Governments risk long-term technological deficiency

Public cloud offerings are set to increase.

This article first appeared in the June/July 2014 edition of Government News.

By Poh-Ling Lee, Vice President and Executive Partner, Gartner

Digital opportunities and threats have grown to pervade every aspect of business and government. However, government CIOs around the world remain under more pressure than most to cut IT budgets and services, and in Australia they face mounting pressure from the latest Federal Budget, putting their organisations at risk of entering a state of long-term technological deficiency. In Gartner’s annual global survey of Chief Information Officers (CIOs), 288 government CIOs shared their views on a number of issues facing IT organisations in the public sector.

The survey found that, for the government sector:

•             26 per cent of government CIOs anticipate a budget decrease in 2014, with 44 per cent indicating flat budget change

•             33 per cent of IT expenditure is being made outside the authority of the IT organisation

•             almost five per cent of government organisations now have Chief Digital Officers in place

•             15 per cent of respondents have made significant investments in public cloud

•             76 per cent indicating they will change their technology and sourcing approach in the next three years

•             45 per cent of government agencies have found the need and means to move beyond a singular and traditional approach to delivering IT services by operating ‘bimodal IT’ capabilities.

With reducing budget under their control and a substantial portion of organisational IT expenditure decision being made outside their authority, government CIOs are advised to differentiate their high-value IT solutions and products portfolio from the commoditised IT services traditionally associated with in-house IT organisations. To maintain organisational relevance in today’s digital industrial economy, CIOs need to work in collaboration with executive peers to strike the optimal balance of grow and transform (innovation, agility) with running the business (integrity, effectiveness and efficiency).

In line with the overall recommendations made in the Gartner Executive Programs “Taming the Digital Dragon” report which details the CIO survey findings, government CIOs should consider three recommended strategies:

1.            Developing digital leadership

2.            Renovating the core of IT

3.            Building bimodal capability

Developing digital leadership
With organisations needing to become digitally savvy, there is a growing trend to appoint Chief Digital Officers (CDOs). Encouragingly, almost five per cent of government organisations now have CDOs in place, which is slightly behind the 6.6 per cent global business average. This is neither surprising nor unexpected.

In the public sector, it is extremely difficult to make the business case and to obtain sustained funding for any new IT or business C-level position. Yet, in municipalities where the digital acumen of elected officials is high, and economic development is a top priority, there is a willingness to hire the digitally savvy talent needed to support initiatives such as Digital Brisbane or FastFwd in Philadelphia.

The exponential availability of government open data fuels a burgeoning marketplace of services and apps that exploit the unprecedented convergence of citizens, information, business and things. Government CIOs need to sustain this initial burst of innovation, while ensuring accountability for the management of the government’s information assets.

This can be done by establishing clear boundaries among the roles of CIO, CDO and Chief Technology Officer (CTO), even when these duties are the responsibility of one person. Government CIOs should also increase the digital leadership competency of government program executives by featuring successes of digital innovation in similar business services, or by introducing technology showcases, “hackathons” and reverse mentoring.

Renovating the core of IT
The future of digital government depends on its ability to use data analytics and mobile services to engage citizens, employees, and the crowd with compelling and coordinated retail-grade user experiences. Ultimately, smart government will emerge from the pervasive digitalisation of all government business processes and information. Government CIOs recognise the transformative nature of these three levers of innovation, ranking them as the second, third and ninth technology priorities.

Table 1: Technology Focus: Government vs. Global

Government Global
1.       Infrastructure and Data Centre 1.       BI/Analytics
2.       BI/Analytics 2.       Infrastructure and Data Centre
3.       Mobile 3.       Mobile
4.       Cloud 4.       ERP
5.       ERP 5.       Cloud
6.       Security 6.       Networking, Voice and Data Communications
7.       Networking, Voice and Data Communications 7.       Digitalisation/Digital Marketing
8.       Legacy Modernisation 8.       Security
9.       Digitalisation/Digital Marketing 9.       Industry-Specific Applications
10.   Industry-specific applications 10.   CRM
11.   Architecture 11.   Legacy Modernisation
12.   Enterprise Applications 12.   Collaboration

Source: Gartner, March 2014

When compared to the overall global survey results, it is clear that government CIOs have a strong focus on making sure government IT assets are “fit for purpose.”

However, capabilities such as collaboration and customer relationship management — in addition to mobile, business intelligence (BI)/analytics and digitalisation — are crucial to succeed in an era of radical digital disruption. With so many resources now directed at renovating core technologies, governments are at risk of entering a long-term state of technological deficiency if they fail to attract, develop, retain and reward digitally savvy leadership. It’s interesting to note attitudes toward public cloud within government organisations.

Cloud being placed at priority number four (see Table 1) indicates a growing interest in this area.  Heightened concerns among government agencies about security, privacy and requirements to keep data within a jurisdiction may serve to temper public cloud adoption in government when compared to global adoption rate (15 per cent of government versus 25 per cent of global respondents have made significant cloud investments).

Surprisingly, cost and financial considerations are not the highest ranked reason for adopting public cloud offerings.  The survey results indicate that government CIOs see public cloud offerings in software as a service (SaaS), platform as a service (PaaS) and infrastructure as a service (IaaS) as a more agile and innovative way to address their IT service provision responsibilities.

Gartner predicts that by 2017, public cloud offerings will grow to account for more than 25 per cent of government business services in domains other than national defence and security. Government CIOs should consider public cloud offerings as part of a hybrid enterprise infrastructure, application and service portfolio, in order to increase agility, innovation and efficiency.

Around 63 per cent of global and government respondents said they manage a “mixed model” of providers. With 76 per cent of government CIOs reporting that they will change their technology and sourcing approach within the next three years, Gartner concludes that the need for the role of IT broker will significantly increase.

Competition from commercial IT service providers that can offer government program managers fast “time to value” solutions at affordable prices are forcing CIOs to demonstrate they can deliver similar levels of performance and value. Where this is not possible, government CIOs must either explain why paying a premium for subpar IT value is acceptable, or proactively take steps to act as the agency’s designated broker for external IT services.

Government CIOs will be expected to manage IT effectively in an increasingly diverse ecosystem of vendors and solutions by combining their specialised knowledge of government business practices and policies with their executive role, in order to promote architecture standardisation, interoperability, robustness, agility and security.

Building Bimodal Capability
IT leaders are splitting their IT organisations in two, in response to the age-old tension between needing to provide safe, reliable and integrated IT, and being able to pilot and capture value from new technologies and trends at high speed. Gartner calls this division into traditional and nonlinear IT functions ‘bimodal capability’ or ‘two-speed IT’.

The Gartner survey found 45 per cent of government sector respondents had two modes of IT. This is pleasingly consistent with global averages and suggests government agencies have found the need and means to move beyond a singular and traditional approach to delivering IT services to full bimodal capability.

Government CIOs are adjusting to the demands of — and pursuing the opportunities associated with — the Nexus of Forces (social, mobile, cloud, information and analytics) and the Internet of Things (integrating sensor networks, government information networks and technology in products and consumer devices, with enterprise IT). Notable examples include Australia’s Centrelink and Medicare Express Plus mobile apps, the U.K.’s Jobcentre Plus app for iPhone and Android and MyLA311 mobile smartphone app, offered by the City of Los Angeles.

Government CIOs need to build on bimodal capabilities by establishing clear principles on what is required by conventional IT, and on what goes into nonlinear innovations, using default criteria such as need for speed, need to innovate, and need to address high levels of uncertainty. This bimodal capability encompasses and surpasses the responsiveness of agile software development. It includes creating separate multidisciplinary digital innovation teams, working with small businesses and start-ups, and adapting governance and metrics for lightweight, second-stream capability.

It also depends on overhauling IT procurement regulatory constraints, and on streamlining procurement practices.

Poh-Ling Lee Is a Vice President and Executive Partner with Gartner Executive Programs who has been with Gartner for 6 years. Most of her time was spent in Canberra working with Federal Government clients. Now in Singapore, Poh-Ling has more than 26 years of IT industry experience, including nine years at IBM, and 10 years at ATR.

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