Budget puts IT on new course

Agencies need to show they can manage the projects within 10 percent on cost, schedule and performance.'

'Karen Evans, OMB

Rick Steele

2007 proposal reflects OMB's emphasis on blending tech into business processes

The message about IT the Bush administration sent with the fiscal 2007 budget request earlier this month reiterated its annual theme: Get results from the billions of dollars agencies spend on technology.

But the subtext, which also should become clear to agencies over the next year, is the importance of shifting from a focus on applications, systems or even technology to how IT is becoming a part of the overall business process'just like acquisition, finance and human resources.

The 2.8 percent increase in the overall IT budget to $64.2 billion'the smallest in the administration's six spending submittals to Congress'reflects the changing times for technology.

'The shock-and-awe days of what technology can do are over,' said Jim Kendrick, president of the P2C2 Group Inc. of Kensington, Md., a consulting firm. 'In a lot of ways, the budget parallels the trends in the private sector. Everyone is trying to reign in their costs'and not just in IT.'

Karen Evans, the Office of Management and Budget's administrator for IT and e-government, said the budget represents the belief that IT is becoming more and more like a utility.

'Like your phone, where you pick it up and the dial tone is always there, you expect it to work,' she said. 'If you want to improve services to citizens, CIOs can tell you how to use technology as an enabler and how to achieve an outcome.'

This does not mean the administration doesn't see the value of IT. Just the opposite, experts said. The 2.8 percent IT budget increase is larger than the bump in overall discretionary spending. And while nearly every agency would see its overall budget drop or remain flat, IT budget lines at 21 of 25 agencies would increase by at least $1 million over 2006 levels.

At civilian agencies, the increase would be 5.1 percent; the Homeland Security Department would get the largest increase, $772 million, to $5.4 billion. Defense IT spending would jump only $103 million, or 0.3 percent.

Additionally, a slightly greater share of portfolio dollars is targeted for new development and modernization projects, such as DHS' Transportation Worker Identification Credential project, rather than to operations and maintenance work.

IT as utility

Aside from tightening most IT budgets, the administration is pushing IT as a utility through the introduction of three new Lines of Business Consolidation initiatives'budget formulation, IT infrastructure and geospatial investments. It also has increased its emphases on project management and hiring qualified project managers, and on continued shifting of agency spending from back-office to mission-critical systems.

'If you look at what has been done over the last few years, they put in place the right framework to make IT investments and manage them,' said Alan Balutis, president of government strategies for Input of Reston, Va., and a former Commerce Department CIO. 'What it comes down to now is, what difference does it all make? It's all about results and implementation.'

The LOBs are a prime example of the shift. The budget formulation task force, led by the Environmental Protection Agency, will focus on:
  • Identifying opportunities for common automated tools to enhance agency and central processes, including promoting integration and standardization of information exchange

  • Institutionalizing budget and performance integration to align programs with their outcomes

  • Providing agencies with en- hanced capabilities to analyze budget performance and financial information.

Even the infrastructure LOB, which at first blush seems to be all about technology, actually aims to consolidate back-office operations in order to focus funds on mission-critical business goals.

Evans said this is becoming more evident each year, as the percent of the total IT budget agencies spent on IT infrastructure decreased to 34 percent and the total percentage spent on their mission-critical systems increased to 52 percent in 2006. This is the second straight year agencies have seen this change.

Evans said the infrastructure task force, led by the General Services Administration, will consider consolidating help desks, data centers, data networks, voice networks and seat/desktop management.

'There are tremendous efficiencies to be gained in the IT infrastructure LOB,' said Kim Nelson, executive director of e-government for Microsoft Corp.'s U.S. public sector and former EPA CIO. 'State governments have been consolidating data centers for years. ... The enterprise as we look at it is get- ting larger and larger, and we have to look at it that way.'

The administration also is pushing agencies to hire more project managers'600 in all'in 2006 as opposed to fulfilling their other needs such as IT security or architecture professionals.

'We need to close the competency gaps,' Evans said. 'The project managers are, day to day, first on the line managing those investments. We recognize these are high-risk projects, and agencies need to show they can manage the projects within 10 percent on cost, schedule and performance.'

Evans said agencies have improved their business cases'857 projects remain on the management watch list, down from 1,087 last year. But she attributed some of the progress to better planning.

'Where we are focusing is the agency's ability to execute on their plans,' Evans said. 'That is why earned-value management is so important.'

While there still is a lot of haggling to be done between the Congress and the White House over the raw numbers, OMB's emphasis with the budget is to start to move agencies into a new way of thinking about IT.

'The budget does assume a certain amount of implementation has been completed by the agencies, and we are realizing the productivities that we planned for e-government and the LOBs,' Evans said. 'Those things are working well and we are using them as utilities as we focus on the results of programs.'

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