Steering Clear of the Austerity Trap

Organizations that retain outmoded legacy systems are headed right for it.

by / November 16, 2005
It's been said that government in the 21st century must navigate the perfect storm of rising expectations and a shrinking tax base.

Faced with demands for better services while expenses continue to grow -- due, in part, to an aging baby boomer population -- public-sector organizations find themselves relying on IT to produce better outcomes more than ever.

The responsibility for achieving this higher performance falls increasingly on the CIO.

Accenture's IT Investing for High Performance study found that government CIOs are, in fact, spending too much time and money maintaining old systems, and not enough time building new ones.

This study -- which polled CIOs from more than 400 Fortune 1000 companies and government organizations in the United States, Europe, Asia and Latin America as part of the management consulting firm's ongoing effort to identify the common underlying behaviors and characteristics of high-performance businesses -- also found that more than half of these government agencies cite the age of their systems as the primary driver, compared to only one-third of their counterparts in the private sector.

Over the last 15 to 20 years, government CIOs have let their systems grow older and patched them as needed, a practice that has been less acceptable on the private side due to mergers, acquisitions and competitive pressures. As a result, government CIOs must now devote much of their time to running and fixing these systems and less time to building new ones. The labor for this is intense and expensive.

Research shows that organizations that retain outmoded legacy systems instead of deploying new technology run the risk of falling into an austerity trap.

Achieving Higher Performance
Furthermore, the study reveals a significant difference between high- and low-performing IT organizations in terms of their level of investing versus maintaining. High performers don't necessarily spend more on IT -- they just do a better job in how they spend their time and money.

The study found that high performers more aggressively adopt newer technology; spend more time building new systems and less time fixing old systems; depend more on performance metrics; and drive more online transactions in customer, supplier and employee interactions.

Government CIOs report that they want to do more, but can't because they are given about 30 percent more work and only 5 percent to 10 percent more budget. As a result, innovation is curbed and productivity undermined.

The study shows that government CIOs have identified a gap between the way they currently manage their technology portfolios and the way they would like to manage them. In fact, 84 percent view best practices from the private sector as valuable or very valuable. Yet within their own organizations, most CIOs report replacing technology on an ad hoc basis, rather than using technology to drive value.

What's driving this is a much bigger call for integration across agencies and levels of government -- federal, state and local. Customers have grown more sophisticated and demanding. They want mobility and security, and they expect everything to work together. As a result, government is shifting toward an outside-in influence on its infrastructures, and many CIOs are not preparing properly for it.

Innovation is largely nonexistent in the public sector. For example, 63 percent of government CIOs said they would follow the market -- as opposed to lead the market or be early adopters -- compared to an average of 53 percent of public- and private-sector CIOs combined.

Online technologies present an opportunity, which the study found has been greatly underused. The public sector has lost the drive to increase online transactions with customers, suppliers and employees.

The study shows that high-performing IT organizations have 33 percent more customer transactions online than average-performing organizations, and twice as many as low-performing IT organizations. Government CIOs, meanwhile, say that 35 percent of their customer and employee transactions could be online, but only 15 percent are presently online.

This is considered a key factor in driving productivity. Automation drives business productivity. For government organizations in particular, moving more services online will increase utilization, which will foster improved citizen satisfaction.

Perhaps because of the nature of government organizations, which often must lock into other systems across agencies, their CIOs report a greater desire for the following, according to Accenture's study, in comparison with total responses:
  • 71 percent desire knowledge management tools to an aggregate of 46 percent;
  • 79 percent desire content management tools to an aggregate of 45 percent;
  • 55 percent desire integration of structured and unstructured data to an aggregate of 42 percent; and
  • 53 percent desire a metadata management catalog to an aggregate of 35 percent.

    Government agencies' historically siloed approaches have hindered their ability to use data for decision-making purposes. A cohesive enterprise system -- which 92 percent of government respondents rated as a valuable benefit -- would alleviate that problem.

    Furthermore, research shows that high-performing IT organizations are 10 times more likely than low performers to have access to key metrics. This kind of information gives an IT organization more confidence in knowing where to invest their resources.

    Government organizations must contend with the harsh realities of improving service quality and personalizing the way citizens experience government. And they must simultaneously reduce the cost of service delivery with limited resources. Traditionally this creates a dilemma between whether to raise taxes to improve services, or lower costs and quality.

    It doesn't have to be that way. Public-sector CIOs who avoid the austerity trap and use technology as a driver for achieving high performance will generate greater productivity -- and better services -- in a cost-effective manner.

    Martin Cole Contributing Writer