IT Optimization: Navigating Fiscal Austerity

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03/07/2013 by Public Sector Research Centre
IT Optimization: Navigating Fiscal Austerity

At a glance

The Federal Government faces a situation similar to that of the private sector in the early 2000s. The question is whether Federal COOs, CFOs, and CIOs will wait for OMB to levy cuts on them or whether Federal executives will act to address the systemic drivers of IT expense so they are ready to respond to the inevitable round of forthcoming budget cuts.

The Federal Government faces a situation similar to that of the private sector in the early 2000s. Many corporations experienced rapid growth in the late 1990s. Companies spent tens of millions of dollars on ERP, CRM, and other enterprise IT systems. As the below graphic illustrates, large enterprise systems grew corporate expense budgets at an unprecedented rate in the form of support, maintenance, enhancement, operations, and amortization. The late 1990’s technology and dot com busts, multiple downturns, and a recession caused industry to change their spending habits and drive cost out of their baseline. Some succeeded, many failed, and a few went bankrupt.

The question is whether Federal COOs, CFOs, and CIOs will wait for OMB to levy cuts on them or whether Federal executives will act to address the systemic drivers of IT expense so they are ready to respond to the inevitable round of forthcoming budget cuts. In the words of George Bernard Shaw, “The possibilities are numerous once we decide to act and not react.” Acting now could protect agency missions and even redirect additional funds to critical needs. If CFOs and CIOs wait for the inevitable budget mandate, it will be too late to identify waste - and the only thing left to cut will be investment dollars.