Government CIOs are under constant pressure to do more with less, while still enabling digital government initiatives. When IT is perceived as a cost center, the first step is to ensure that those costs are not excessive.

Key Challenges

  • Many government IT organizations are perceived as cost centers, which puts them at the top of the list for cost cutting.
  • Economic uncertainty and anti-establishment political pressures are likely to create new scrutiny on all government budgets.

Introduction

Government CIOs should look at what costs they can control directly and what costs they can influence, and then work with their business and mission counterparts to determine willingness to collaborate on the latter.
The term “cost optimization” implies that there is some ideal way to ensure organizations can optimize “value for money” by finding the perfect balance between money spent and value received. While commercial executives can use their professional judgment to weigh risks, probabilities and unknowns in order to guess when an investment in an automation solution will result in offsetting greater IT costs with productivity savings, government officials have a tougher set of challenges. Mission value isn’t easily quantifiable in financial terms, and cost accountability is often ambiguous.
Figure 1 shows four categories of cost savings; the ones on the top are harder to achieve, but have greater payback. The top two address overall business-IT cost optimization, whereas the lower two focus on savings that generally can be achieved within the IT organization. In general, the higher the savings potential and the larger the organizational scope, the more difficult it is to achieve the savings. The degree of difficulty varies considerably based on your agency’s environment. Federated IT, shared services and funding practices that allow program executives and agency directors to implement new capabilities with unique new IT systems and services — all these factors increase the difficulty level and reduce the likelihood of achieving the collaboration and cooperation needed to save costs.
IT cost optimization begins in IT. Although the greater savings in the organization are enabled by leveraging IT for overall business cost savings, government CIOs must first put the IT house in order with proof that they are optimizing the value delivered to the business and mission. The most important thing to reinforce as government CIOs report on these optimization efforts is to never talk about cost without also talking about service and value. Just as fuel efficiency in a car will differ depending on terrain, speed, weight and safety features, so, too, will business and mission leaders need to understand that they will get what they pay for.