Techscape: The coming collapse in IT services spending

Mark Forman

The main purpose of IT is to reduce labor costs by automating processes, but the bulk of the government's IT budget goes to labor'not hardware and software.

The complexity of IT itself requires a cast of thousands. The more components, the more people are needed to make everything work together. The more users, the more staff members are needed to keep things running and secure. The more layers in an architecture, the more planning and design work is necessary.

Computers are widely used because processing is cheap and systems execute mundane business operations faster and cheaper than antiquated, labor-intensive approaches.

But IT can be so labor-intensive that staffing and support costs are out of whack with their value. Most non-IT folks and CIOs feel captive to the support cost structure, so the IT services workforce is under attack.

Basic laws of physics and economics are now at work and will ultimately change IT's cost structure.

First, Moore's law continues driving down the cost of computing.

Second, long-standing economic principles govern IT. High wages for U.S. IT workers force movement to cheaper offshore labor, while domestic innovations focus on the cost and complexity of IT.

In particular, two major disruptions continue to ripple through the community: commoditization of products such as servers, operating systems and virtualization tools; and the emergence of Web services to make data and applications widely accessible.

A service-oriented architecture removes the need for each application to have a dedicated computer and each organization to have its own version of a common application. A service-oriented infrastructure enables sharing and simplification to reduce IT labor costs.

The government should look at manufacturing industries to see how this might play out. First, skilled jobs go offshore. With online education, standardized programming languages, the Internet and global telecommunications, IT services jobs have spread quickly around the world. Second, our economy fosters innovative automation when labor costs exceed value.

Digital production tools and robotics increased the strength of U.S. manufacturing in the face of global competition. In IT, a similar approach'what IBM Corp. calls autonomic computing'is emerging to make computers self-configuring, self-healing, self-optimizing and self-protecting.

In Silicon Valley and other places where innovation thrives, one already sees the emergence of the IT answer to the offshore threat. The IT version of robots will be a services-oriented infrastructure that will use virtualization and policy rules to handle monitoring, management, protection, provisioning and repair.

So, here's the issue for the federal IT community. The vast majority of federal IT spending is devoted to services, which thrive on complexity. The community has largely deflected the outsourcing threat by raising national security concerns. But the move to cut IT services costs through automation and simplified management cannot be deflected. The innovations will come to government.

Therefore, federal IT workers must ask themselves: Do I have a job because I take advantage of the complexity of today's IT, or do I work to meet the challenge of making technology easier to use? If it's the latter, buckle your seatbelt because we're going to have a good run over the next few years. If not, well ...

Mark Forman, former Office of Management and Budget administrator for e-government and IT, is executive vice president at Cassatt Corp. of Menlo Park, Calif.

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