Government vs. Private IT Spending

January 7, 2010

The government is less efficient than the private sector, and technology investment is a prime example. A column this week on the federal CIO, Vivek Kundra, by InformationWeek’s Bob Evans illustrates this reality. Evans begins his column with some well-placed sarcasm: 

So did you hear the one about the CIO with the 2009 IT budget of $71 billion, which breaks down to $200 million per day? He decided that for any year—but particularly for the gut-wrenching economic climate of 2009—such a number was totally unsustainable, indefensible, and just plain wrong.
But instead of hacking into that wasteful excess, this CIO padded the flab with another $5 billion, amounting to an increase of 7% and pushing the grand total to $76 billion! And hey, c’mon now, knock off the smart-aleck comments—how’s a CIO supposed to get by on $200 million a day??
Let me ask you folks out there in the real world: anybody’s IT budget go up at all last year? 
Later he writes:
I refuse to believe that Kundra’s strategic objectives would be rendered unreachable if each and every day he had only $137 million to spend instead of $200 million.
And I’m willingly suspending that belief because so many other CIOs—you people out there across every industry and every sized company, regardless of unique competitive challenges or any other external factors—did exactly that in the past year: you chopped your budgets severely and then got together with your teams and figured out better ways to do things. Not more-expensive ways of doing things, but better.
The crux of Evans article is that businesses are encouraged to invest in IT efficiently by the bottom-line, but the federal government can keep on throwing money around even during recessions. The government never has to tighten it belt. One upshot is that federal technology projects at the IRS, NASA, FAA, and many other agencies are always running over budget and behind schedule.


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