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IT Budgets Are Shrinking: Here’s How to Plan Responsibly

The pandemic is having real impacts on the government budget picture. Here’s what technology leaders should be doing now to make smart decisions today and retain the ability to innovate in the future.

by Teri Takai and Phil Bertolini / November 12, 2020
Shutterstock/metamorworks

Have you ever gone to a conference where the speaker asks what you would do if you had unlimited resources? We all know that unlimited resources don't exist for government. In fact, the pandemic has imposed serious financial constraints on already stretched resources. The competition for funding has always been fierce in government, but now it is more like a cage match where two people enter and only one will leave. Please excuse our Mad Max reference but it sure feels appropriate now. Our recently released guide titled Navigating the Next Normal touched on a number of issues that directly relate to the finances of government. These budget struggles that just about everyone in government is experiencing today show no signs of going away anytime soon.

Our discussions with government technology leaders across the country have given us a unique perspective on your struggles. Technology plans have been flipped upside down due to the way legacy technologies were exposed during the pandemic. New technologies were implemented and are here to stay. Technology decisions were made to meet the emerging demand and now need to be reviewed for their long-term viability. The technology priority shift will force direct competition with every other resource need government has on their books. Be ready to manage these priorities in the near future. 

What Do You Have?

Now is the time to examine your existing plans to determine if the priority shifts have affected current initiatives, causing them to be continued, stalled or even stopped altogether. Reviewing existing project and program funding will help determine if projected ongoing costs should be used for other priorities. Analyzing sunk costs will be a primary consideration for whether to move forward with a project. The distinctions between “have to haves” versus “nice to haves” are more important today than they ever have been. But these decisions can not be made from a technology viewpoint alone. Agency and department partners are crucial collaborators in this process.

Now is also the time to do a thorough review of your current infrastructure costs to determine if funds can be optimized in order to fund other priorities. A thorough review of your contracts with your partners can yield some innovative approaches. In many cases, there are opportunities to optimize costs by looking at new ways to move forward, like moving faster to the cloud. Another area to analyze is your deferred maintenance for just about everything you have. Delaying or deferring these costs could benefit current financial needs but great care should be exercised to not push this type of maintenance for too long which could create more problems if left unchecked. Kicking the can down the road helps in the short term but in the long term, it can be disastrous.

Finally, assessing the capabilities of your team is extremely important now. Ensuring you have the right resources internally balanced against what you need from partners is an excellent way to manage costs. It also helps build a roadmap to developing needed skill sets on your team. No one wants to be in the business of cutting heads to save dollars, but you can maximize your human resources to operationalize your new priorities. While deferring hiring or reducing headcount provides short term savings, it can lead to a talent gap that will impact your organization far into the future.

What Do You Need?

The future of government technology is very bright, and leadership has an enhanced perception of what technology can do for the future. Understanding leadership priorities is very important as you define the projects and programs that will go forward.

Now is the time to continue your focus on working with the agencies and departments to ensure that technology decisions are made with the business of government in mind. Engage with your finance team to build strong business cases and return on investment analyses to compete for scarce resources. Explore alternate approaches to the funding models in use today. Engage with the agencies and departments so that they understand their stake in the financial decisions around technology that must be made moving forward.

Optimizing your infrastructure will gain great financial benefits as you move forward. Moving to as-a-service applications, platforms and infrastructure will enable a flexibility and agility while also keeping costs under control. The shift between capital costs and operating costs will change the financial viewpoint of your technologies with your finance team. Strong business cases will help give a forward-looking financial analysis a fighting chance.

One last but perhaps most important thought to share is that now is the right time to invest in your team, both internal and external. Enhancing skill sets through training and utilizing partners to build up skill sets will be dollars well spent. Your people are your No. 1 resource. Build them up for a better future.

As one of our country’s Founding Fathers Benjamin Franklin said: "An investment in knowledge pays the best interest."

The opportunities are here to adjust your plans, your relationships and your financial needs to ensure you can remain innovative and ready for the future. Invest in knowledge and reap the rewards. We are here to help you.

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