Part 1: IT OutsourcingPart 2: Managing IT

March 6, 2012

Managing IT in the public sector 2

In-house development IT is managed by the public agency itself However, the agency needs the human resources

and technical expertise, which may not be available in-house

Partnerships (Public/ private) Public agency partners with private sector in

developing IT service, bringing strengths of each Joint ventures between the public and private sectors Public sector has its core service objective; private

sector provides technical competenceIs it automatically more efficient to turn IT

functions over to the private sector? Some have an ideological belief that it is always preferable to have market-based solutions.

Managing IT: PartnershipsKeys to successful partnerships

Agency culture open to learning from the private sectorWillingness to engage in mutual problem solving/goal

seekingHaving a comprehensive partnering agreementHaving an ongoing day-to-day mechanism for feedback Inclusion of performance penalties as well as rewards in

contractAgency must not become dependent on the partnerPrivate partner able to handle changes in services

provided.The degree of accountability of the private partner

What if the partnership is of weaknesses?Private sector could hold the public sector hostagePublic services could be compromised

Managing IT: OutsourcingOutsourcing as an alternative

Outsourcing is a process of contracting with a vendor to provide a service or an activity while the public agency retains the responsibility and accountability for the service or activity

There is a transfer of management responsibility for the delivery of resources and the performance of those resources

Many examples of IT oursourcing See: International City/County Management

Association. 2005. Information Technology Outsourcing: A Handbook for government. [Online at http://bookstore.icma.org/freedocs/Outsourcing.pdf]

Managing IT: Outsourcing 5 Outsourcing Advantages

Contractor may be able to provide state of the art technology

Contractor may be able to provide technology at lower cost

Agencies receive hardware and software updates automatically

Large outsourcers deal better with scalability issues

Outsourcers may be able to obtain better human resources

Agencies can shift or shed training and support burdens

IT services are provided on fixed budget, no surprises

Competition between contractors ensures high quality/low cost (in theory!)

Managing IT: Outsourcing 6

Outsourcing DisadvantagesLoss of agency jobs can leave them with little or no tech

abilityAgencies lose capacity to get baseline performance data

and contract management is difficultOutsourcing of jobs has been done in the past for no good

economic reason – cost/benefit did not support the actions

Outsourcing may involve the loss of local jobsOutsourcing may lower agency morale and cause turnoverOutsourcing increases the possibility of favoritismOutsourcing is done mainly through large contractors,

making contract monitoring difficultCosts of monitoring contracts are typically underestimatedPossibility of expensive litigationOutsourcing can adversely affect women and minorities

Managing IT: Outsourcing

San Diego Case studyFirst, San Diego’s outsourcing failed, then it

turned around Failure: See

http://www.cio.com/article/31139/GOVERNMENT_OUTSOURCING_You_Can_t_Outsource_City_Hall

Turn around: See http://www.govtech.com/gt/93060 http://www.computerworld.com/action/article.do?

command=viewArticleBasic&articleId=108019

Contract ManagementGood contract management is a key element for successful

outsourcingContract management allows an agency to obtain goods and

services at an advantageous price, delivered on time, meeting functional specifications.

White and Korosec (2005) enumerate many problems with IT contracting: Specification default – if specifications are lacking vendors

take advantageRequirement creep – agency asks for additional featuresLegacy maintenance – vendors are reluctant to integrate

existing legacy systems into new systems Integration risk – vendors propose and government seeks

enterprise software – however one size does not always fit allAspects of contract management

Performance Based Service ContractsShare-in-Savings ContractsProcurement

Aspect of Contract Management -1Performance Based Service Contracts

Agencies specify only the outcomes they want – the means and methods are left to the contractor.

Difficulties in managing performance-based contracts have given rise to a new industryConsultants who assist agencies in

development and monitoring of performance-based IT contracts

Pitfalls with performance contracting include achieving artificial cost savings due to reducing services to have a better bottom line and failing to closely monitor results

Aspect of Contract Management -2

Share-in-Savings Contracts (SISC)A contract management strategy for creating

vendor incentives to deliver effective IT systems on time and within budget

Vendors are awarded a portion of the savings brought about by the system

SISC has many critics who say that it uses “shady financing and accounting techniques” and moves federal IT purchases away from “public and congressional” scrutiny

Evidence that SISC is in the public interest is weak as there is very little documentation of actual savings

Aspect of Contract Management-3Procurement

Procurement is the purchase of goods and services by a public sector agency

It is another aspect of contract management E-Procurement

Electronic procurement was enabled in the 1990s when several companies began to develop applications that allowed vendors to publish electronic catalogs

ProcessTypically federal procurement has been based on the

lowest bid. However the new concept of “best value” is beginning to

eclipse the low bid procurement. ‘Smart procurement’ is also used as a synonym for best

value, or it may also refer to a centralized purchasing agreements.

See: GSA Smartbuy Program http://www.gsa.gov/Portal/gsa/ep/contentView.do?

contentType=GSA_OVERVIEW&contentId=22458

Chapter SummaryPublic sector may not have in-house expertise

in ITPublic sector could seek to implement IT

through public private partnershipsOutsourcing has emerged as a key aspect of

IT implementation in the public sectorHowever, outsourcing has both advantages and

disadvantagesContract management is important for

successful outsourcingWithout major investment in oversight abilities the

agency will be very likely to become dependent upon the contractor

Part 2Managing IT

How to plan for IT investments?The Role of the CIO

It is important to have a Chief Information Officer (CIO) who can strategically direct the IT investments in the public agency

The CIO role became widespread under the “Reinventing Government” initiatives of the 1990s.

The vision of the CIO position is that this officer would report directly to the department head and play an inner-circle role in departmental planning.

The CIO’s position was formalized for public sector with the Clinger Cohen Act, 1996.

At the federal level, there is also a CIO Council, which was codified into law by Congress in the E-Government Act of 2002 . The CIO Council serves as the principal interagency forum for improving practices in the design, modernization, use, sharing, and performance of Federal Government agency information resources. [See: http://www.cio.gov]

Since 1998 the Office of Management and Budget (OMB) and CIO Council have issued an annual strategic plan that sets goals, objectives, and targets for IT investments.

How to plan for IT investments? 15

Strategic PlanningStrategic planning is required for IT investments.Strategic planning builds on environmental

scanning to perceive changes. Strategic planning for IT involves seven steps:

Creating a planning structure Auditing information systems Defining goals Evaluating proposals Composing annual plans Obtaining administrative and political approval Implementing the plan, evaluating outcomes, revising

the plan

IT Management: Needs AssessmentNeeds Assessment

The main purpose of needs assessment is to identify organizational problems (internal and external).

A thorough needs assessment can re-energize an organization as quickly as a poor one can damage it

Four stages of Needs Assessment Collecting information:

Interview stakeholders, brainstorming, focus groups, organizational surveys, data and transaction reviews

Present modes of Service delivery of the organization Identifying and prioritizing problems: This identifies

What are the baseline improvements sought in LOBs and Services

Can IT adaptation achieve the improvements? Researching alternative possible solutions: This identifies

alternative technological solutions to improve performance

Seeking consensus on proposed solution: People need to agree to the solution

IT Management: Business Process Analysis (BPA)

BPA is not the same as needs assessment and not necessarily associated with it.

Prime focus of BPA is on Workflow analysis Workflows deal with how tasks are distributed and

sequenced between employees in an agency (or between agencies). For example, building permit requires processing by several units, such as planning and zoning, fire, infrastructure, environment, and other departments.

Workflow analysis seeks to increase efficiency of task performed (e.g. reduce building permit process from 30 days to 5 days)

Workflows are categorized into processes (each with its associated process owner)

BPA uses an iterative method to consider how a process might be reengineered and to arrive at consensus on proposed solutions

IT Management: Feasibility studyFeasibility study analyzes a business problem and has three

broad dimensionsOperational feasibilityEconomic feasibilityTechnical feasibility

Feasibility study is needed to indicate what is possible on the above three dimensions; Needs assessment identifies what is required for the organization. Sometime, what is needed may not be feasible, and what is feasible may not be needed.

Needs assessment should be coupled with feasibility studies in order for both to be effective

Feasibility studies do not ensure that projects match agency missions, and do not establish need. They simply bridge strategic planning and needs assessment on the one hand, and practical concerns of the project manager on the other hand.

IT Management: Project Management A project is a temporary management effort to launch a

product, service or process. Project management is the oversight of this effort A project plan involves several elements:

Mission statement Governance of the project Authority and approval structure Budget and resources General management approach Evaluation procedures to be used

The Role of the Project Manager Managing people is more difficult than managing technology There are 10 broad tasks of all project managers

An important universal skill for project managers is project scheduling – PMs must have knowledge of critical path scheduling techniques, and address scheduling of all project resources (time, money, human resources, hardware, software)

Various certification and training programs are now in place, and are being supported or supplemented by professional associations

IT Management: Project ManagementThe Role of the Project Manager

Managing people is more difficult than managing technology

Various certification and training programs are now in place, and are being supported or supplemented by professional associations

An important universal skill for project managers is project scheduling – PMs must have knowledge of critical path scheduling techniques, and address scheduling of all project resources (time, money, human resources, hardware, software)

IT Management: Project ManagementThere are 10 broad tasks of all project managers1.Setting clear goals for the project2.Setting clear objectives for the project3.Establishing specific checkpoints, activities, relationships,

and timelines4.Scheduling tasks for the project5.Developing the project team and the individuals in it6.Motivation of team members7.Keeping stakeholders informed8.Managing project tasks creatively9.Negotiating agreements with all internal and external

groups involved with the project10.Negotiating enough power for the project manager,

commensurate with responsibility

Lesson summaryIdeally, organizations should engage in

strategic planning to achieve objectives that further the organization’s goals and fulfill its mission. The CIO’s role is significant for strategic planningStrategic planning is required for IT investments.

Strategic Planning

ProjectImplementation

Needs AssessmentBusiness Process Analysis

Feasibility StudiesProject Management Protocols

Lesson Summary

IT Management requires both technical and human resource management

Four aspects of IT Management:Needs AssessmentBusiness Process AnalysisFeasibility StudiesProject Management

Proper IT Management ensures implementation of projects