Sleeping Giants Awaken: Optimizing Government IT for the New Economy

Federal, state and local governments and other not-for-profits have largely been operating the same way as they have for decades. Typically, it is with highly distributed, decentralized IT models that are not necessarily efficient, or successful in providing great service quality.

The recession has changed all that, and now there is an imperative not only to drive costs out of the system, but also to improve the service delivery to all of their constituent agencies or departments. Today, they are looking at how to refresh legacy systems to take advantage of modern technology environments.

Cost is the driver; improvement is the benefit

Like any large legacy operation, change in budgeting is usually the first wake-up call.

How can we overall reduce the cost of our IT operations? How can we avoid any major capital outlays for new technology in this environment? Those are the initial issues, but at the same time, there has been keen interest in process improvement. How do I enable my employees to do more themselves? How do I make it easier for my citizens to communicate with me? How can I make it easier for them to access my services?

So while the initial questions were about cost, questions of service quickly follow.

A hard look at hard costs

Many government organizations’ IT is highly decentralized or federated. It is difficult to get a true picture of spending and/or how services are currently being delivered. Improvements can be around the processes, but often it is around consolidation and centralization. Then the thinking turns to a shared services approach, where we start to deliver services on a fee-for-service basis, or on a resource-units formula.

Lately, we have heard clients say, “Why are we investing in this technology anyway? We’re not particularly good at it. Maybe there are others that could do it better and perhaps less expensively than we currently do it.”

Go big

Most organizations tend to look at their optimization programs with a very narrow, small focus. They are perhaps a bit cautious about mounting a major transformational initiative. Unfortunately, we find that normally those small initiatives are more likely to fail than perhaps even the large ones, so we have really encouraged organizations to think big and recognize that safer, more incremental programs don’t necessarily get the job done.

Big and broad thinking around transformation tends to have a better track record. The public sector is a very complex entity, with many stakeholders and consensus operating styles. In this sector, change management and communications programs are significant keys to success.

Build on fact, but think differently

It is even more important to be armed with the facts. A keen understanding of the environment and a fact-based business case around organizational change can go a long way to move the effort out of the gate.

Once the facts are on the table, it’s time to change the mind-set. Cultural change is difficult—even in the most progressive businesses. Shared services and outsourcing require a different mentality. With shared services and outsourcing, stakeholders are paying fees for service. It’s no longer just a broad-based budgeting exercise, but a real spend. That gets people’s attention, and that keeps the transformation moving ahead.

Hear more about issues related to IT Optimization in the KPMG SSO Institute podcast: IT Optimization in the Public Sector featuring Glenn Davidson, and the KPMG whitepaper by the same name.

And to receive the latest insights from KPMG, join the KPMG Institutes. Be sure to customize your profile by selecting “Shared Services” and “Outsourcing” along with other interest areas.



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