IT Does Matter
The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.
By Craig Orgeron
September 26, 20
At times, the disparity between the public and private sectors is stark. The private sector’s quest for market dominance has a definitive focus on maximizing profit for shareholders. Within the public sector, the sentiment is more often on cost control, or on minimizing what is spent to deliver services to citizens, across a wide span ranging from public safety and security to the issuance of birth and death certificates. Yet, in each sector, information technology (IT) plays a vital role in driving innovation to potentially maximize profit as well as reduce cost. Indeed, is IT a strategic tool for innovation, or a cost center to be minimized?
It was in a Harvard Business Review article by Nicholas Carr, which pondered that very question. In “IT Doesn’t Matter” Carr argues while “IT’s potency and ubiquity have increased” the core functions of IT have rather been transformed into “commodity factors of production.” The central theme of Carr’s argument, originally published in 2003, suggests as the availability of IT increased and cost decreased, ubiquity rendered this strategic resource “invisible.” Leveraging examples of a national rail network and electrification, Carr argues that IT commoditization is the harbinger of “greater homogenization” of IT functionality. Lastly, Carr offers a path forward by stating, “when a resource becomes essential to competition but inconsequential to strategy, the risks it creates become more important than the advantages it provides.”
Quite possibly, Carr’s rules for IT management – spend less; follow, don’t lead; and focus on vulnerabilities, not opportunities – can speak to the public sectors approach to IT. In addition, an interpretation of Carr may warrant an overarching generalization that if IT cannot forge innovation, then it must be skillfully governed to deliver optimal results. Yet, there is much evidence to the contrary. In a recent article by Jonathan White, appearing in Government Procurement, a significant gap exists in the transparency of IT spending in public organizations. White notes that “both spend value and transaction counts on information technology purchases rank in the top 5 out of 30 across every type of public sector organization.” Yet, data classification errors during the procurement process can “contribute to the disconnect between IT spend figures based on general ledger codes and actual IT spend.” Presuming that Carr’s first management dictum is a fair barometer for effectively leveraging the power of IT, the rise of Shadow IT – IT spend on hardware, software and services without oversight – in the age of commoditization is potentially costing the public agency more for hardware, software and services. In one example cited by White, a K-12 school district discovered a difference of almost $20 million between spend on IT between the general ledger code and the actual outlay.
And there is a lot of money to spend. As reported by Government Technology, IT spending by public agencies at the state and local level was the topic of a forecasting event held by the Center for Digital Government last spring. Reporting by Noelle Knell noted that “total IT spending across state and local government is projected at $101.3 billion, which represents growth of 1.4 percent over 2016.” The article documented spending projections across key verticals: Health and Human Services – $26.4 billion; Education – $23 billion; Transportation – $10.3 billion; Finance and Administration – $8.7 billion; Public Safety and Justice – $7.6 billion; Public Works – $7.6 billion; and Natural Resources and Environmental – $7.4 billion. In addition, cities are expected to spend $30.9 billion on IT in 2017, with county governments expected to spend $22 billion on IT in 2017.
If Carr’s proposition that commoditized IT doesn’t represent an opportunity to innovate, then the portfolio of IT assets and services must be overseen with diligence, especially given the vast sums of taxpayer dollars expended on IT across state and local government. Yet, in many cases, public sector agencies at all levels have bureaucratic tendencies which foster siloed methods for IT budgeting and operations. Traditional IT governance models have for many decades relied on incremental budgeting processes models that valued the procurement and ownership of technical infrastructure, an outdated strategy for IT investment. As noted in the forecasting metrics supplied by Government Technology, state and local public sector agencies are investing in cloud computing technologies – highly commoditized, “infrastructural technologies.” Carr points to the potentially “greatest IT risk” facing organizations – “overspending.” Indeed, even with the rapid commoditization of computing platforms delivered with cloud service offerings, and with decreasing costs, a key function for public agencies will be the ability to “separate essential investments from the ones that are unnecessary.”
For state and local governments, the optimization of commodity technology components, including data centers, servers and storage, offers potential reductions in acquisition and continuing maintenance costs. The greater challenge for the public sector involves bringing “more rigor in evaluating expected returns from systems investments.” Indeed, with the billions reported to be spent by state and local governments on IT, and with the rapid rise of commodity computing, as well as sourcing alternatives and partnerships – as noted by Carr – “there’s no excuse for waste and sloppiness.”
Author: Dr. Orgeron currently serves as the Executive Director of the Mississippi Department of Information Technology Services (ITS) and Chief Information Officer for the State of Mississippi. [email protected]
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IT Does Matter
The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.
By Craig Orgeron
September 26, 20
At times, the disparity between the public and private sectors is stark. The private sector’s quest for market dominance has a definitive focus on maximizing profit for shareholders. Within the public sector, the sentiment is more often on cost control, or on minimizing what is spent to deliver services to citizens, across a wide span ranging from public safety and security to the issuance of birth and death certificates. Yet, in each sector, information technology (IT) plays a vital role in driving innovation to potentially maximize profit as well as reduce cost. Indeed, is IT a strategic tool for innovation, or a cost center to be minimized?
It was in a Harvard Business Review article by Nicholas Carr, which pondered that very question. In “IT Doesn’t Matter” Carr argues while “IT’s potency and ubiquity have increased” the core functions of IT have rather been transformed into “commodity factors of production.” The central theme of Carr’s argument, originally published in 2003, suggests as the availability of IT increased and cost decreased, ubiquity rendered this strategic resource “invisible.” Leveraging examples of a national rail network and electrification, Carr argues that IT commoditization is the harbinger of “greater homogenization” of IT functionality. Lastly, Carr offers a path forward by stating, “when a resource becomes essential to competition but inconsequential to strategy, the risks it creates become more important than the advantages it provides.”
Quite possibly, Carr’s rules for IT management – spend less; follow, don’t lead; and focus on vulnerabilities, not opportunities – can speak to the public sectors approach to IT. In addition, an interpretation of Carr may warrant an overarching generalization that if IT cannot forge innovation, then it must be skillfully governed to deliver optimal results. Yet, there is much evidence to the contrary. In a recent article by Jonathan White, appearing in Government Procurement, a significant gap exists in the transparency of IT spending in public organizations. White notes that “both spend value and transaction counts on information technology purchases rank in the top 5 out of 30 across every type of public sector organization.” Yet, data classification errors during the procurement process can “contribute to the disconnect between IT spend figures based on general ledger codes and actual IT spend.” Presuming that Carr’s first management dictum is a fair barometer for effectively leveraging the power of IT, the rise of Shadow IT – IT spend on hardware, software and services without oversight – in the age of commoditization is potentially costing the public agency more for hardware, software and services. In one example cited by White, a K-12 school district discovered a difference of almost $20 million between spend on IT between the general ledger code and the actual outlay.
And there is a lot of money to spend. As reported by Government Technology, IT spending by public agencies at the state and local level was the topic of a forecasting event held by the Center for Digital Government last spring. Reporting by Noelle Knell noted that “total IT spending across state and local government is projected at $101.3 billion, which represents growth of 1.4 percent over 2016.” The article documented spending projections across key verticals: Health and Human Services – $26.4 billion; Education – $23 billion; Transportation – $10.3 billion; Finance and Administration – $8.7 billion; Public Safety and Justice – $7.6 billion; Public Works – $7.6 billion; and Natural Resources and Environmental – $7.4 billion. In addition, cities are expected to spend $30.9 billion on IT in 2017, with county governments expected to spend $22 billion on IT in 2017.
If Carr’s proposition that commoditized IT doesn’t represent an opportunity to innovate, then the portfolio of IT assets and services must be overseen with diligence, especially given the vast sums of taxpayer dollars expended on IT across state and local government. Yet, in many cases, public sector agencies at all levels have bureaucratic tendencies which foster siloed methods for IT budgeting and operations. Traditional IT governance models have for many decades relied on incremental budgeting processes models that valued the procurement and ownership of technical infrastructure, an outdated strategy for IT investment. As noted in the forecasting metrics supplied by Government Technology, state and local public sector agencies are investing in cloud computing technologies – highly commoditized, “infrastructural technologies.” Carr points to the potentially “greatest IT risk” facing organizations – “overspending.” Indeed, even with the rapid commoditization of computing platforms delivered with cloud service offerings, and with decreasing costs, a key function for public agencies will be the ability to “separate essential investments from the ones that are unnecessary.”
For state and local governments, the optimization of commodity technology components, including data centers, servers and storage, offers potential reductions in acquisition and continuing maintenance costs. The greater challenge for the public sector involves bringing “more rigor in evaluating expected returns from systems investments.” Indeed, with the billions reported to be spent by state and local governments on IT, and with the rapid rise of commodity computing, as well as sourcing alternatives and partnerships – as noted by Carr – “there’s no excuse for waste and sloppiness.”
Author: Dr. Orgeron currently serves as the Executive Director of the Mississippi Department of Information Technology Services (ITS) and Chief Information Officer for the State of Mississippi. [email protected]
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