But longer-term, governments will need to consider what their core competencies are – and whether or not that involves running networks. “Organizations that focus on what it is they do really well and outsource the things that are non-mission-critical usually save money and usually the quality of IT goes up,” said Stewart.
Transforming service delivery
“Our collective challenge in the public sector is to transform service delivery,” said Corinne Charette, CIO of the Government of Canada, who also spoke at the Public Sector CIO Forum. The phenomenon threatening the public sector, she said, is the unrelenting growth of IT projects – and that complexity has mushroomed to proportions we all need to start worrying about.
This is compounded by redundant applications, weak interoperability and cost-prohibitive upgrades. “The legacy landscape is starving investment in innovation,” said Charette. The federal government spends $5 billion annually on IM/IT; in 2007 only 13 per cent of that budget went to innovation – which isn’t much if government is looking to transform service delivery.
So why is project spending exploding when the cost of technology is decreasing and performance is increasing? It boils down to complexity. “There needs to be a focus on simplicity if we are really going to transform service delivery,” said Charette. One of the root causes of complexity is legacy. “Legacy is killing us, [but] legacy does not have to kill us. We’re spending too much on just keeping the lights on.”
Government is dealing with a hodgepodge of legacy, from HR to financial systems. There are more than 30 HR systems of the same flavour, for example, in federal government. “There’s more than one of just about everything,” said Charette. “Provinces redo the work, municipalities redo the work. Why are we stuck there? Every time we put a bolt on legacy, we delay the inevitable.”
The biggest problem is that government requirements are almost always over-engineered. Commodity components are repurchased, reinvented and re-customized. “Infrastructure is not unique,” she said. “Infrastructure is a commodity. How much of our budget is tied up with people and projects that are infrastructure-bound?” Projects are too definitive and too big at the get-go – mega-projects with mega-price tags. They’re hard to scope, estimate and procure, and they’re impossible to manage. And this is contributing to spiraling costs, unmanageable projects and flailing credibility with the public.
Another problem is the very nature of the public sector itself – departments and jurisdictions have their own political mandates and priorities, causing them to implement the same systems over and over again. “It makes no sense,” said Charette. “We just cannot afford to build the same systems over and over again.”
In a recent study on why IT spending isn’t creating more value, PricewaterhouseCoopers found that productivity growth has declined since 2002. Now we have a structural deficit as a result of the recession, meaning there’s an awful lot of pressure – and momentum – around getting value out of our IT spend, said Ellen Corkery-Dooher, partner in the advisory services practice with PricewaterhouseCoopers. “While we may have been a bit slower in the public sector to address the IT spend, now there’s a real, visible, tangible pressure to open up the dialogue.”
One of the first challenges is getting a grip on that IT spend. In the private sector, the concept of total cost of ownership – what’s their core business, and what parts of the IT spend they should be involved with – is a robust concept. But that traditionally has not been the type of dialogue that goes on in the public sector. If they don’t have a grip on their costs and service levels, however, it’s difficult to manage out complexity or focus on innovation.
Since Y2K, there’s been a high operational spend in IT, with a duplication of infrastructure and proliferation of business applications. Maintenance costs have become a significant portion of the budget, with very little investment in integration of legacy applications. At the federal level, there’s now a management accountability framework in place and a push toward shared services. “But they have to get a handle on their costs and look at the spend horizontally across the organization,” said Corkery-Dooher. “There’s far too much spend in the government on maintaining old systems and applications.”
One of the biggest challenges government now faces is interoperability. “We’ve invested in all these great applications but we don’t share business processes from a citizen perspective,” she said. “I can’t easily be viewed as a single client because the infrastructure doesn’t allow for interoperability, unlike a bank.”
We can deliver more value if we move toward a continuous improvement approach, she said, building platforms and applications that can evolve instead of having to be replaced. “There’s a real lack of creativity around thinking about new ways to do things, new ways to deliver value to internal or external clients,” said Corkery-Dooher. “A recession is a good thing. We shouldn’t waste it. It’s an opportunity to think about how we invest our dollars and get value out of that.”
In today’s world, we don’t have to be tied to buildings or locations – and cloud computing is part of that formula. “It’s not a new idea, but I would say it hasn’t really been considered strategically or embraced in the public sector in particular, so there’s a lot of opportunity there,” she said.
The arch-challenge, said Charette, is we have a culture in government where consultation trumps practicality and prompt decision-making. It’s necessary, it’s worthy, but when unchecked, unmanaged and unconstrained, it becomes an end in itself and a huge consumer of project time, resources and money.