produce benchmarking studies and prepare sourcing transactions for our clients. The major outlier in the Federal government environment is the proper treatment of ‘colors of money’ within the TBM data and processes.
We were challenged at one point that there are ‘significant reporting’ requirements due to federal laws and regulatory practices that can drive IT costs. We reminded the members that there are also very significant reporting needs in the private sector due to federal laws and regulation as well—comparatively more for each private entity as a matter of course, especially small and midsized businesses.
CIO.com: The IT COST Commission declared that the federal government could save nearly $6 billion by applying these recommendations. Was that more or less savings than you expected.
Lavieri: At the outset of aligning the IT COST commission, there were no real preconceived notions on the savings potential that a TBM taxonomy could potentially unveil. Based upon the approach in determining potential economic impacts provided by insight from the TBM Council, the $6 billion estimate comes out on the conservative side of their analysis.