October 21, 2010 By Jessica Mulholland
The Technology CEO Council (TCC), a group of chief executive officers from American information technology companies, recently announced in a report that the feds can save more than $1 trillion by 2020. The solutions, according to TCC Executive Director Bruce Mehlman, "do not require new legislation — they can start today — leading to innovation and long-term economic growth."
The council's report, One Trillion Reasons, says that the federal government could save $1 trillion by: moving toward green data centers via IT consolidation ($76 billion annually), decreasing duplication ($500 billion), stopping fraud with analytics ($200 billion), going digital ($50 billion over 10 years), and consolidating excess and underutilized buildings ($150 billion over 10 years).
Some question whether saving so much money is feasible, while others think it's definitely doable. This difference of opinion begs the question: If these suggestions would save so much money on the federal level, could states and localities also see huge savings? Three experts shared their thoughts.
Darrell West, director of government studies and founding director of the Center for Technology Innovation at the Brookings Institution, said he's uncertain about the $1 trillion figure, but there are substantial cost savings the public sector could realize in the technology area. "Right now, the public sector is way behind the private sector in technology innovation in terms of taking advantage of the latest developments and using cloud computing and other new things," he said.
A specific area where the private sector has a leg up on the public sector regards streamlining the procurement process so that it's easier for agencies to buy and integrate new technology, West said. Until recently, technology contracts used to be negotiated on a department-by-department basis at the federal level. "So even though the federal government spends $76 billion on information technology and $20 billion on hardware and software, it never really was able to use its large size to negotiate the deals with contractors," he said. "That can certainly be an area where there can be big cost savings."
Michael Nelson, a technology professor at Georgetown University (who previously was director of Internet Technology and Strategy at IBM), said saving $1 trillion (at least) would most definitely occur, because the council has listed the easiest solutions. Most of what the report calls for follows the best practices of companies and certain agencies. The General Services Administration, for example, has taken steps to make it easier for agencies to buy cloud computing, and the National Science Foundation is making cloud computing available to the research community.
"It's not like they're asking for a total transformation of government," Nelson said. "They're not restructuring government. They're not going to change a whole bunch of laws and practices. This is just taking what the government does today and doing it more efficiently by using information technology."
If more federal agencies embraced technology in the ways outlined in the report, West added, it would provide a model for states and localities that are facing their own budget problems and there could be a good chance that states and localities would follow their lead.
"Some of the hardest-hit sectors have been state and local agencies, so they need to figure out ways to use technologies to innovate so they can cope with the massive budget problems that they have," West said. "If a federal agency can demonstrate cost savings through technology, you are going to see that spread throughout government because everybody needs to get faster and smarter — and what we need are some successful role models to lead the way."
But would another trillion or two of savings happen should states and localities follow suit in the other report recommendations? That's ultimately a difficult question to answer. Alan Shark, executive director of Public Technology Institute, said he thinks the savings would be a bit less, since a lot of innovation in this area already has begun. Many state and local IT offices have or currently are pursuing consolidation and digitization efforts. "We're way ahead of the federal government in doing things," Shark said. "We spend a lot of quality hours sharing best practices, and I think the federal government could take that as lessons learned on what we're doing and how well it's working."
When looking at the breakdown of $1 trillion over 10 years, Shark said that roughly $100 million per year technically could be feasible, but he has two main issues with the figure. "One, it's not going to happen all at once," he said. "To save $100 million a year, that means they needed to start, like, yesterday."
The second issue regards re-investment: money set aside to take care of aging equipment, replenish aging software systems and invest in innovation. Shark said that when he sees those things accounted for as opposed to just cutting, he feels more comfortable. "But I don't see any of that mentioned in this report," he said.
West said a huge amount of money could be saved if federal, state and local governments followed the recommendations. "There are great economies of scale to be had," he said. But Shark points to an issue with the potential savings: "Since states are in such dire financial pressure, they will have to come up with new monies as investments for the future — will they be able, politically and financially, to spend more today in order to save for tomorrow?" A good question for all levels of government, indeed.
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