Budget freeze could lead agencies to focus on IT projects that reduce costs, report says

The Obama administration's proposed discretionary spending freeze for fiscal 2011 could end up increasing investments in information technology, according to a report released on Monday by a government research firm.

In an analysis of priorities laid out in the president's Jan. 27 State of the Union address, IDC Government Insights, an independent research and advisory firm, concluded that agencies can reduce spending with strategic investment in IT solutions. The report also found that the budget freeze provides a need for agencies to build more standardized information systems.

"From a strategic standpoint, [agencies] are really trying to be smart about reducing operational costs," said Thom Rubel, vice president of research for IDC Government Insights. "We're suspecting the tact they will take is to really use the opportunity to consolidate data centers and information systems and leverage existing infrastructure in a way that probably wouldn't happen otherwise."

IT investments outlined in the president's budget proposal released on Monday reflect what Obama called for in his State of the Union address.

While budget cuts could reduce spending on IT programs, agencies that make smart IT investments could reduce discretionary spending, the report said, and they should concentrate this year on developing long-term plans for standardizing systems.

For example, agencies can lower infrastructure costs by investing in cloud computing. On the management side, service-oriented solutions, including electronic records and IT dashboards, provide better information, reduce overhead and improve efficiency.

"It comes down on the side of smart IT, that is to say deploying IT in more strategic ways as opposed to just more massive spending on IT," Rubel said.

One initiative he expects to see expand in 2010 is agencies' efforts to engage citizens by posting data and providing feedback through online applications. "The administration has moved to put data out there and let people use it and develop applications around it," he said. "It's pretty savvy. It takes cost off government and leaves it in the hands of individuals and companies to develop themselves and lets citizens define how they want to interact with government."

Agencies and program directors should consider investing in IT solutions that improve the delivery of services, according to Rubel. "IT freezes really drive government agencies to look to increasing the business value of IT because there's so much work that can be done there around service delivery," he said. "There's so much [isolated] information in government that IT can open channels across a lot of those silos and bring down the cost of service."