Improving Government IT Procurement: Just How Serious is the Problem?
Categories: Learning / Research, Public Sector, Services and Indirect Spend, Technology | Tags: Sourcing and Categories
This post is based on Billions in the Balance: Removing Barriers to Competition & Driving Innovation in the Public-Sector IT Market, a new report from Public Spend Forum and Censeo.
When I last saw Public Spend Forum’s editor Jonathan Messinger a couple weeks ago, he mentioned something about working on a major report on IT procurement. The report in question came out earlier last week, a succinct but in-depth paper that looks at five ingrained causes of failure in government IT procurement and provides six recommendations for reform.
Written by Raj Sharma (CEO of Censeo Consulting Group) and David Wyld (Professor of Management at Southeastern Louisiana University), “Billions in the Balance: Removing Barriers to Competition & Driving Innovation in the Public-Sector IT Market” is the result of six months of combing through government reports, studies, and articles, along with interviews and roundtables with leading IT experts from the public and private sectors. Although there are ongoing reform efforts in public sector procurement, there are systemic issues such as barriers to competition not being addressed—hence, this report.
As the authors explain in the introduction, federal, state, and local governments in the U.S. spend more than $200 billion a year on information technology. The large scale of government IT programs means that delays and failures not only lead to wasted taxpayer money, but also negatively affect individuals who would benefit from these programs. After all, the success of these programs, whether concerning healthcare or security, in part hinges upon innovative IT.
So how extensive is failure in government IT? According to the report, “recent failures, like the front-page news related to Healthcare.gov, have brought to the mainstream issues with how government purchases and manages IT. Unfortunately, this problem has been around for a long time, and has spared no president or political party. The U.S. Government Accountability Office (GAO) highlighted in 2008 that ‘more than 400 active information technology projects, representing more than $25 billion in spending… had been delayed for more than a decade and cost billions more than originally budgeted.’ A more recent study by the Standish group found 94% of government IT projects fail!”
In covering the report findings, this series will explore the primary causes of failure and ideas for reform. There are lessons for private sector readers as well. I asked Jonathan how relevant this report is to Spend Matters readers, and this is how he put it: “Large IT programs fail because of deep-seated problems in program management, and culture. We talked with people from the public and private sector, and found that it's not just a public-sector issue; our research showed that large IT programs in both sectors have a long history of struggles, and a low success rate. Some of the best practices we discuss in the paper are applying private-sector principles to public-sector procurement, but that doesn't mean that all companies have implemented those principles, or are immune to these problems.”
Jason Busch (Managing Director, Spend Matters) added: “The fundamental issues of how best to manage (internal) demand and drive the right type of structural competition over the lifecycle of an agreement – not just focusing on unit cost – continue to challenge private sector IT organizations as well. The more we focus on the bigger picture of the intersection of internal demand, procurement, and vendor management, the greater the opportunity to target the issues fundamentally leading to continued IT sourcing project failures that lead to missed deadlines and unmet expectations.”
To read the report in its entirety, you can download it for free here.