The Department of Housing and Urban Development is spending as much as 95 percent of its $342 million IT budget on legacy systems.

The Homeland Security Department, with its $6.2 billion technology spend in fiscal 2016, wasn’t much better just a few years ago. It was spending 80 percent of the department’s IT budget on legacy systems, including 48 percent on what technology executives considered commodity legacy systems that could be transitioned to shared or enterprise services.

DHS and HUD are two examples why the Office of Management and Budget is pushing for Congress to approve its proposal for the $3.1 billion IT Modernization Fund.

While lawmaker acceptance of the ITMF is unclear, HUD and DHS aren’t waiting around either.

Susan Schuback, HUD’s deputy chief information officer, said the implementation of a portfolio management approach is swinging the pendulum the other way on legacy IT spending.

“Our portfolio management process is more transparent and deliberate,” Schuback said May 3 during an event sponsored the Potomac Forum. “We hold project management Wednesdays where we bring in 25 development projects that are ongoing — half come in one week and the other half come in the next week — and they brief the CIO’s office on the status of the project. Our intention is not to have projects reviewed, but it allows us to say to our customer, ‘We know what we are doing. We know what’s going on with the projects that are underway and we are dealing with issues as they come up.’ That’s just getting underway, but we are very excited about it.”

Schuback said as part of the oversight process, OMB is sitting in on the meetings, making it sort of a TechStat or even PortfolioStat meeting.

Over at DHS, Carlene Ileto, the executive director of the Enterprise Business Management Office, said her agency is spending a lot of time focusing on the 91 major projects highlighted on the IT Dashboard.

“We are doing program health assessments where we assess to see how healthy it is by evaluating the program against weighted criteria,” Ileto said. “We look at risk management, human capital, making sure they have the right skillset to do work and be successful, cost and schedule performance, ensuring they stay on track, operational requirements identification, making sure business needs align with the business case.”

Ileto said if there are problems, the DHS CIO calls for a TechStat to figure out what are the root causes and take corrective action.

Through its portfolio management process, DHS is identifying areas where it can reduce that 48 percent spend commodity legacy systems.

Ileto said over the past five years DHS has saved about $1.3 billion, mostly by reducing the number of data centers to 22 from 47. She said this led to a 41 percent decrease in operational costs and a 22 percent decrease in server costs.

Now, DHS is focusing on that commodity IT spending that could be moved to shared services. Ileto said 16 percent of the spending has been transitioned, and the other 32 percent is in progress.

Both HUD and DHS’ efforts are examples of a broader trend that is starting to gain momentum throughout government.

“Portfolio management tends to be hard conversations and you have to say ‘no’ to someone so it has to be driven by personality of people in the C-suite. Do they have the personality and the data to have those conversations?” said Stephen Holden, a senior manager with Octo Consulting. “In the past, it was a real challenge for CFOs, CIOs and chief acquisition officers because I’m not sure they had the data and the tools. But I think it’s getting a little easier because of things like the IT Dashboard and the Federal IT Acquisition Reform Act. CIOs are recognizing they need to get a handle on spending and major contracts.”

Holden said several of Octo’s federal clients are seeing more horizontal integration across projects, budgets and governance.

He said FITARA is helping to promote that integration. Similarly to what I wrote about last week, this is another example of FITARA’s impact without big flashing lights that say “FITARA Happens Here.”

“FITARA is providing the impetus for CIOs to get back into the budget conversation and I think it’s caused CFOs and CAOs to reengage with CIOs like they haven’t before. That engagement also is giving CIOs a new level of legitimacy,” Holden said. “I’d like to have thought Clinger-Cohen would have given them legitimacy and currency to talk at the budget table, but we know there was institutional resistance to that. It was clear Congress wanted to increase CIOs’ authority so they could reinsert themselves in to those budget conversations.”

Holden said another reason CIOs are using portfolio management tools and data more successfully is the widespread acceptance of agile or iterative development.

He said it’s causing CIOs to look at projects differently and take advantage of digital services.

“Portfolio reviews are one way to recognize you need to look not only at investments, but your base budget too,” Holden said. “It’s also driven by how do you fund digital transformation because Congress isn’t in the business of handing out new money so agencies have to take it out of hide.”

Over the last 10 years, OMB has pushed agencies to take a portfolio approach to investment. OMB, under President George W. Bush, pushed agencies to develop enterprise architectures to include a current state and a future state of technology across their agency. There was limited success using these modernization blueprints to transform IT spending.

Then, in 2012, OMB launched PortfolioStat to ensure accountability across the government by making investment review boards focus on programs and not individual investments.

PortfolioStat seems to have had a bigger impact as OMB reported between 2013 and 2015 agencies saved or avoided spending more than $2.5 billion on IT.

Holden said examples such as DHS and HUD show that these and other initiatives are just starting to make an impact on agency IT management and spending.

“Change doesn’t happen overnight, so it does take years, but getting a level of conversation and governance in place is important,” he said. “There is some concern within the CIO community that Congress’ patience with FITARA and IT improvements is waning. There is some trepidation that while most folks in the CIO community understand their lack of patience, folks are working hard, but it’s not going to happen overnight. I’m hopeful that the oversight organizations realize they have provided a great set of tools and some top cover for CIOs to improve how IT is managed. Now I think they need to follow up, but they also need to let CIOs work with the authorities they have been given and I think that will take time.”

HUD and DHS are perfect examples of why patience around FITARA and seeing its impact is so necessary. The alternative is by harassing CIOs, the federal community returns to the high rate of IT executive turnover that plagued agencies in the mid-2000s, leaving change to only happen around the edges.

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