Federal Sector Report: The High Cost of Federal Information Technology

THE HIGH COST OF FEDERAL INFORMATION TECHNOLOGY

Hornet's Nest?

In writing this month about why federal IT costs so much, I wondered if I was following in the tradition of Flash, my indefinite breed dog, who stuck his nose into a hornet's nest this past week. To say the least, there were exciting consequences for the two of us.

I would appreciate feedback about the federal cost issues--regardless of whether you concur or disagree with my comments. Pretty much every one I work with--federal executives and techies, contractors, and colleagues in various professions--all want the system to work … and to work better. We're usually so swamped with busy schedules that it's difficult to take time for the big picture. But take a moment to think about it; and write me.

Reporter's Question: Why does federal information technology cost so much? That's what a reporter from Investor's Business Daily phoned and asked me the other day, and it triggered my thinking about big-picture issues that we seldom have time to consider in everyday Washington. The reporter had been looking at reports from the Government Accountability Office, and he was astounded by the magnitude of the costs and the frequency of budget overruns.

I've continued to think about the global issues involved in federal IT costs, and the overall list of issues is daunting. In this issue of the newsletter, I will point out some of these. Most are well known but often shrugged off with sighs of frustration, like "well, that's the federal way." Frankly I don't think it has to be that way; we can do better if we work together.

Here's the starter list of why Federal IT costs so much:

Congress: Our lawmakers put lots of interesting ideas into legislation, often with ambitious mandates that have a costly impact on information systems. For example, Congress enacts a new or modified program, and the responsible agency shall implement it within maybe 120 days. Yet, how many major information systems can comply with such mandate for instant additions and changes? And at what cost? Someone needs to do a technology impact assessment before laws are passed. Except for national emergencies, even the best intentioned legislation needs to be phased in according to a realistic and cost efficient schedule.

Regulatory Uncertainty: Some agencies develop two and three versions of application systems because they don't know how, whether, or when a key regulation affecting their program mission or business processes will be changed. Again, when a regulation is changed, there is usually some unrealistic mandate--that the new regulation must be implemented within a short time frame. Ability to change regulations is important, but hot-wired schedules are expensive.

The Burden on Government IT: Federal IT is one of the most highly regulated activities in the United States. As people in private industry point out, loudly, government regulation is expensive; yet most private industries contend with only a fraction of the regulations with which federal IT managers must contend: budget requirements, acquisition, information security, technical standards, management requirements, federal records management policies, performance reviews, paperwork reduction and elimination rules, personnel security, privacy, and much more. Top that off with ad hoc data calls from federal oversight agencies, along with a few IT performance audits by GAO and the IG. Each of the regulations and accountability reviews is well intended, but the collective weight is enough to sink a battleship.

Capital Investment Planning: The federal process for IT Capital Planning and Investment Control is flawed. The private sector and many state/local governments prepare 5- and 10-year capital investment plans (and budgets) that seek to define the long-term investment strategy for an entire enterprise or major operating division. Annual spending, while adjusted and updated, supports long-term business strategies and vision. In contrast, the federal IT capital investment process tends to be an annual fire drill that seeks to justify individual IT investments. There is little consistency from year to year, the piecemeal approach does not add up to an enterprise-level investment plan, and the piles of paperwork for annual budget justifications do not lead to an integrated long-term capital investment strategy. Despite strategic plans and Enterprise Architecture documents, most agencies don't have stable, long-term capital investment plans for IT.