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. The report is written by Raj Sharma, CEO of Censeo Consulting Group, and David Wyld, Professor of Management at Southeastern Louisiana University.
With more than $200 billion spent a year on information technology, delays cause billions of dollars to be spent over budgeted amounts. Some 94 percent of the more than 3,500 public-sector IT programs with costs of $10 million or more end up “failing” – i.e., not meeting expected results based on initially planned budgets. Remember Healthcare.gov? Although there are ongoing reform efforts within government to improve IT procurement, the authors of “Billions in the Balance” suspected that the root causes of program failures needed to be addressed first:
“As David Van Slyke, business and government policy professor at Syracuse University recently observed, ‘The policy environment, the multiplicity of goals, the unevenness of who has access to what information, as well as the uncertainty about the product and the funding itself, make the public-sector environment more complex (than the private sector).
Add to this complex environment a risk-averse and ‘check the box’ culture, we end up with a slow, prescriptive, and cumbersome process that is unable to keep up with the fast-changing technology environment, creates barriers to entry for new and existing suppliers alike, and leaves little flexibility for any partner to propose innovative solutions.”
After completing a study of large-scale IT programs, the report authors found five major problems thwarting successful IT procurement. For practicality’s sake, they limited themselves to issues that can be addressed without major legislative changes.
No alignment on problem or desired outcomes – “Many IT programs are doomed to fail because there is no agreement on what problem we are trying to solve or what success looks like.”
Weak leadership and governance – “Many senior leaders and program executives are not around long enough to run large IT programs from beginning to end, and they often lack the management skills or authority necessary to make tough executive decisions.”
“Check the box” culture – “Making a mistake in a large IT program can often mean public embarrassment in the federal government. This risk-averse culture means program timelines stretch out for months and years to get through the multiple layers of reviews, approvals, and sign-offs. For smaller companies, these are sometimes insurmountable barriers to selling to the government, given the cost and uncertainty.”
Requirements too prescriptive – “Many companies choose not to compete, or when they do, they often ‘check the box’ themselves rather than provide solutions that they believe will solve the problem.”
Slow procurement process and closed markets – “Layers of rules and policies result in an overly slow procurement process. Large-scale IT programs can take half a decade or more to roll out… government agencies have created large, multiyear ‘contracting vehicles’ to speed up the cycle, but in the process created ‘closed markets’ that also act as a barrier to innovation.”
Spend Matters Managing Director Jason Busch added: “Government IT acquisition is a wonderful target of criticism for many reasons, in part because it is so often in the headlines. But if we look at the five problems my colleagues highlight, nearly all (except perhaps the last, in certain cases) mirror related issues in private sector technology buying. The lessons learned in the report are universal. But it’s about time we memorize them and take action rather than simply point out the continued broken bridge between IT sourcing and IT vendor management, which leads to missed deadlines, cost overruns, and less than satisfied stakeholders and taxpayers.”
To read the report in its entirety, you can download it for free here.