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Information Technology News
OMB launches PortfolioStat to reduce commodity IT spending
Monday - 4/2/2012, 5:22am EDT
The new PortfolioStat initiative will give OMB and agency chief information officers a more complete view of where the money is going and opportunities to consolidate buying.
Steven VanRoekel, the federal CIO, said Friday his office will conduct sessions with agencies, similar to TechStat and CyberStat, to look at data to better understand where agencies are spending money on IT.
He said PortfolioStat builds on the CIO Authorities memo issued by OMB in August.
Steven VanRoekel, chief information officer, OMB
Under PortfolioStat, VanRoekel said OMB will ensure accountability across the government by making investment review boards focus on programs and not individual investments.
In the past, investment review boards were more budget focused. VanRoekel said PortfolioStat will impact the 2014 budget cycle.
"By June 15, agencies will complete a high-level survey of agency IT portfolio status and a bureau level information request for specific types of commodity IT investments that will used to baseline the maturity of agency portfolios," VanRoekel wrote in a blog post Friday. "Then, using the portfolio data gathered combined with other data available at the bureau and agency level, COOs will establish targets for commodity IT spending reductions and deadlines for meeting those targets; illustrate how investments within the IT portfolio align with the agency's mission and business functions; establish criteria for identifying wasteful, 'low-value,' or duplicative investments; and improve governance and program management utilizing best practices and, where possible, benchmarks."
VanRoekel and acting OMB Director Jeff Zients signed a memo Friday as well detailing the steps they must take to implement the portfolio-based approach.
OMB wants agencies to:
- Submit a draft plan to consolidate commodity IT by June 29
- Hold their first PortfolioStat session by July 31
- Finalize their commodity IT consolidation plans by Aug. 31
- Transition two commodity IT areas to shared services or consolidated buying through strategic sourcing by Dec. 31.
- Document lessons learned, which OMB will put together in a document and share with agencies by Feb. 2013.
OMB announced the PortfolioStat approach as part of the 2013 IT budget passback.
Several already are heading down a path similar to PortfolioStat. One of the most well-known examples is the Veterans Affairs Department's Program Management Accountability System (PMAS) initiative.
VA's PMAS shows how PortfolioStat could work
Under PMAS, every VA IT project is held to 3-to-6 month milestones and officials review progress reports regularly to ensure programs don't go off track.
Roger Baker, the VA's assistant secretary for information and technology and the CIO, said this approach works, in part, because he has full control over the IT budget.
Roger Baker, assistant secretary for information and technology and CIO, VA
"We have in our ruthless reduction task force about 25 things along these lines-the single CPU policy, the consolidation of mobile telephone polices for services," he said. "They are all the same sort of thing that your private sector CIO to be doing for your budget. In a consolidated appropriation, you start to see CIOs who start to look at that way. That is what the PortfolioStat will start to do when you start to look at the distributed ones that way."
Baker said he put in place a policy for every computer to go to sleep at 7 p.m. and wake up at 7 a.m. because he can see every device on the network and know how much power they are using when no one is at the office.
The department expects to save as much as $24 million a year in electricity that the computers are no longer using.
In addition to power savings, VA expects to save about $100 million a year by consolidating software licenses and another $200 million annually by consolidating the number of printers in offices from taking a portfolio approach to spending.
Interior centralizing commodity IT
The Interior Department is taking a different, but aggressive approach to reigning in IT spending through something similar to PortfolioStat.
Secretary Ken Salazar created one departmentwide CIO in December 2010 and then the bureau level CIOs became assistant director for information resources (ADIR).
David Hayes, deputy secretary, Interior Department
"We've decided to do this by ripping off the Band-Aid," Hayes said. "Within the last several weeks, we've had meeting with everyone of our bureau directors and [talked about] what we are looking to centralize and what we are looking to keep in the bureaus. They need some mission-specific software and capability still at the bureau level, but there is a lot of redundancy at the major level. I talked last time, we have one server for every seven employees at our department, for example."
The move to enterprisewide functions also will affect Interior employees who work on IT.
Hayes said they are looking at every IT employee and decided if they will work in the new centralized office or remain at the bureau level.
Interior also is managing its investment review program at the department level and looking at it more closely than ever before.
Connected to PortfolioStat are vendor management organizations (VMOs). VanRoekel announced last November Interior, VA, the Education Department and the Patent and Trademark Office would test this concept.
VanRoekel said using the data from PortfolioStat sessions, VMOs can help find areas of duplication or wasteful spending.
VMO saves Patent and Trademark millions
At the PTO, for example, the VMO now is the central purchasing office for commodity IT.
"The ability to modify contracts in order to track efficiencies through time and by individual has also been transformative for us. It has changed us from an approach where bills came in and said things like, 'We did something for a month and here's how much you owe us,' which is very, very difficult to then pry open and figure out how you audit it, how you ensure the work was done and you got value for it," said PTO director David Kappos. "Now with the VMO process, we literally know what every person on that contract did, every day, even down to the hour so we can tell the activity they were working on and the productivity we got from it. It makes me, and our CIO, feel more confident about the value we are getting for our spend."
He added the VMP also helped PTO reduce its spending on commercial software by $1.8 million per year, but more significantly, reduced the cost to maintain that software by $52 million annually.
Kappos said the agency was spending so much on maintenance that it was unable to do upgrades to mission systems.
PTO is hoping to reduce the amount it spends on maintenance to 40 percent of its entire IT budget. Kappos said it started at 84 percent, and now it's down to 68 percent.
The General Services Administration also is seeing savings or cost avoidance, through its VMO.
Casey Coleman, CIO, GSA
"The VMO has a companion team in the contracting organization," she said. "We've staffed that up and added additional contracting officers. We are now linking that commodity IT function, which over five years is $250 million, so it's a significant spend for us, to the vendor management organization. The VMO will be responsible for managing that contract, overseeing its progress and managing that vendor team by making sure at the project level we're getting the right kind of staff and we are not overpaying for those skills."
Coleman said the VMO, combined with the portfolio approach, is helping GSA avoid spending $3 million to upgrade its IT service desk. Instead, she said GSA will move those services to the cloud for a few hundred thousand dollars.
VanRoekel said PortfolioStat and VMOS are significant culture shifts. He said the goal is to create stronger partnerships between program or mission owner and the CIO's office. The CIO can't be seen as just a service provider.
VanRoekel said having people see IT as a strategic asset is the government's biggest challenge, but agencies are making progress.
Part of that culture shift, OMB is developing guidance to change the way mission software is built so it's done in a more modular way, VanRoekel said.