Federal IT and acquisitions officials often ask me: “What does the Modernizing Government Technology (MGT) Act really mean for my agency?”
This question usually leads to a conversation about whether the agencies and their leaders should take action, and the potential benefits and risks. Bottom line, agency leaders want to know if doing this is worth the effort.
Short answer: Yes.
The Technology Modernization Fund received its first $100 million in funding for fiscal 2018, with another $210 million requested by the administration for 2019. Although that represents just 10 percent of the $3.1 billion that was originally envisioned, it is a start and it can drive significant benefits for federal IT investment.
Keynoting the 2016 Federal Forum on June 14, 2016, former federal Chief Information Officer Tony Scott said: “I guarantee you, there is enough money in that inefficient, ineffective infrastructure and application space that paying back isn’t going to be the problem, from a financial perspective.”
However, government IT executives who have spoken with me are still concerned about whether they will be able to pay back their initial loans over a 5-year period. Even if you replace a legacy system with one that is 80 percent cheaper, you still will need to run both systems as you migrate from one to the other and hope your migration roadmap stays on track. This is the only way to close down the old legacy system and contract and make sure your initial Total Cost of Ownership (TCO) model was accurate and that you can repay the funding all within five years.
Here’s what federal agencies should do:
Create an IT working capital fund if you are a CFO Act agency (even if you have no immediate plans to use it).
This sends a message to your incumbent suppliers that they are on notice. This is a way to gain leverage with suppliers and maintain competitiveness in your spend. Using the fund itself may be redundant, but having the ability to capture and reserve appropriated funds for up to three years shifts leverage massively from the vendor to the government buyer. This should not be ignored.
Apply for funding from central IT Modernization Board (even if you are unsure whether you will accept funds).
Office of Management and Budget Director Mick Mulvaney’s guidance on the Technology Modernization Fund states that any federal agency can apply for funding consideration, and subsequently reject the funds after the agency’s application is accepted. This may sound like a waste of time and effort. But agency leadership should consider the messaging from a supplier’s perspective. Agencies can use the simple act of applying for funding to replace legacy solutions to gain leverage with incumbent suppliers.
Find inefficiencies across your IT investment portfolio, and develop your own internal savings/cost avoidance capture strategies.
Using private sector best practices such as Technology Business Management (TBM), Leverage Management and Software Asset Management, agencies can prioritize human capital and funding resources for optimal impact in 2018, 2019 and beyond. Some agencies have saved well north of $100 million by applying these proven methodologies, but their adoption and maturity across government remains limited. As CIO organizations look to spend appropriated funds more efficiently, they have more tools at their disposal to drive innovation and change than at any other time in the 21st century. Let’s make sure the status quo does not prevail this time.
Jeremy Wilcox is managing director for the federal public sector at ClearEdge Partners Inc.