How government IT organisations can stop acting like a cost centre

government IT organisations
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Many government IT organisations are still perceived purely as cost centres. Here, Cathleen Blanton, Gartner Research VP, argues that government CIOs must go on the offensive to lead digital transformation by focusing on the value IT delivers

The pandemic has demonstrated the value of IT, allowing business to carry on as usual – and pointing to an increasing need for government CIOs to double-down on the value IT delivers.

Government IT has long been perceived as a cost centre, putting them at the top of the list for government budget cuts. Yet, for government CIOs to lead digital transformation across organisations, they will need to overcome this common misconception. At the same time, they will need to demonstrate they have good business value and financial stewardship to benchmark their IT costs and improve government efficiency.

For this to happen, government CIOs will need to address several challenges. Those include assessing and addressing IT cost-saving measures, engaging with business relationship managers to educate leadership on the value of IT capabilities, and establishing ongoing IT cost optimisation practices by collaborating with business counterparts.

Assess & address IT cost saving

Funding constraints pose a unique challenge for government CIOs and are often getting in the way of cost optimisation. Due to its complex, hierarchical, and federated structure, governmental budget dynamics end up hindering efforts to recognise savings across federated organisations.

However, government CIOs can address this by exploring IT cost optimisation ideas with organisations above and below the hierarchy. For example, it might make sense for government IT to embrace the cloud model, where each department only pays for what it uses based on the number of users.

By consolidating enterprise data centres, CIOs or IT leaders can then help position IT services at the optimal level for achieving economies of scale. They may also outsource IT services or capabilities to integrators or cloud providers to change the cost structure.

It’s worth bearing in mind that while it might be tempting to prioritise these opportunities by ROI, other factors must be considered when ranking. Some opportunities are more likely to achieve hard savings which can be returned to the budget, while others will take longer to realise.

Establish a financial transparency roadmap

IT funding within government is budgeted independently, and it’s often treated as autonomous from the IT department’s business and mission costs. This inevitably leaves the department running dry – particularly in times of austerity.

Government CIOs need to collaborate with business relationship managers, who will be their biggest allies for explaining the value of IT investments to government leaders and establish a financial transparency roadmap on budgeting. These can include benchmarking IT financial data to prove IT is following industry best practices for delivering services and finding better ways to show the mission and business value IT provides to every employee, process, and citizen.

In this relationship, government executives will be swayed to see the value of IT investments, and no longer see them as cost centres, as they’ll be able to see how efficiently IT funding is spent.

Establish ongoing IT cost optimisation practices and values

Government budgets will always go through extremes – from fat spending to cost-cutting fire drills, due to the nature of how economies and government budgets naturally operate.

However, IT organisations can always overcome this uncertainty. They can focus on the overall cost-benefit-risk picture and respond to budget windfalls and shortfalls by optimising investments against that picture.

To achieve this, government CIOs can integrate cost-saving values and practices into business as usual by assessing their organisation’s ability to optimise costs strategically and factor in any constraints or challenges to the cost optimisation approach.

They can also determine what an ideal IT run cost should look like by helping organisations to benchmark their costs. For example, CIOs can identify which areas of IT delivery can be cut, which are running cost-effectively, and which might be underfunded and running into technical debt.

In short, for government IT to stop acting like a cost centre – it will need to assess and address its IT cost savings, educate leadership on the value of IT capabilities, and establish IT cost optimisation practices and values. Only then will government executive leaders see the value of IT and unlock its full potential in driving digital transformation across governmental agencies.


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