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FEDERAL SECTOR
REPORT
February 2005
IN THIS ISSUE
Finding
Cost Savings through e-Government
Consulting
Services
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(c) 2004 by the P2C2 Group,
Inc.
SAVING MONEY THROUGH E-GOVERNMENT
We need to look
beyond federal information technology when searching for cost savings
and Return on Investment (ROI). Many of the savings are driven by the
broad e-Government agenda, and you may find most of the dollars saved
are outside of the IT organization. The greatest potential for ROI will
often be derived from business process simplification, agency-level
reorganization, consolidation of back-office functions, and customer
self-service.
Unfortunately, many of the Exhibit 300 business
cases for IT budget justifications consider only a very narrow range of
alternatives. For example, the alternatives identified may be limited
to software alternatives (such as Oracle versus SQL Server), technology
architectures, or IT acquisition alternatives such as inhouse versus
outsourcing.
The problem with using a narrow range of
alternatives is that your Cost Benefits Analysis may fail to
demonstrate an adequate ROI, because most savings and benefits of e-Gov
accrue outside the IT budget. Further, the cost of continuing legacy IT
systems is often less than the budget outlay for replacing them. What's
more, simply selecting one technology alternative over another
(wireless telecommunications versus satellite) is somewhat bogus for an
Alternatives Analysis--like saying you'll save money buying a Chevy
Suburban rather than a Hummer … without justifying why you need to
budget for either.
e-Gov is a way of doing business that has the
potential for reinventing the entire government organization--improving
customer service, streamlining business processes, and reducing
organizational complexity. A simple but efficient example is the move
by state governments to put many Motor Vehicle Administration functions
online, where automation enables government to reduce the cost of field
offices and personnel.
The truth is that the federal government will
need to spend MORE on IT to achieve e-Gov, but the justification for
the investments must be based on inventing a more streamlined approach
to government programs and agency performance objectives. For example,
many regionalized functions need to be consolidated into a single "back
office," located in a low-cost community (same as corporations do).
Many centralized functions can be consolidated and automated.
You have undoubtedly noticed that customer
service in the business world has become highly automated, with the
unspoken agenda of enabling most customers to get information, get
services, and get solutions without incurring additional business costs
for labor. The same approach can be applied to many government
services, and the cost savings are potentially dramatic.
Following are just a few thought-starters for
identifying where to find the ROI to justify investments in e-Gov:
Business Architecture
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Consolidation
of organizational structure
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Simplification
and automation of business processes
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Conversion
to customer self-service approaches that do not require direct
government
personnel costs
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Consolidation
of internal IT organizations within the agency
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Outsourcing
non-core business functions to other government agencies or the private
sector
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Elimination
of unnecessary business functions
Information
Architecture
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Elimination
of duplicative or overlapping data systems
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Use of
enterprise-wide directory services
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Partnerships
with other agencies having similar needs
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Outsourcing
data acquisition or maintenance
Technology
Architecture
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Improving
the cost efficiency of the EA Technology Architecture
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Use of
Presidential government-wide solutions
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Consolidation
of systems within the agency
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Consolidation
of maintenance of similar application systems
Infrastructure
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Simplifying,
consolidating, and unifying the management of infrastructure
In addition to
outside the box thinking, there are also actions that IT executives can
take to improve the IT cost performance of agencies, and examples
include:
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Establishing
an agency Project Management Office to improve the overall efficiency
and
performance of IT investments
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Making full
use of earned value (EVMS) for cost and schedule performance.
The above ideas for
finding ROI may sound like a tall order. However, with the mandate for
tightened agency budgets, IT executives in the government may find that
this is an opportune time to work with line managers in redefining how
agencies are structured and operate. e-Gov can be part of the solution.
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- e-Gov
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I get excited when I
talk to federal and contractor personnel who are working hard to make
e-Government a reality. Yet I wish there was a better way in the
federal sector to identify, validate and apply innovation and best
practices. Many agencies and contractors have people who are making
exciting contributions, but these advances are often hidden within
organizations and difficult to locate.
There currently is no easy way to "Google" a comprehensive
catalog of best practices … and promising practices. It's even more
challenging to validate that the results are real, and not just wishful
thinking. In addition, there is no consistent structure for information
and case studies about innovation and good practices, and
comparisons between alternative practices are often difficult.
My own suspicion is that the federal government could save a
billion dollars a year on IT simply by making it easy for the federal
sector to find, compare and implement the most appropriate best
practices.
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Winter
finally arrived in Washington, DC, but my son wasn't satisfied: He flew
to Connecticut to step into a knee-high New England blizzard.
The
photo is courtesy of CNN archives.
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Best
wishes,
Jim Kendrick
Enterprise
Management Consultant
4101 Denfeld
Avenue
Kensington, MD
20895
301-942-7985
NEWSLETTER ARCHIVE
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The P2C2 Group, Inc.
4101 Denfeld Avenue | Kensington, MD 20895
Point of Contact: Jim Kendrick, President
e-mail: kendrick@p2c2group.com
phone: 301-942-7985 |
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