Mission impact: The critical factor in IT modernization ROI

Performance measures are integral to estimating actual savings from IT investment. 

As federal agency leaders look to improve mission outcomes, technology modernization plays an essential role. Modernization efforts will produce operations and maintenance savings, for example by lowering cyber risk, increasing cloud hosting efficiency, improving resilience, reducing system downtime, and even lowering training costs due to better system design. These are all beneficial results.

Of course, modernization requires investment. A custom agency-owned application will take a large in-house development effort and have perhaps ten years of useful life. Alternatively, sourcing low-code/no-code vendor software is faster to implement but less customizable to agency-specific needs. There are also costs to update software to comply with new regulations, and the need to keep up with rapidly changing technology.

Most agency IT leaders will look at these investments in terms of cost savings. While reducing costs is never a bad thing, it is far more important to estimate the mission benefits and business savings that are the primary reasons for IT investments. REI has found in multiple cases that performance improvement and its mission impact are where the biggest returns lie, usually far exceeding the operating savings or the capital expense.

Three steps to rationalizing investment

Focusing on how to maximize those benefits should be part of any IT modernization effort. As IT leaders are planning for future requirements, three often-overlooked steps will help prepare them for measuring and justifying the right level of investment:

  1. Understand the current budget environment. Do some homework to see which modernization projects are meeting the bar for acquisition, which are not, and why. Be sure to include acquisitions through special programs like the Technology Modernization Fund, the Information Technology Oversight and Reform (ITOR) initiative, and other available innovation programs.
  2. Assess from where mission impact and return on investment (ROI) actually result. This must be an intentional effort; presenting a case for a new investment will be far easier with some supporting evidence rather than having no idea where ROI will be found and no way to measure it.
  3. Factor in improvements in quality, productivity and customer service. While this must include updating existing technology, don’t forget to calculate automating processes that are currently manual. All of these inputs equate to mission impact. While they may depart from typical IT measures, quantifying them will go a long way to supporting the case for a given investment.

Expand thinking around ROI measurement

IT leaders who have not previously considered prioritizing new investment this way may be unsure of how to start. Looking at already-completed projects can offer a blueprint. Consider just one example of a real agency program:

A department within Agency A identifies and certifies whether or not individual claimants are legitimate victims of a particular type of crime. Department personnel used spreadsheets to collect and track claimant data, then an analyst would decide if an individual was entitled to benefits or not.

Automating data collection and tracking allowed on-demand access for the entire immediate team, an obvious benefit of introducing technology. However, it also enabled a dozen Agency A components to more easily coordinate with Agency B, an integral part of the justice system.

In quantifiable terms, Agency A was able to serve twice as many victims in the year after implementation vs. the year before, without increasing budget or staffing. While that was likely in part because more people were being victimized, it was also because the agency was far more productive. Additionally, the time to victim certification was reduced by half (from six to three weeks). This already shows high value ROI from the IT system modernization.

Taking it a step further, if all of Agency A’s staff is needed to serve 1000 victims, with their annual salary costing roughly $50 million, there is additional savings in not hiring another $50 million worth of staff to serve twice as many customers. Ultimately, the $50 million in savings produced a $50 million ROI on a $1 million IT investment — a 50-fold return. Even better, some personnel could be repurposed to another program that was short-staffed. There was no need to reduce the workforce. Everyone won.

Beyond Agency A, the IT investment eliminated the need for a duplicate system at Agency B, which was now willing to accept Agency A’s victim certification. The lesson is that the case for investment can also benefit from exploring opportunities to reduce redundancy of partner efforts.

Productivity improvements from IT investment will not only measurably improve critical mission impacts of customer experience and satisfaction; there are also bottom line savings. For example, automation can reduce or eliminate costly manual intervention to help customers who fail to successfully transact for agency services on the first try. This is particularly important given federal mandates to transform customer experience and service delivery.

Transparency elevates ROI

Performance measures are integral to estimating actual savings from IT investment.  While some IT leaders hesitate to reveal full potential savings to their budget officer due to internal sensitivities, practically speaking, transparency usually pays off. Preparing this level of data and insights arms IT leaders to share it with contracting personnel if and when they need to. Not having it eliminates the option.

With IT modernization a never-ending quest, IT leaders will ultimately be well served by understanding the full scope of mission impact that their investments will produce for their agency and for their citizen customers.

Jeff Myers is senior director at REI Systems.

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