Mod Squads

IT Modernization Project Teams Could Save Governments Billions; yet Agencies Struggle to Move beyond Expensive Legacy Systems


Governments aren’t exactly known for moving fast. When it comes to public-sector IT systems, their sluggishness is especially renowned—and costly. The U.S. government, for example, spent more than 75 percent of its US$80 billion-plus IT budget on maintaining legacy platforms in 2015, leaving little left over for upgrades and replacements. Globally, 76 percent of IT spending will support existing systems in 2017, according to IDC.


As legacy systems age, government agencies are being forced to make tough choices about their next move, says Shawn McCarthy, research director, IDC Government Insights, Framingham, Massachusetts, USA. “The first big project decision CIOs need to make is whether to go greenfield and develop a new system from scratch or to do something to upgrade the existing legacy system.”

For years agencies have chosen the latter, adding modern user interfaces on top of old legacy systems without changing the core infrastructure. By spending more and more money each year on simply maintaining legacy systems, though, organizations “have missed multiple generations of advancements in technology,” Tony Scott, CIO of the U.S. federal government, said in a June 2016 speech. He’s pushed for legislation creating a US$3.1 billion governmentwide IT modernization fund to wean the government off its legacy addiction.

Globally, 76 percent of IT spending will support existing systems in 2017.

Source: IDC

While the U.S. Congress considers the legislation, other governments have already pushed forward with new projects—despite major challenges that include national security concerns, conflicting stakeholder demands and wavering budgets. In India, the national government is working on a modernization effort that includes US$736 million worth of projects to provide automation and hand-held device connectivity to 129,000 post offices across the country, in addition to installing banking services in more than 25,000 post offices. Japan, often considered a government IT modernization leader, has recently rolled out phases of a six-year initiative to establish massive cloud computing infrastructure that supports all of the government’s IT systems and drives efficiencies though shared resources across ministries.


—Shawn McCarthy, IDC Government Insights, Framingham, Massachusetts, USA

Yet securing buy-in for executing greenfield projects isn’t always easy. Moving to cloud-based services, which most modernization projects involve, can allow agencies to take advantage of lower prices and more efficient technology. But the existence of legacy infrastructure complicates the process. Calculating migration costs can be difficult, making it hard to prove that a positive ROI can be achieved in a reasonable period of time, Mr. McCarthy says. “If the on-site systems are still functioning, it can be difficult to make a business case for shutting them down.”

Then there are the familiar IT project challenges: wasted money, missed deadlines and failure to deliver key goals. “Scope creep is a big problem on government IT projects,” he says. India’s project, which launched in 2012, faced many delays. New contractors have since been brought on board, and the project is expected to be completed by March 2017.

To be successful, project teams need to prioritize user engagement and an agile environment to make sure modernization efforts serve citizens’ needs, says Chris Bartlett, partner, Strategy&, Sydney, Australia. “It’s critical to test these projects with end users and to take an iterative approach so you can get feedback very quickly,” he says.

Within the U.S. federal government, Mr. Scott is hoping that better project planning and a system of oversight and accountability will reduce project failures. To keep his modernization efforts on track, Mr. Scott has suggested a process through which IT teams must present a business case to an independent board. That group will assess the plan based on how significantly it decreases cybersecurity risks and improves efficiencies and effectiveness, and whether it incorporates cloud services and modern IT architectures. If a project is approved, each team would still have to submit incremental project plans, receiving additional funding only after upgrades are achieved. “We need accountability all the way,” Mr. Scott said.

Executive sponsorship is indispensable as well, Mr. McCarthy says. Once these projects are underway, the CIO and the CFO need to be actively involved, meeting monthly to review progress and make decisions about how to adapt if problems arise. “No one gets 100 percent of what they want from these modernization projects,” he says. When executives are involved, it ensures the core goals of the project are met and that they are on board with changes, such as dropping nice-to-have features. “That engagement in decision-making will be appreciated by the CIO and the people who hold the purse strings.” —Sarah Fister Gale




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