Business Sector's Tech Investments Result in Productivity Gain

Data released in February show that the
business sector's tech investments resulted in a
productivity gain of more than 4 percent last
year. Coming on the heels of an almost 5
percent jump in 2002, this one-two
productivity punch ranks as the largest two-year gain since the Truman administration.

The federal government borrows heavily
from the commercial sector's productivity playbook. Over the past
three years, a push by the executive branch for performance-based
management has put agencies under an accountability spotlight as
bright as any that exists in the private sector. Initiatives such as
the President's Management Agenda demand measurable progress
from agencies in everything from financial control to launching
new e-government services.

Federal CIOs focused
on performance-boosting
efforts are increasingly
turning to IT suppliers
in the private sector and
asking them to do much
more than deliver
products. Together
they're knocking
down stovepipe
computer systems
and consolidating
them into centralized
technology resources
that are not only easier
to maintain but also
provide central control
over the IT organization.
Thanks to more flexible
procurement regulations, IT
managers also are taking
advantage of innovative, off-the-shelf technology that is
bringing cutting-edge hardware
and software from the commercial
world to federal desktops.

But the pressure on federal CIOs
to make productivity-enhancing
changes isn't coming only from the
executive branch and senior
managers. Fundamental changes in
the workforce are occurring as large
numbers of federal employees move
closer to retirement age. Combined
with the effects of downsizing, there
simply aren't enough public sector
professionals to accomplish these
ambitious IT projects without the
assistance of private sector technology
suppliers, systems integrators and
outsourcers. The public sector must
increase services to citizens through
more efficient infrastructures and not
through burgeoning staffs.

Already there are a number of
hopeful signs that agencies and
contractors are willing to establish
closer partnerships:

Savings sharing. When private
sector contractors provide an
innovative way to save money in a
large-scale federal IT project, they
now get to share in the savings. With
luck, the two sides will quickly find
ways around the all-too-frequent
squabbles that arise over how to
measure savings and determine
appropriate rewards.

Talent sharing. In January, the
Office of Personnel Management
began soliciting comments about its
Information Technology Exchange
program, which calls for some federal
IT workers to trade places for a few
months with their private sector
counterparts to learn new skills, soak
up the energy of the commercial
environment and return with fresh
perspectives on how to re-energize
their own departments. The open
communication process comes full
circle as private sector managers set
up camp inside the Beltway to get a
better understanding of the challenges
inherent in federal IT departments.

Although these initiatives look
promising, more must be done for the
public and private sectors to come
even closer together. That means
overcoming a host of obstacles that
still plague effective IT collaboration.

The first step is to quash the
mistrust that exists on both sides and
that can cloud IT implementations.
Federal CIOs, concerned about cost
overruns and slipping deadlines by
outside contractors, need guarantees
that important projects will be done
on schedule. At the same time,
federal IT leaders must respect the
financial pressures that drive
commercial businesses by reining in
scope creep: attempts to constantly
add new capabilities to IT project
implementations without
renegotiating contracts.

Second, each group must better
understand the unique needs of their
counterparts. From a performance
perspective, federal agencies are
trying to operate more like
commercial businesses, implementing
new and innovative strategies for
government, such as quarterly
performance reviews. This represents
a fundamental change from the past,
when managing a new IT project was
more about the implementation
process, and achieving a measurable
outcome was almost an afterthought.

While the federal government is
working to streamline process
procedures as it adapts commercial
contract management techniques for
its use, some federal IT managers are
still in a learning process. In subtle
and some not so subtle ways, their
organization's culture is changing.
Such fundamental change is always
difficult, no matter whether you're on
the public or private side of the aisle.

It only adds to pressure on federal
IT managers that they must undergo
these changes under regulatory and
media microscopes that are more
intense than what publicly owned
commercial businesses typically
experience. The result: Everything
that happens in the federal
government necessarily takes longer
than it does in the commercial world.

The best way to work through this
cultural evolution is to structure
projects with well-defined milestones,
and provide a structure that lets IT
partners in government and industry
focus on incremental successes. Take
small bites that let you more easily
achieve a positive result, and then
watch all the naysayers disappear.
Everybody likes to share in a win.

Those in the private sector can use
these opportunities to demonstrate a
fundamental lesson they learned long
ago: Always stay focused on the
customer. Federal agencies that get
caught up in the narrow confines of
fulfilling their mission can forget that
they exist to satisfy their constituents.

In return, the federal sector has a
lesson to teach the private side: Create
stepping stones to the stars for your
employees. If you take care of your
people, they'll take care of you. But
that's a lesson that a lot of people in
private industry have yet to learn.