There is an intense and growing frustration resonating from many government CIOs and IT Directors. They're fighting the negative perceptions that internal, enterprise IT is too expensive and delivers too little. I call it the “Customer Perception*” problem.
Virtualization and Cloud have delivered many benefits to government. However, these technologies have also shifted the customer’s perception of IT: the availability of cheap computing and storage, iPhone and Android apps, and free consumer Software-as-a-Service (SaaS) offerings have left customers with the impression that all IT should be free, or at the most it should cost 99¢. How does a government CIO compete against that?
The argument can be made that most customers don’t understand or appreciate the effort that goes into making government IT systems secure, reliable, governed, and highly operational. Government IT must adhere to many laws and regulations, and is subject to ongoing audits. In addition, governments require unique IT services and apps to support unique missions; SaaS can’t solve everything. All the efforts to make IT become “Enterprise IT” costs significant money. But let’s put the Enterprise IT argument aside for a moment because here’s the real challenge for government CIOs:
Users think demand has remained relatively flat. They mostly look at IT from the bottom-line total cost, "My needs haven't changed much but my IT costs have risen, IT isn't delivering value to this organization." This perception doesn’t reflect reality for most government entities. It’s inaccurate because we fail to reflect back upon the past. If we were to take an analytical and comparative look back in time, we would see that the demand for IT services has skyrocketed, and the value of IT has increased. Government IT is replete with examples but here are just two personal observations:
- When I started working in government, back in early 2000, almost no one had a government issued cell phone. Now demand is significant. Many (most?) government employees have government issued smartphones and tablets. These mobile devices are needed and valuable in today’s world in which government is expected to work anywhere, anytime.
- Many agencies moved from paper-based to digital-based systems with the expectation of reducing IT costs. Instead, IT costs increased. However, government organizations now process business transactions much faster and with greater accuracy. They also have greater archival ability, improved business continuity, and increased access to timely information. This has lead to a greater demand in data: what is captured, stored, processed, and disseminated. Digital may cost more than paper but many of us forget the tremendous value digital provides over paper.
Demand for government IT has increased and the value of government IT has also increased. These two factors (along with inflation) have lead to an annual increase in the total cost of IT.
So if perception is a flat demand curve with rising IT costs, what is the reality? For most government IT organizations, this graph is probably a better depiction of reality:
Yes, the total cost of IT has increased but it has increased at a slower rate relative to demand. More importantly, if you could look at the unit cost of each IT service, you would most-likely discover that unit costs have decreased over the years: the cost for each email account, a gigabyte of storage, the annual maintenance and support of a smartphone, etc. are lower, or the costs remains relatively flat.
I use the terms “most likely,” “typical,” and “probably” when stating government demand for IT has increased while IT unit costs have decreased. That’s a problem. In fact, that is THE problem. How does the CIO objectively and factually demonstrate a decreasing (or flat) unit cost of service while proving the overall business value of IT has increased?
The solution for changing negative perceptions to positive reality starts with the recognition that we don’t really know our IT unit costs and we don’t know how to articulate the business value of an IT service.
Government IT organizations need to grow their IT financial and business skills. CIOs should provide training and opportunities to their staff, especially those involved with providing end-user systems and services, and those responsible for portfolio, programs, and projects. CIOs should also consider consulting services, such as VMware's Accelerate, to kick-off these efforts, and provide periodic support if the IT organization lacks the knowledge and skills for developing IT cost models.
In addition to developing IT’s finance and business acumen, CIOs must acquire a platform tool, such as VMware's ITBM, which provides automatic capturing of usage and costs, from any cost driver within IT; whether it’s physical or virtual infrastructure, private cloud, public cloud or SaaS, internal labor or contractor hourly rate. Some IT organizations have tried to do this with manual processes, rough-estimates, myriad spreadsheets, and a small army of analyst. The net result being too many errors, too many “truths,” and way too many dollars spent for too little understanding into IT’s cost and value.
* A government IT organization is already ahead of the game if they refer to their business users as “customers.” Many still refer to them as users or employees, as though everyone is to be treated the same within the department, agency, or office. They shouldn’t be treated as just another employee, they are IT customers and they have, or will someday have, a choice to go elsewhere for their IT needs.