The Federal Government’s Big Benchmarking Challenge

The U.S. General Services Administration (GSA) has signed a $22 million contract with the Gartner Group to develop metrics so the federal government can begin benchmarking its IT infrastructure costs and service levels the way private industry does.

While it may seem like a big chunk of change to drop on a one-year contract with Gartner, it’s a drop in the bucket compared with the $22 billion the Office of Management and Budget (OMB) estimates that federal agencies spend annually on data centers, desktop management, help desk, data networks and telecommunications.

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The Gartner deal is the latest step in the federal government’s IT Infrastructure Optimization Initiative (IOI) Line of Business program, itself a subset of the Federal Enterprise Architecture program established in 2002. The GSA says the performance management process will allow it to benchmark IT infrastructure costs and services across the federal government and to industry peers.

Historically, federal IT infrastructure spending has been decentralized. Agencies used fair contracting principles as laid out in the Federal Acquisition Regulation (FAR) and the competitive market to purchase IT goods and services but ultimately had a great deal of latitude in how they spent their IT dollars, explains David Perara, research director for IDC’s Government Insights. (IDC and CIO.com are owned by the same parent company.) But the OMB found that federal spending on IT infrastructure appeared to be higher than industry spending, and there was no comprehensive process to take advantage of economies of scale and no way to even assess the current state of infrastructure costs at the federal level.

That was all fine and dandy a decade ago, when IT spending in relation to overall costs of government operation were pretty low, says Howard Rubin, Gartner senior adviser and professor emeritus of computer science at Hunter College of the City University of New York. Now that it’s one of the top 10 costs, it’s a real problem. “Government has realized that it too is subject to Moore’s ‘flaw’: as unit costs go down, demand goes up and total cost goes up,” says Rubin. (Rubin is a consultant for Gartner,but he is not involved with the GSA benchmarking project.)

Taking a Cue from the Private Sector

Benchmarking has the potential to rein in those costs. “Taking a cue from large corporate organizations like Raytheon, American Express and JPMorganChase, government has decided to evaluate the ability to take advantage of volume purchasing and economies of scale,” explains Perara. “It is clear that business-thinking is moving into government. “They have realized that government expense on infrastructure is massive, and there would be sizable benefits in being about to both have standards and performance metrics.”

Under the IOI plan, federal agencies and departments will be measured on the effectiveness and efficiency of their IT infrastructure services. If they fall below the OMB’s acceptable levels, they will need to either justify the deviation or develop a plan to meet the goals. The net result will impact not only federal agencies and their employees but also vendors providing federal IT services. By following private industry best practices for benchmarking, the feds will incorporate interagency measurements and methods, and compare infrastructure service bundles and costs with those recorded by other government entities and private industry. It will essentially create “a micro-economy for IT services,” at the federal level, Perara says.

OMB has stated that industry experience suggests an infrastructure optimization program could yield 20 percent to 30 percent savings while maintaining or raising service levels. But government efficiency watchers shouldn’t hold their breath, says Perara. “From my experience working with companies like IBM, American Express, Sears and Xerox, implementing improvements after benchmarking still remains difficult.”

And the federal government isn’t your typical business. Taken as a whole, it comprises a whole host of industry types, including financial services, health care and aerospace. In the private sector, a financial services company can benefit from economies of scale or provider specialization around specific business processes. The federal government, too, will gain experience as an integrator of large-scale services and specialized niche service providers but will continue to lag private industry in adoption of services bundled by business process, says Perara. And while the goal of the IOI is to benchmark federal IT infrastructure against peers in industry, the federal government has never aligned its processes with those in industry.

Bottom line, Gartner’s got its work cut out for it. Getting accurate baselines will be a bear. Gartner will need to figure out the current level of service provided and the resources used to provide it. Within government, such resources may be shared or unidentified with no good paper trail, says Perara. The consultancy will also have to extract cost data from existing accounting systems to determine baseline costs for hardware, software labor and other expenses. Most agencies have never tracked such costs on a service-level basis, says Perara. “Government and IT suppliers will struggle with defining the lowest common service for interoperability reflective of private services and custom services unique to government and among agencies and bureaus,” says Perara.

But Rubin stresses the big-picture benefits. “In the long run this isn’t just about metrics,” says Rubin. “It is about governance and architectural principles that over time will drive to commonality and sharing—even perhaps utility computing—within government.”