But after the massive data breach suffered by the Office of Personnel Management and the continued uncertainty around the budget, Scott has to do more than just land the plane—to continue his analogy—he has to change the tires, upgrade the engine and ensure the structural integrity of the wings, all while during the flight.
Take IT spending. Scott said in August the pendulum had swung back where agency spending on legacy systems—known as operations and maintenance (O&M)—was creeping back up toward the 80 percent mark after years of it dropping in favor of development, modernization or enhancement (DME) spending.
“This will happen naturally when you have an environment that we have where budgets are constrained, CIOs are told to cut costs and don’t spend more money,” Scott said during an interview with Federal News Radio at the 930Gov conference on Aug. 26. “It’s just a natural phenomenon. Everywhere I’ve ever been when the CEO or CFO or somebody comes to an IT organization and says ‘we need to save money.’ CIOs know how to do this. They are well practiced at it. This is a natural human reaction, they cut the easiest thing there is to cut, which is spending on new application development and refreshing infrastructure. Those are the easiest levers to pull and say, ‘we’ve got to retrench.’ And it’s really, really hard, in contrast, to cut that operational expense, that thing that keeps the lights on, and usually you don’t get that much credit for it because it takes a long time, and in many cases you need investment to actually cut the spending in the long run anyhow.”
Scott said in the current budget environment with the looming specter of sequestration cuts and the growing demand for IT services, it’s no surprise that agency spending has swung back toward O&M.
“The irony of all this is if you can actually figure out a way to go after O&M spending, the payoff is phenomenal,” he said. “At Microsoft where we got on a regular refreshment cadence, and what you realize is every two years you can buy gear that is twice as powerful for the same cost or less. Everything, in some ways at least in hardware, it’s a race to the bottom in terms of efficiency and cost effectiveness. If you can get on that trend, you can save a whole bunch of money and use that for new application development, new business capabilities and so on. So the trick is not to do the easy thing and pull that fast lever, but really to invest in a regular refresh of infrastructure, a regular refresh of applications and a regular refresh of business capability. If you do that, you will do one of two things. You will save money in the long run or you will create dramatic increases in capacity for the same costs. So that’s the trend I want to get us on and it’s hard to do in a sequestered world.”
Scott said agencies need to have an operational plan detailing how they are going to move into that regular refresh cycle for hardware so they can begin realizing the benefits.
“If you don’t regularly look at your application portfolio and say ‘here are the things that I’m going to do proactively to upgrade and modernize it,’ you will not get on that train. If you don’t look at how you are running your operations or the contracts that you use to manage that O&M type spend, you will not get on that train. That’s the activity we want the CIOs to engage in,” he said. “Once you get on it, the dividends really start to pay off.”
Scott said there is a budget angle because agencies need flexibilities to make that long-term investment.
“There are tons of year-end spending because it’s a use it or lose it sort of proposition. That is a really bad way to run IT. It’s horrible. It drives exactly the wrong behavior in terms of what you really want,” he said. “Part of what we will work on is how do we change that model so that you can either take that money that would either, I’ll say, be a little frivolously spent at the end of the year and make it available as seed money to start this flywheel of better investment or some other mechanism, but we have to figure out a way. We can’t sit here and responsibly watch all of this decay and feel good about it. You’ve got to figure out a way to do something.”
Scott said OMB is collecting data to get a better handle of just how much the pendulum is swinging toward O&M spending and away from DME investments.
He said the details of the spending trends will be available in the next few weeks and OMB also will announce it plans to reverse it back toward new or upgraded investments.
There are several ongoing initiatives OMB is leading to get agencies on this refresh trend.
The CIO Council reinvigorated the U.S. Government Configuration Baseline around cyber standards for desktop operating systems back in May.
As part of the category management initiative, the General Services Administration led a cross-agency team to develop computer desktop configurations after making recommendations to the Office of Federal Procurement Policy to move toward a common, more limited set of requirements.
OMB and OFPP also created an interagency team led by OFPP, GSA and the Defense Department will develop a strategic plan to increase the number of enterprisewide software agreements across government.