CIO watch

It's time for the federal government to start getting out of the information

technology business, according to George Molaski.

With eight months' experience as a government IT chief — and 20 years

before that as an industry IT executive — Molaski says "IT is no longer

a core business of government."

He doesn't want to go back to typewriters and carbon paper — indeed,

Molaski, who is chief information officer at the Transportation Department,

said he looks forward to a day not far off when automobiles will be equipped

with wireless devices connected to the Global Positioning System, the Internet

and cellular phone service. But he wants industry, not government, to provide

the government's IT services.

Now, the rise of application service providers (ASPs) presents an opportunity

to do just that.

Instead of running their own information technology departments filled

with government-owned equipment and government workers, federal agencies

should start renting IT services from ASPs, Molaski told a gathering of

IT executives and government managers May 3.

During the past 18 months, ASPs, which rent access to computer applications

and provide computer services such as maintenance, information storage and

security, have emerged as one of the fastest-growing sectors in IT. Some

ASPs rent hardware as well as software and supporting services. These companies

are emerging as a solution at the same time the government IT sector is

increasingly beset by problems.

"It's a convergence of the stars" that the government should take advantage

of, Molaski said in a speech to the Information Technology Association

of America.

The most pressing problem for government is a growing shortage of IT

workers. By using ASPs, agencies would need far fewer of the workers who

run computer systems.

Agencies also have trouble keeping up with the rapid rate of change

in computer systems and software, Molaski said. That problem could be eliminated

by switching to ASPs with contracts that require software and hardware upgrades.

But any effort to move agencies to ASPs will encounter some hurdles.

A key problem is that agencies typically want to "own" their IT assets — software, computers and personnel — and are not inclined to rent them,

Molaski said. "We must change that culture."

Fragmented agency accounting practices pose another roadblock. "I can't

tell you how much we're spending today" on IT, so it is difficult to compare

current costs with the cost of switching to ASPs, he said.

Federal spending regulations present yet another problem. IT is usually

considered a capital expenditure, but renting ASP services would be considered

an operating expense. Funding shifts and perhaps changes in budgeting procedures

would have to be accommodated.

The ASP industry could help itself by doing a better job of educating

agencies and Congress about ASPs, Molaski said. "What are the benefits?

You have to sell that to OMB." The Office of Management and Budget plays

a major role in setting government information technology policy.

"And you need to educate Congress. Congress is used to buying systems,

not services," he said.