dministration officials are pushing agencies to collaborate more and to think more strategically about their operations and programs. But a recent study suggests that collaboration and a longer view will remain elusive.
In "Overcoming Budget Barriers: Funding IT Projects in the Public Sector," Jerry Mechling of Harvard University's Kennedy School of Government and associate Victoria Sweeney examine why government agencies don't seem to get much of a bang for their information technology bucks.
Their conclusion: The budget system itself is to blame. "Traditional budget processes focus on one organization's next year of spending, causing agencies to overlook multi-year and multi-agency opportunities," the researchers say. Furthermore, "government budgeting is characterized by near-term risk avoidance," and excessive reliance on tax revenues forces society to pay for services that benefit only a narrow segment of the public.
As part of their research, Mechling and Sweeney asked about 100 public- and private-sector executives-about half from federal agencies-to evaluate a dozen approaches. Three got the highest scores for their potential value to society:
- Investments in the IT infrastructure, up front. "Such investments could improve processes in the near term while also creating more shareable data and networks for the future," the report says.
- Financing for applications that cross agency and intergovernmental boundaries. "Cross-boundary investments can present particular challenges to coordination and budgeting, however," Mechling and Sweeney say.
- Performance contracting, in which contractors are paid when they deliver desired results, rather than just supplying hardware, software or networks. Besides giving contractors a strong incentive to make their systems work, performance contracts can be self-financing. The contractor can be paid from cost savings or recaptured revenues.
Asked to rate the difficulty of implementing these options, the workshop participants said cross-boundary investments would be the most difficult to implement, perhaps requiring new legislation or new organizations if such programs cross jurisdictional borders. In view of those difficulties, the report suggests that performance contracting and infrastructure investments will be more feasible and fruitful.
The executives predicted that their agencies will spend more on IT in coming years. Budgets will remain tight, they said, but the scarcity of funds probably will force agencies to fall back on technology. Alternative IT funding approaches, such as revolving funds, user charges and performance contracting, "are greatly underutilized," the report says.
Without adequate IT funding, it adds, agencies may miss major opportunities to become more effective or efficient. On the other hand, the report acknowledges that agencies at all levels spend, altogether, roughly $60 billion on IT every year--$240 for each man, woman and child in the nation.
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