For CIOs, tight budgets have a silver lining

Alan Balutis is senior director and distinguished fellow in Cisco Systems’ Internet Business Solutions Group.

Firms such as Gartner and Forrester Research used to describe the evolution of the CIO position as a four-stage process. First came the CIO as director of information management, responsible for back-room IT operations. Next came the CIO as an adjunct of the chief financial officer, who would be the first to recognize how IT could be used to cut costs and reduce staff. Third came the CIO as a peer of the CFO and the line-of-business manager.

Finally came the CIO as the CEO for transformation, using technology to change the way the organization did business. The Clinger-Cohen Act of 1996, which created the CIO position in the federal government, gave that office responsibility for business process re-engineering (along with a number of other responsibilities) to ensure that the CIO would be able to bring about transformation and apply technology to business and management processes.

Unfortunately, many CIOs remain mired in stages one and two. But perhaps there is a silver lining to the current tight budget environment.

Federal CIO Steven VanRoekel said as much during a recent presentation sponsored by the Bethesda, Md., chapter of AFCEA International. He said his office has been trying to focus on how to take the money saved by closing data centers, improving IT management and moving programs to cheaper cloud computing and invest it in new initiatives that deliver better government services.

In a panel discussion after the speech, CIOs from a couple of major departments echoed the upside of doing more with less. Richard Spires, CIO at the Homeland Security Department, said DHS’ CIO Council agreed to reduce IT infrastructure spending by 10 percent and put the money into more business and mission-oriented investments. Robert Carey, deputy CIO at the Defense Department, said DOD officials had taken a less structured approach to cutting costs but shared the overall goal of squeezing savings from existing projects so they could invest in new initiatives.

Carey’s boss, DOD CIO Teri Takai, speaking at the American Council for Technology/Industry Advisory Council’s Excellence.gov awards luncheon in March, reinforced that idea. As agencies prepare for shrinking budgets, technology will be a key component of keeping critical operations running smoothly. But technology won’t be enough, she argued. “There must be serious innovation that solves problems in different ways than in the past,” Takai said.

So might such innovation be a silver lining in the coming fiscal clouds? I participated in a roundtable discussion on what has been dubbed “decremental budgeting” — that is, the process by which agency officials manage under increasingly reduced budgets. It made me recall my days guiding the management and budget office at the Commerce Department, which has the smallest budget of the Cabinet-level agencies.

Annual budget pressures drove us to continuously innovate. Commerce got rid of seven payroll systems and seven separate personnel systems and cut its processing costs more than half by entering into a cross-servicing agreement with the Agriculture Department’s National Finance Center in the early 1980s. We were the first Cabinet-level agency to do so. Commerce also proposed the idea — and ran the initial pilot tests — of using a credit card for small government purchases.

I could go on, but the point should be clear. Budget pressures can be a source of innovation and could allow CIOs to leapfrog into more influential roles at their agencies. It will be interesting to see who takes advantage of the opportunity.