Commentary by Vance E. Hitch
Senior advisor to Deloitte Consulting LLP

Federal IT is enormously complex and has had significant and highly visible challenges over the years. As the former chief information officer of the Department of Justice (2002-2011) and currently senior advisor to Deloitte Consulting LLP, I believe that IT can be leveraged to improve management and mission accomplishment cost effectively within federal agencies. There are many examples of federal IT successes and thousands of outstanding federal IT employees who can take credit for that success. But highly visible failures can cast all federal IT in a bad light. Several major changes could be initiated that would help in the overall effort and achieve better outcomes:

• Improvements in how IT is budgeted and procured;
• Changes in the way IT professionals are recruited, developed, compensated and trained;
• Increased oversight and management of projects and programs
• Empowerment of executives and managers and hold them accountable for success.

While changes in these areas are being discussed both at the Office of Management and Budget and on Capitol Hill, it is unclear when and how such changes may be implemented.

On the other hand, PortfolioStat is a reality. It is widely deployed across federal agencies and thus well worth exploring how we may be able to maximize the benefits derived from it.

PortfolioStat is an annual process for identifying and prioritizing the IT investments that will be pursued by each agency. It was introduced by OMB as part of the President’s Management Agenda to add discipline, oversight and visibility to federal IT spending.

As part of the process, technology, financial and program executives for each agency come together with their counterparts in OMB to critically discuss mission and policy priorities in the light of budget realities and establish a path forward for IT for the coming year. During 2013, PortfolioStat was specifically enhanced to address plans for data center consolidation, cloud computing, shared IT services and “commodity” IT.

Has PortfolioStat Been Effective?

After two years in place, PortfolioStat has had its share of praise as well as critiques. OMB states that PortfolioStat led to $885 million in savings in its first year with expected savings of more than $2.5 billion through 2015. They also say they have streamlined and consolidated reporting for many agency submissions including federal data center consolidation and cloud efforts and have included specific performance indicators for strategic priorities such as digital government, cloud first policy, FedRAMP, cybersecurity and open data. OMB views PortfolioStat as a dynamic process and it intends to “incorporate lessons learned and changes in technology” over time.

Key Areas for Potential Improvement

The basic objectives of PortfolioStat are sound and have been beneficial overall. But there are fundamental elements of the process which could be emphasized and strengthened.

These include:

• The data included in PortfolioStat should be better defined and more reliable. As a former CIO, I know that most federal financial systems do not collect and report budget and actual cost data for IT at the level of detail required for managing the systems and then making prudent decisions. I believe CIOs should be charged with the responsibility of significantly enhancing the cost, operational, and performance data and the associated systems (often called IT systems management) as needed to run the IT aspects of an agency like the big business operation it is.
• PortfolioStat should be built on an IT strategic plan which is inclusive of all agency IT and forward looking. IT strategic plans become outdated if they are not refreshed every few years with an infusion of new ideas and creative ways to use technology. Also, legacy systems must be critically looked at to phase out less cost effective investments. PortfolioStat cannot achieve its goals if it does not reflect the current best thinking on how technology can improve the management and mission accomplishment of the agency. It should address all aspects of the agency IT program including commodity IT, mission systems, ITSM (as discussed above) and IT human resource management.
• PortfolioStat should encourage pragmatic innovation in federal IT. Last July, President Barack Obama announced his second term management agenda to the nation and charged his cabinet secretaries with delivering more innovative and accountable government to the citizens, emphasizing the important role of IT in accomplishing this. While changing the culture of government to be more innovative will be challenging, it should certainly be a long term goal; and PortfolioStat may provide an opportunity to help drive appropriate innovation from the ground up. If we could somehow infuse the entire federal IT spend, which is approximately $80 billion a year, with innovation, it has the potential to effectively transform government as we know it. One approach may be to require an innovation plan for every IT project that requires an OMB Form 300. The plan could include specific innovations to be considered and tested early on in projects for potential incorporation into the overall solution design. Innovation lessons learned and rollout strategies could be appropriate PortfolioStat topics.
• PortfolioStat should accurately depict executive priorities and the commitment to accomplish them. This requires substantive processes and real involvement of executives supported by specific skills. The processes need to be resourced with strong analytical skills and rigor on both the agency and OMB sides. The results of the processes should include straightforward conclusions and a manageable number of action oriented “to-dos” that are understood by all the executives involved.

Clearly, there is no one silver bullet to improve federal IT. PortfolioStat is just one process and only in its second year, so the benefits may not be fully visible yet. The PortfolioStat process though has shown the potential to contribute real value to its stakeholders and represents a meaningful start towards improving Federal IT.

Copyright 2014 by Vance E. Hitch. All rights reserved.

Vance E. Hitch is a former CIO and deputy assistant attorney general for Information Resources Management (IRM) at the Department of Justice. He is now senior advisor to Deloitte Consulting LLP.

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