What Government IT Can Learn From The Private Sector

FedEx faced the prospect of having to build a new East Coast data center to meet its ever-expanding IT requirements, but CIO Rob Carter decided instead to retrofit an existing facility and squeeze more processing power into a smaller space, saving millions of dollars. Could FedEx's approach work in federal government?

United Stationers, a leading distributor of office supplies, saw an opportunity to help its reseller and retail customers serve their consumer customers via e-commerce, so it acquired a software and services company to sell them e-commerce and other capabilities. Might government IT shops learn from United Stationers' transition from internally focused IT organization to one focused on serving customers?

Federal CIO Vivek Kundra would likely say yes to both questions. For two years now, Kundra has been trying to narrow the gap between private sector IT best practices and standard government IT practices, and he's going directly to the business world for ideas. That technology gap became a point of embarrassment in mid-April when President Obama, in unscripted comments at a Chicago fundraiser, complained about the White House's phone system. "We can't get our phones to work," Obama reportedly said. "Come on, guys. I'm the president of the United States." He quipped that the White House's technology is "like 30 years behind."

In early May, Kundra invited a half-dozen CIOs from the private sector, as well as seven of his government CIOs plus an administrative official from the federal CIO Council, to the White House for a three-hour meeting to discuss best and next practices in enterprise IT. Topics included emerging technologies and IT architectures, organizational structure and culture, cloud computing, and ways to improve customer service. InformationWeek editors facilitated and attended that meeting.

In an earlier demonstration of just how serious Kundra is about tapping into the best practices of business IT, he referred to private sector initiatives more than a dozen times when he issued the Office of Management and Budget's 25-point IT reform plan in December. That road map for federal IT reform references the private sector in data center consolidation, cloud computing, agile software development, and IT project management. The plan notes that "high-performing private sector firms quickly bring together small multidisciplinary, integrated program teams," and it proposes rotating government program managers into private industry to keep them current with the latest skills and practices.

Vivek Kundra

InformationWeek made public-private-sector collaboration the starting point of our Government IT Leadership Forum on May 5 in Washington, D.C. The forum's opening keynote was a brainstorming session among Kundra and three CIOs from different industries: Rob Carter of FedEx, Dave Bent of United Stationers, and Peter Whatnell of Sunoco.

Kundra recapped some of the progress in federal IT over the past two years--$3 billion savings as a result of OMB's feet-to-the-fire TechStat project-evaluation sessions; data center closings and consolidation; adoption of cloud computing; and the shift to real-time security monitoring--but he also laid out the major challenges that remain.

"How do you take such a large organization as the U.S. government, with such diverse missions as the Intelligence Community, the Department of Defense, Health and Human Services ... and turn that organization into a much more agile enterprise?" Kundra asked. "How do we fundamentally rethink the way we deploy these technologies?"

Kundra turned to the private sector CIOs on the panel and inquired about the "big bets" their companies are making on technology. "What should we, as public sector CIOs, be looking at as far as some of the huge opportunities that are out there?" he asked.

FedEx's Carter was the first to acknowledge that the private sector doesn't have all the answers. "Take heart," he said. "Everybody's out there fighting those same battles, and that lends itself to good solutions emerging over time."

FedEx, like the U.S. government, has invested in its IT infrastructure for decades. One of its big bets, Carter said, is on a "dominant design" in data center architecture, the main components of which are vast arrays of commodity x86 servers, dense solid-state storage arrays, and IP networking. "When we build our private cloud at FedEx, it's exactly like what Amazon, what Facebook, what Google are building and offering," he said.

IT teams must get the software architecture right, too, Carter said. FedEx has accumulated dozens of enterprise applications through years of development, purchasing, and acquisitions of other businesses. "We had 10 of everything, just like everyone else," he said.

Instead of spending millions of dollars to "get down to one instance of this or that," FedEx is simplifying its software portfolio by "normalizing" its applications and the core interfaces to those apps by recoding them to run in virtualized containers. That way, they can run on servers in any FedEx data center or even in the public cloud "if we ever needed to run them there," Carter said. Such flexibility extends the life of enterprise apps and makes them more manageable. For federal agencies struggling to maintain their own legacy apps--and there are many such agencies--it's an architectural strategy worth considering.

What's next at FedEx? The company has begun offering sensor technology, called SenseAware, that gives customers visibility into the "vital signs" of packages being shipped. The GPS-sensor devices are capable of monitoring temperature, light, and even radiation levels. The National Institute of Standards and Technology, a government agency, helped FedEx test the tech, and plans to use it in a climate measurement pilot. In the early going, FedEx is aiming SenseAware at the healthcare and life sciences industries. Conceivably, small, multisensor devices like those developed by FedEx could be useful to government agencies for, say, weather tracking or military cargo.

A Customer Imperative

Much of the discussion at the Government IT Leadership Forum, and at the CIO meeting at the White House, focused on ways to improve customer service, which in the case of many agencies translates into the services they provide the American public. Agency CIOs are under added pressure to get that right. On April 27, President Obama issued an executive order, "Streamlining Service Delivery and Improving Customer Service," that requires agencies to deliver better, faster, and cheaper services to the public--and Obama himself exhorted agencies to emulate private sector best practices.

"Such best practices include increasingly popular lower-cost, self-service options accessed by the Internet or mobile phone and improved processes that deliver services faster and more responsively, reducing the overall need for customer inquiries and complaints," the order says.

Such efforts to improve how the feds treat customers go back as far as 1998. Technology advances, including new service delivery systems, and rising public expectations are reasons to keep at it. "How do we get the government to do this?" asked one agency CIO during Kundra's White House meeting.

Stephanie Reel, CIO of Johns Hopkins University and Johns Hopkins Medicine, who participated in the White House meeting, suggested that providing self-service capabilities is part of the answer. Sunoco CIO Whatnell, also in attendance at the White House, added that anytime, anyplace service delivery to mobile devices would bear dividends.

At the IT Leadership Forum, Kundra said federal IT leaders must shift their emphasis. "If you look at the last decade in federal IT, we've done what is the easier problem to solve, which is continue to work on infrastructure, on integrating these legacy systems," Kundra said. "Where we haven't focused a lot, and that is why you have the president's executive order on customer service, is the interface between the American people and how they interact with their service when they're getting service from federal agencies." Kundra pointed to the feature-rich, self-service capabilities on websites such as OpenTable and Expedia.

The Social Security Administration now processes about 40% of retirement benefits applications online. That's progress for an agency that depends on old mainframe software to deliver services, but a long way from the goal--recommended by an advisory panel of government officials and business executives--of conducting 90% of such transactions online. "We need to drive that up substantially," said Social Security CIO Frank Baitman, in an interview with InformationWeek earlier this year.

As public sector CIOs rethink their customer service strategies, United Stationers' CIO Bent advised them to start at the foundation: IT architecture and organizational structure. When Bent joined United Stationers eight years ago, he said the company's IT organization was internally oriented. "We put a lot of focus around organization and creating an architecture for the future," he said. "So redesign from the outside in."

United Stationers was a paper-driven business 10 years ago, just as many government agencies are today. "People bought business products from a catalog and picked up the phone," he said. Applying "outside in" thinking, the company's IT team asked: "What are the tasks that people perform to interact with us as a business? And how do we expose those tasks electronically?"

Part of the answer for United Stationers was to acquire a software company and begin offering software and services to its channel of 25,000 resellers and retailers, many of them small operations. For example, it's providing services such as integration of e-commerce and finance systems, as well as online marketing services. And United Stationers' search engine of its products is embedded in many resellers' websites.

FedEx CIO Rob Carter

The approach United Stationers took isn't unlike the growing number of app stores in government (see story, "Everybody Wants An App Store"), where federal employees can browse and download applications they need, Bent said.

Outdated Tools

Many government employees are working with technologies in the office that are a generation or two behind what they use at home. That's beginning to change at agencies like the Federal Bureau of Investigation, which has replaced outdated PCs with dual-core Dell computers equipped with 24-inch flat panel displays, voice over IP, videoconferencing, and Microsoft's latest collaboration tools. Elsewhere, a growing number of agencies are testing and buying Apple iPads, iPhones, and other new mobile devices (see story, p. 6).

In the private sector, employee-owned technology is becoming de rigueur in the office. Kraft Foods, for example, offers its employees a stipend to buy mobile devices and computers and encourages them to bring those devices to work, as long as they use Microsoft Office, install company-specified security software, and maintain the systems themselves. Likewise, Kundra advocates letting federal government employees bring their own computers, tablets, and smartphones into the workplace, although those policies are generally set agency by agency.

Another big opportunity Kundra sees is doing more with the petabytes of information--so called Big Data--generated by government agencies. "We're looking at, how do we think of Big Data and business intelligence in terms of slicing, dicing, and cubing information, whether it's data on intelligent transportation systems, fraud detection, or in terms of the Intelligence Community," he said.

The federal opportunity for applying analytics to its data is in many ways untapped. For example, independent researchers recently suggested that the Food and Drug Administration could mine the data in published studies to uncover dangerous drug side effects.

Tighten That Belt

How would Uncle Sam pay for its big bets on analytics, customer service, and other IT priorities? That's where the Federal Data Center Consolidation Initiative and other belt-tightening efforts come in. "The reason we're shutting down data centers--it's not just about cost savings," Kundra said. "It's also about lifting up and spending a lot more resources on the higher stack, moving away from the physical layer to the presentation layer."

That sounds a lot like the old 80-20 budget trap that's well known to business CIOs, where 80% of their IT spending goes to ongoing IT operations and maintenance, leaving only 20% for investment in new technologies and IT innovations. Successful private sector CIOs have turned the dial on that ratio into the 60-40 range, and this is yet another area for public and private sector CIOs to share experiences. Kundra has started an important discussion around best practices in enterprise IT; now it's up to CIOs in both camps to follow through.