A Discussion on the IT Budget

Bob Evans, senior vice president and content director at TechWeb, this week took on Federal Chief Information Officer Vivek Kundra in his blog for adding $5 billion to -- rather than cutting -- the $76 billion federal information technology budget.

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??

Evans suggested the government should be able to get by on much less, say $50 billion.

I refuse to believe that federal CIO Vivek Kundra cannot fulfill the operational end of his mandate with an annual budget of $50 billion, rather than $76 billion. I refuse to believe that he cannot do what so many other CIOs have done and find new ways to stretch a sharply reduced IT budget to meet those objectives with better leadership, tighter communication, more-rigorous requirements, less cronyism, and more focus on customers (plus, of course, that not-so-trivial $50 billion).

Evans raises the age-old question about just how much federal spending is enough and how to match spending levels to the huge missions federal agencies must meet.

So, with the release of President Obama's fiscal 2011 budget (including IT spending, which will likely see even more) just weeks away, I contacted Bob to ask him if he would engage in an online discussion in Tech Insider about federal IT spending and bring his private-sector and outside-the-Washington-Beltway perspective. (Bob lives in Pittsburgh and works out of New York City and San Francisco.) He graciously agreed.

Below is the beginning of our email exchange, which will continue in the days ahead -- and maybe even after the White House releases its fiscal 2011 budget, if Bob is willing. So, check back often. Also, as always, please join in the discussion by commenting below. Bob and I would love to hear your take.

Allan (1:44 pm, Jan. 6): Hey Bob, enjoyed your post this week on the ever increasing federal information technology budget -- now at $76 billion -- and what Federal Chief Information Officer Vivek Kundra has or hasn't done about it. It reminded me of what Mark Forman, who was the first to hold Kundra's position during the early years of the Bush II administration, asked when the annual federal IT budget weighed in at $40 billion to $45 billion. He wondered if $40-something billion was appropriate. By raising the question, he really meant to send the message that he believed it not to be too low, but rather too high. Forman thought government's redundant networks -- like payroll systems -- could be consolidated, saving billions of dollars. So, I was wondering, how did you settle on $50 billion a year as a more appropriate figure? It's a good exercise to work through what is the right amount.

As an aside, I would come to the defense of Kundra in one respect: Let's not forget Congress' role in budget making. Kundra's purse strings are just so strong, or rather, shall we say weak. Senators and representatives are the ones who have the final say about spending. Through the president's budget, Kundra can only propose what that spending should be. Over the years, I have seen more instances of money being added into the president's proposed IT budget than taken out.

Bob (2:23 pm, Jan. 6): Allan, great questions---let's start with how I came up with $50 billion as an aspirational target for Kundra to pursue. I fully realize that Vivek Kundra did not create this $76 billion monster -- and with a number so huge and otherworldly, it's important to try to think of it in more manageable terms, so we should think of it as about $210 million per day, every day, 365 days/year. There's no viable reason -- none whatsoever -- that it has to be that much, as proven by some of Kundra's early evaluations of projects across agencies and departments that revealed so many disasters in the making.

In the private sector, the message from the CEO to the new CIO charged with overhauling a bloated and inefficient IT operation would be something like this: "Hey, Allan the new CIO, thanks for jumping into this mess -- you're a very brave guy. But you can count on 100% unwavering support from me in your efforts to bring this mess under control. I'll crack heads, move people out, get the CFO to work with you to reset new budgets to more-appropriate levels, or anything else you need. What you need to do is determine what we need to spend to run our organization in a way that lets us give great value to our customers in return for the money they invest with us, and we both know that new number will have no connection with the runaway madness that existed before."

So why $50 billion as a new target? It represents about a 33% reduction from last year's number, and that number is consistent with the amount by which a lot of private-sector CIOs had to cut their IT budgets in 2009. It has been done and it can be done, and more importantly it removes the crutch of just throwing money at what are clearly some horrendous problems.

As for your second question about Kundra's responsibility: you'll get no argument from me on that -- Congress is responsible for rubber-stamping not just the $71 billion from 2008 but adding on an astounding increase of $5 billion. Very very few -- if any -- corporations in the world spend $5 billion on IT in a single year, yet that's the INCREASE granted to federal IT from the just-print-more-money crowd on Capitol Hill.

But as far as I know, there is no law or federal mandate that says that just because Congress larded up Kundra's checking account with $76 billion that he has to go out and spend it -- that money's now under his control, or at least his influence.

Think what a powerful statement that would make about the end of business as usual were our new federal CIO to say something like this: "Everyone in this country, from citizens to corporations, has had to learn to do more with less and we in the federal IT organization need to grasp that same lesson. Therefore, my management team and I have decided to create a federal IT annual budget that allocates the incredibly large sum of $50 billion to run our operations for this year. It is our hope -- make that our promise -- that we will fulfill the mandate we've been given to reduce the cost of government operations while improving the quality of service to our citizens, and we'll achieve that not through the blunt-force drunken-sailor spending of $76 billion but rather by employing new and better ideas, new and better technologies, and new and better communication and collaboration. In the private sector, studies have shown that there is zero correlation between sheer volume of spending and quality of IT operations, and we intend to prove that's true in the federal sector as well.

That's it for now Allan -- Thanks. --bob