Facing Down the Budget Crisis

Of all the C-level executives, CIOs have the greatest opportunity to help create a government that runs more efficiently while increasing and improving services.

The economic recession and slow recovery have affected citizens of the world in different but significant ways.

We need only look within our own borders to see the drastic impact of foreclosed homes, lost jobs and reduced net worth. In our integrated world economy, each crisis reverberates into other sectors, intensifying the effects and challenges.

The economic recession and slow recovery have affected citizens of the world in different but significant ways.

We need only look within our own borders to see the drastic impact of foreclosed homes, lost jobs and reduced net worth. In our integrated world economy, each crisis reverberates into other sectors, intensifying the effects and challenges.

One result has been to raise questions regarding the cost of government and its effectiveness. Although most of the public debate seems to manifest itself in partisan political slogans and sound bites, there are options for making agencies more efficient and effective.

Where Are We?

Certainly, there is fairly clear agreement that the government's discretionary budgets cannot sustain the level of cuts that will enable our country to manage our debt load. Over the past year, there have been several significant actions that will begin to address the scope and cost of government.

First, the Deficit Commission, a bipartisan review of options for addressing the growing deficit, released its report late last year. The report's subtitle, "The Moment of Truth," seems to set the tone for the document. The basic finding: We need to address just about every aspect of government, including discretionary spending, mandatory spending and tax reform. Under the commission's proposal, changes would be distributed across the entire citizenry.

The plan has six major components: discretionary spending cuts, comprehensive tax reform, healthcare cost containment, mandatory savings, Social Security reforms and budget process changes. Interestingly, only a small number of the recommendations focus on identifying agency-level savings, consolidating duplicative programs and making the government as a whole more efficient.

Second, President Obama has launched a new initiative to reorganize the government to eliminate duplication and redundancy and save billions of dollars. He cited several programs for priority action: exports, where 12 agencies have program roles; and housing policy, which involves five agencies.

Finally, the Government Accountability Office released a report in March that identified 81 areas as opportunities for reducing program duplications, saving tax dollars and enhancing revenue. For the most part, GAO compiled recommended changes from previous reports on individual programs.

GAO does not offer a total projected savings from implementing its recommendations, but a scan of potential savings from the individual areas would certainly total in the tens of billions of dollars. One congressman recently referred to the GAO report as a roadmap for achieving efficiencies and budget savings. The recommendations target inefficiencies in the structure and operations of government.

Most people agree that we need to change at least the cost impact of government on our economy and world position, and most also agree that we can and should make government as efficient and effective as possible. The question becomes, can we make the changes required to achieve these savings?

What's It Going to Take?

The most critical element of any large-scale or radical transformation is the motivation to change. This applies to governments, corporations and individuals. Although we have widespread recognition of the problem, we have widely divergent views on what needs to be done to fix it.

First, radical transformation typically requires a significant crisis. Frankly, there is no other way to generate the motivation necessary. There have been examples of crises leading the way to large-scale change — perhaps the most recent was the creation of the Homeland Security Department in the wake of the Sept. 11 terrorist attacks. There is no way that such radical restructuring would have happened without an administration and Congress united to fight an external threat, and a career staff motivated to work together to address that threat as well.


Illustration: Elizabeth Hinshaw
"The most critical element of any large-scale or radical transformation is the motivation to change." — Paul Wohlleben

Second, implementation must be perceived as involving shared and equitable sacrifice by everyone affected — by agencies' leaders and employees, by programs' constituents, by industry and by the general population. If the change is seen to involve unbalanced sacrifice by any one group, strong resistance will arise.

In this context, the federal budget situation constitutes a crisis. And while there will certainly be differences in the ultimate outcome about where and how reductions in federal agencies and programs are taken, they will need to be perceived as a shared and equitable sacrifice if they are to endure.

CIOs Front and Center

Federal CIOs are currently dealing with the leading elements of the budget crisis: short-term continuing resolution funding and a more active cross-government oversight of IT spending and projects. CIOs need to acknowledge that this is a crisis, one that will not be going away any time soon.

The budget crisis will be difficult for all federal executives, as the short-term funding and direction will remain choppy, and the long term difficult to plan for. This will be especially true for CIOs, who must combine the same budget uncertainties faced by other senior leaders with a movement toward pay-as-you-go IT models prevalent in the cloud computing environment.

But, in many ways, CIOs are also fortunate. Their environment is a realm that is absolutely necessary to support a more efficient and effective government, and the costs to provision IT are steadily declining. And even more important, the opportunities to restructure federal IT — if implemented and operated optimally — offer the potential for great results: lower costs, more security and better performance.

May 04 2011