New (fiscal) year resolution: Get your IT budget fit

It’s not easy balancing budgets these days, and no one knows that better than federal information technology executives who are faced with frozen or declining funds. We asked a few of them for their best advice on saving money in fiscal 2007, based on how they dealt with budget constraints last year.

U.S. Postal Service
Any chief information officer who manages wisely has already harvested the low-hanging fruit, said Robert Otto, vice president of IT and chief technology officer at the U.S. Postal Service. As a self-financing agency that receives no congressional appropriations, USPS has budget differences that set it apart from other agencies. But like them, USPS must find new ways to cut IT costs.

Otto said he will look for savings in the agency’s desktop PC and server replacement policy. USPS has about 250,000 PCs, and standard industry practice is to replace computers and servers every three years. But Otto now questions that practice. With the processing and storage capacity and reliability of today’s computers, a three-year life cycle makes less sense than it once did, he said.

In 2006, USPS saved $30 million by not replacing its 3-year-old servers and PCs. With the agency beginning work on a fiscal 2007 budget, he has started thinking about all those 4-year-old PCs. “If I can take them to five years, I can save — again — millions of dollars in avoiding a refresh,” he said.

Environmental Protection Agency
Linda Travers, acting assistant administrator and CIO at the Environmental Protection Agency’s Office of Environmental Information, said the EPA began reaping savings from IT investments in late 2004.

Her office deployed a managed desktop PC program with centralized support and service for computers from acquisition to disposal. The approach decreases the cost of in-house support staff for a savings of about $1.5 million a year.

That amount will likely grow in fiscal 2007 because other EPA offices are interested in using the service, Travers said.

The EPA also reviewed telecommunications expenses with an eye toward consolidation. Four years ago, the agency centralized the local-area network at its headquarters. It combined many area networks into one, six e-mail systems into one and 300 servers into 50. Those consolidations generated $2 million in savings. Travers said she expects more opportunities to save money in the coming year by consolidating Web-based mail and increasing bandwidth.

She said the EPA is expanding its wide-area network by providing three times the bandwidth at no cost to agency customers. She said the EPA will add a disaster recovery system for the WAN that represents a $1 million cost avoidance. For the fiscal 2007 budget, the EPA is looking into consolidating call centers and further increasing the WAN’s bandwidth.

Interior Department
The Interior Department combined 13 WANs into one, saving $2 million, said W. Hord Tipton, the agency’s CIO. As Interior enters the second phase of its effort to provide extended network services, including an extra layer of security, the agency is likely to achieve more savings by eliminating inefficiencies, Tipton said.

The agency is also expanding its enterprise approach to buying hardware and software. “We currently save about $100 million per year off [General Services Administration] schedule prices through consolidated purchasing,” Tipton said.

Also, the efficiencies gained through building a standardized technical architecture not only offer huge cost savings, they enhance security and interoperability and generate further savings through data sharing, he said.

Although it’s difficult to calculate, Tipton said he believes the agency has achieved more than a 50 percent gain in productivity by improving technology and acquisition practices.

“Essentially, all of Interior’s progress over the past four years has been accomplished in the face of declining dollars and fewer people,” Tipton said. “Several congressional and legislative actions have added to our workload, with virtually no work going away.”

Transportation Department
Former Transportation Department CIO Daniel Matthews said last June that DOT officials will consolidate IT systems at a new headquarters beginning in September 2006, which will save $5 million annually in IT overhead costs.

The move to the 11-acre headquarters at the Southeast Federal Center next to the Washington Navy Yard will make funds available for mission-specific requirements, Matthews said before he left government for the private sector last year.

He said consolidation will continue in the e-government arena. If many agencies conduct similar business activities, it makes sense to consolidate those activities. The benefits of that approach reach beyond the budget, according to Matthews. The government can use the consolidated systems to move standardized citizen-centric services to the Web — for instance, the processes that people use to apply for grants.

Federal, state, and other government and commercial information can also be made available in a single location, using a single process, just as Interior did with Recreation.gov, he said. FBI When the FBI created its CIO office in 2004, CIO Zalmai Azmi started saving money by consolidating contracts. Some vendors had multiple contracts with the bureau, so eliminating redundancies saved the FBI $12 million in the first year, Azmi said. He reinvested the savings into maintenance costs, additional training and other areas.

Aggressively restructuring the FBI’s IT operations continues to yield savings, Azmi said. In fact, he has made those cost savings a performance measure for one of his key staff members, Sanjeev “Sonny” Bhagowalia, acting assistant director of the FBI’s Office of IT Policy and Planning. Bhagowalia must meet the annual savings goal set for him as part of his job requirements, Azmi said.

Internal Revenue Service
Sometimes consolidation doesn’t work. The Internal Revenue Service tried in 2005 to reduce the hours that it offers toll-free phone support to taxpayers from 15 to 12 hours daily and close what it considered unnecessary walk-in assistance centers. But Congress blocked both cost-saving moves.

An IRS official said the adjusted hours would have met customer demand, because 93 percent of the calls come between 8 a.m. and 8 p.m. Although the IRS received $400 million more in its fiscal 2005 budget than in fiscal 2004, its customer service budget decreased by $100 million. The agency also considered closing 68 of its 400 walk-in assistance centers, but Congress halted the move until a study was completed. The IRS said the public’s increasing use of the agency’s Web site and toll-free assistance number makes the 68 centers unnecessary. An official estimated the cost savings at almost $50 million a year.

Michael Arnone, Judi Hasson, Florence Olsen, Aliya Sternstein and Matthew Weigelt contributed to this article.