Make the case

The list of agency needs has always been long, but with tighter budgets and new high-profile homeland security projects on the fast track, information technology officials are finding the competition for scarce resources heating up.

Managers are finding that it's no longer enough to request money for a major IT project. Today, budget requests must be backed up by effective business cases. Although the goal seems simple — the business case is designed to ensure that agency officials know exactly how each investment will improve their agency's ability to perform its mission — achieving it has proven more difficult.

Three years after business cases became a required part of the budget process, agency officials are still struggling to master some of the most basic steps to building a good business case, experts agree.

However, it's a skill that must be honed. Under a policy backed by President Bush, the Office of Management and Budget cannot release money for a project that does not have an effective business case.

The minutiae of a business case are where agencies stumble. They have struggled with technical details, such as setting incremental cost, performance and schedule goals, and with big-picture issues, such as determining how to deliver services. And there are still common trouble areas across agencies.

"No one has gotten to nirvana yet," said Bill McVay, who led OMB's business case oversight for two years, most recently as deputy branch chief for information IT and policy in the Office of E-Government and IT before leaving for a position in the private sector May 30.

While nirvana may be out of reach for now, OMB officials say agencies must come closer to perfection so that they can get more bang for each IT buck.

Money at Risk

The IT business case, more technically known as Exhibit 300 of an agency's overall budget request, is a key element in the push toward performance-based budgeting, which links a program's funding to how well it does.

There are guidelines available to help agencies draft their business cases. Information and planning that must be included in a business case and what agencies are graded on are laid out explicitly in the Exhibit 300 guidance for Circular A-11, the policy that OMB updates annually on all investments.

The fiscal 2004 budget, submitted in February, was the first budget to include the new business case process.

Regardless, more than 750 business cases, representing almost $21 billion of the $59 billion in federal IT investments, did not satisfy the requirements in that guidance and were placed on an "at risk" list.

Agencies have been working to fix the problems. Thus far, about 15 percent of those IT projects deemed at risk have been moved off the list, said Mark Forman, administrator of OMB's Office of E-Government and IT.

And hundreds more business cases are now being re- evaluated, he said. Many of those also look like they may have improved enough to pass the requirements, he said.

Some agency projects now off the list required only a finished plan for performing security certification and accreditation on the systems involved. This area, in particular, is ripe for improvement during the fiscal 2005 budget process largely because of the increased details required by the Government Information Security Reform Act of 2000 and its follow-on, the Federal Information Security Management Act of 2002.

Those laws require agencies to do much more up-front planning for security and develop a comprehensive plan to correct any deficiencies.

Other agencies re-worked entire business cases. Linking the business cases to the agency enterprise architecture and the federal enterprise architecture was one of the biggest enhancements, McVay said.

By making the link to their own enterprise architectures, agencies show that they are really thinking long-term about each investment. Using the federal enterprise architecture helps move the government toward managing the entire federal IT investment as a single plan, so money spent by one agency can support another's needs.

"It was amazing to see the number of business cases that tried to map to version one of the business reference model," McVay said. The business reference model helps categorize federal programs across agencies by line of business and is one of five OMB is developing for the federal enterprise architecture.

This will be an area of increased importance in the fiscal 2005 process because the performance, service component and technical reference models will also soon be available for agencies to work with, said Dan Chenok, branch chief for information policy and technology in OMB's e-government office.

If there is any existing solution — be it business- or technology-based — identified in the reference models that matches a planned investment at an agency, the business case should demonstrate that the agency has considered that link, he said.

"We are looking very definitely to see, have you taken a cross-agency enterprise architecture view?" Chenok said May 20 at the Federation of Government Information Processing Councils' Management of Change conference in New Orleans.

But many fundamental changes still must be made so these improvements are more than just one-time efforts to please OMB, experts say.

Planning Investments, Not IT

One change — the requirement that agencies integrate IT business cases with the capital planning process — could have the most far-reaching impact for agencies, experts said.

Once agency officials understand that all investments must be managed with milestones and performance goals and why those projects must be weighed against other agency investments, then IT stops being just hardware and software, Forman said.

This is no small task because so many agencies are still trying to create that link, said Bruce McConnell, president of McConnell International LLC and former chief of information policy and technology at OMB.

"The IT portfolio is the point of the spear on getting a capital planning process in place," he said.

Part of the challenge is that agencies are still struggling to translate how IT really impacts their missions and their delivery of services, McConnell said, and they will continue to do so because of "a lack of capacity in the IT community in terms of being able to explain this stuff in English."

Having a mature capital planning process in place can move agency IT programs forward, said Scott Hastings, chief information officer of the Bureau of Immigration and Customs Enforcement at the Homeland Security Department.

"It's hard to do these 300s in total isolation, which is where we've been for so long," he said. "It's been thought of as an IT process instead of an investment process."

Fully understanding what OMB has outlined in the A-11 guidance is the best way to lay a foundation for a good business case development process. "It's doing your homework," said Debra Stouffer, vice president of strategic consulting services at DigitalNet Government Solutions, at the Management of Change conference May 20.

Stouffer, who recently moved to DigitalNet after serving as chief technology officer at the Environmental Protection Agency, led the capital planning and investment management team for the agency's fiscal 2004 budget request. The team developed a step-by-step framework for creating a business case, laying out a timeline for everything from the identification of a requirement to the revision of a statement of work.

The EPA was one of only two agencies to have all of its business cases approved by OMB the first time through.

Joint Business Cases

Another issue for many agencies, particularly for those that were shifted into the Homeland Security Department, will be creating more joint business cases for future solutions out of existing investments based on agency enterprise architectures and the federal enterprise architecture, Hastings said.

"We're not quite sure how you fold things in, how it will come out at the other end," he said.

While it is the area that agencies have the least experience in, the joint investment business cases submitted to OMB for fiscal 2004 were generally among the best, McVay said. For some of those, the detail and depth of planning were the result of agencies having to work so hard on them.

"There's something about bringing together the team at the beginning...it's almost to the point where those [business cases] that are collaborative, even if they're not completely there, you can see where the plan is going," McVay said.

Bringing together people who initially don't speak the same agency language to work on a complex business case probably helps in the long run, McConnell said.

"When you're doing a joint business case, you have more of a requirement to explain and understand the mission you are trying to achieve," he said. "A side benefit of these joint business cases is that you build the capacity" to really make that link between investment and mission.

Collaboration needs to be the first thing that agencies look at when they determine a new investment is needed, Stouffer said. Often, there is already a project that can be expanded or enhanced to serve a larger purpose, not just in other agencies, but also within an agency or department, she said.

And documentation of the thought process behind whether to collaborate or launch a separate project is a key part of a business case, if only to demonstrate to OMB that the option was considered and rejected for a reason, she said.

Working the System

Many agencies are taking advantage of the A-11 training that OMB offers so officials can learn what is expected. Almost 2,000 people attended the training session held at the beginning of May, Forman said, adding that IT was not the only area covered. People from the financial and procurement offices also attended, and the largest group was project managers, he said.

The training is important, but working directly with OMB on an individual basis also has advantages. The business cases that went through the 2004 process with the least amount of tweaking were from groups that "took control of the process last summer," McVay said. These groups brought their draft business cases to OMB and worked with officials to make sure they were ready to submit in September, he said.

In those groups, "the CIO and the [chief financial officer] were basically linked at the hip...and they made the process real internally," McVay said. "Their business cases are only going to be as mature as their capital planning and investment control process and the budget/ performance integration."

Turning to OMB, however, is not always easy. Sometimes officials within an agency — in management and on the front line — are unwilling to admit that their process for dealing with the IT budget is not the best, said one civilian e-government official who asked not to be identified.

Some of the biggest objections are that the process seems to add a lot of work that wasn't necessary before and that it takes leaders away from daily tasks. But what needs to be explained in the long run is that all of the extra work will ensure that daily tasks actually help the agency and its users, the official said.

In the draft fiscal 2005 guidance, up-front planning with OMB is not optional. In that guidance, agencies must bring their draft business cases to the budget office in the summer, primarily to allow officials to get a head start on looking for opportunities for cross-agency collaboration, Forman said.

OMB has also been encouraging agencies to rely on experts in industry — whether they are already contractors with the agency or a separate source — who have much more experience with building business cases. This path can offer many advantages, but it also comes with challenges, such as making sure there is no conflict of interest, experts say. (See "OMB: Ask industry for a helping hand," Page 22.)

In the end, the push to improve the business cases will likely come down to money. No one wants to be the agency that lost money at the end of the year because it was not allowed to spend it.

OMB has already found that the nervousness in mid-summer about unspent funding provides a big kick, Forman said.

The spring guidance for the fiscal 2005 process, which highlights the need for every agency to create and manage a departmentwide consolidated business case for office automation, infrastructure and telecommunications, may also provide an incentive. If agencies come to OMB with a good justification for how an individual business case fits, some fiscal 2004 investments could be shifted into the consolidated fiscal 2005 business case, McVay said.

The most important thing for agencies to keep in mind is that the entire process is about using technology to support changes in how the government performs its mission of service to citizens, officials said.

"Business cases are about managing technology and managing transformation," OMB's Chenok said.

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Low-hanging fruit

The Office of Management and Budget has identified three areas where agencies are likely to make the most improvement in developing business cases in the fiscal 2005 budget cycle:

1. Developing more joint investments by building on existing work at other agencies and identifying areas for new joint solutions.

2. Setting baselines for investments using real cost, goals and schedule information, which will lead to better metrics for the future.

3. Strengthening information security management based on plans laid out in annual reports generated under the Government Information Security Reform Act of 2000 and the Federal Information Security Management Act of 2002.