More and more governments seem to be adopting data centre and application consolidation. From e-mail to ERP. With the promise of higher efficiency and lower costs. Standardization and innovation, it’s claimed. It’s considered a no brainer by some.
Here’s the thing: it’s not a question of savings et al. It’s the illusion that these advantages makes logical sense (“truthiness”) because it appears that closing data centres and sharing software licenses will save money. And, it all fits into the narrative that governments are insufficient. It can be sold to the public.
It has short term political gain by showing governments doing something.
When the inevitable happens: the benefits did not accrue – the attention span of the press may have been exceeded. Or, the previous government could be blamed. Or, more likely, the blame is placed on public servants.
Why do government CIOs agree to this?
Government CIOs are political. The private sector beacons. And, there is advantage of overcoming the challenges. That’s not to say that Government CIOs are bad people. They aren’t – incentives are important to understand.
And, there are significant risk concerns in government. The desire for the tried and true rather than thinking differently. That means using software, hardware and services from large companies because no one ever got fired for buying [fill in the blank].
Even when the tried and true has been proven risky. It’s about conventional thinking, otherwise known as political thinking.
Is this a cynical view?
Perhaps. Consider the shared services promise:
All government organizations will run standard processes – from military to health to education to small organizations of less that 50 people responsible for a small initiative. Good luck with that.
Innovation through these standard processes because, apparently, nothing says innovation more than the lowest common denominator.
Consolidated data centres will reduce costs despite the need to run all sorts of specialized software, support elasticity, performance & fault tolerance (through remote data centres in large countries) and managing system administration changes, virus protection and intrusion detection. And, it’s not like these government departments and agencies are likely to accept lower SLAs for shared services than they experience with on premises data centres.
Lower costs through virtualization even though all government organizations will have the same fiscal year and fiscal period putting significant burden on computing power all at the very same time. (At least the major public cloud services support organizations with different fiscal periods and consumers with peak activities when organizations are running with less people.)
Improved governance through managing more stakeholders. Nothing reduces complexity than having more organizations with divergent needs
Reduced costs by reducing vendors is a super idea because everyone knows that virtual monopolies reduce costs. Not to mention that most of those vendors have proprietary technology meaning that consulting costs for certified vendors are likely to go up.
Governments are increasingly adopting Commercial-Off-the-Shelf (COTS) software to replace legacy and custom-developed software applications for financial, budget, expenditure, tax, treasury and civil service management.
COTS software includes features provided to support other customers and have commercial quality assurance processes resulting in significant “out of the box” functionality and higher quality that should have a better value proposition than custom developed code
The evidence shows that government organizations that chose to acquire Enterprise Resource Planning (ERP) COTS software from large software firms whose software is used in multiple “vertical” markets tend to experience similar risks to acquiring custom-developed software
The acquisition of Government Resource Planning (GRP) software designed exclusively for governments includes the COTS benefits with the ability to meet requirements that are often satisfied through custom-developed software
How are systems adapted to meet government requirements?
Custom-Developed or Bespoke Software
Software is developed from “scratch” using software programming
Specifications are developed that articulate government needs
Software architecture is created including the development of logic and data models
Software code customization including programming languages and scripting languages are used
Development tools such as Computer Aided Software Engineering (CASE) or Business Process Management (BPM) are used
COTS ERP Software
Configuration tools and vertical market “quick starts” are used
There is usually a method to adapt user screens and basic business rules
Specifications are developed that articulate government needs
Software architecture is included in the ERP
Logic and data models are extended to meet unique government needs
Change management tools are used to identify the difference between the off-the-shelf and needed functionality
BPM and business rule engines are often used, where some scripting or software code could be imposed, scripting languages are sometime used
Call-outs to custom-developed code is often used
Software code customization is required
COTS GRP Software
With focus on a single market, GRP software provides a broad range of configuration options for business rules and workflow
There is usually a method to adapt user screens
Software architecture is included in the GRP
Logic and data models to suit government requirements are included with methods to extend these with little or no development
Scripting and code customization is often required for legacy integration
Vast majority of unique requirements are supported out-of-the-box without any software code use
Software code customization is available, but rarely necessary
How do governments mitigate risk in GRP projects?
It is considered a good practice to ensure that the COTS software manufacturer is part of project governance to ensure commitment to meet government needs
What source code elements do governments receive from vendors?
Governments do not receive source code for physical device firmware, middleware or platforms from vendors except under open source licenses
Application platforms include specialized components for reuse such as business objects
Technical platform include middleware, programing languages and engines such as workflow
Government receive source code for configuration, custom development (including integration, reporting, custom application extensions) help and documentation as part of contracts or part of escrow agreements
Adaptability: code customization (including software code, call-outs, scripting) costs more than configuration for implementation and significantly more for software upgrades because customized code has to be maintained.
Footprint: hardware and bandwidth footprint including replication services can add significantly to space, equipment and electricity costs.
Leverage: importance of the government market to the software manufacturer is critical to ensuring that product upgrades meet emerging needs otherwise customization costs increase year over year.
Governance: many GRP projects create governance structures with Systems Integration firms but without the software manufacturer. This reduces the manufacturer commitment to meet government needs over time.
Upgrade costs associated with moving to newer software versions. This includes change management to ensure that any customization accomplished in the previous version is added to the next, with full acceptance testing
Is COTS software too expensive to roll-out government-wide?
Many governments are concerned about the cost of software licenses when implementing government-wide GRP
Some vendors provide value options to governments that include site and enterprise unlimited contracts, concurrent user and user profile licenses designed for government environments that reduces long term software costs. Some license methodologies are designed to support developing nation and emerging economy government needs.
What are the considerations in developing country governments?
Developing nation governments have lower human capacity than more developed countries. There tends to be more public servants dealing with financial transactions and fewer “power users” in developing countries. This is particularly evident when developing nation governments are looking at the cost of government-wide implementations. As a result, traditional licensing models used by enterprise software manufacturers are often unrelated to value received.
What are the acquisition, licensing and source code options available from FreeBalance?
Acquisition: Governments can acquire one or more FreeBalance modules, special packaging of components and modules, FreeBalance application and technical platform: the FreeBalance Accountability Platform,t o enable custom development
Meeting custom requirements: configuration, custom domains (to adjust data), custom development on the FreeBalance Accountability Platform, with the government, FreeBalance or a partner acting as the consultancy. FreeBalance will commit to adapting software to meet government needs as part of any acquisition. The use of the FreeBalance platform accelerates custom development when compared to general technical platforms because all underlying business objects used in the COTS suite are available for use.
Source code: all source code is placed in escrow, custom development based on business objects are available to governments as part of contracts.
Licensing: combination (based on government needs) of named users, concurrent users, user types (professional, power, data entry, approval, reporting) and enterprise-wide based on underlying components to enable flexible granular cost-effective licensing
What are good practices for reducing GRP implementation and adaptability risk?
Leverage GRP products and platforms that enable change with a minimum of customization
Reduce the burden of customization and code maintenance on the government Information Technology departments
Negotiate for good license terms but with the view that TCO is the most critical factor to manage
Governments are increasingly adopting Commercial-Off-the-Shelf (COTS) software to replace legacy and custom developed software applications for financial, budget, expenditure, tax, treasury and civil service management.
A major impetus for recent COTS projects is to replace multiple applications within a government organization with one integrated solution or to support numerous government organizations with a hosted shared serviceor private government cloud.
There are high incidents of failure of ERP implementations in government from late delivery to over budget to inability to achieve expected benefits. Many ERP implementations, even in the most advanced countries, fail. The purpose of this web page is to keep up-to-date with ERP failures in government.
Large ERP project failures in developed country governments
A 2012 study in the UK found low satisfaction with ERP in government Over half of the respondents were using Tier 1 ERP software. The survey showed that Tier 1 ERP satisfaction is far lower than with alternative solutions. Users of non-Tier 1 ERP solutions were 4 times more likely to rate their solution as exceeding expectations on any of 5 dimensions and half as likely to rate their solution as worse than expected.
The FreeBalance survey comparing ERP and GRP experience in the Government of Canada
FreeBalance completed a survey at the Government Technology Exhibition and Conference (GTEC), November 5 to 8 2012 and the Financial Management Institute of Canada (FMI) Professional Development Week, November 27 to 30 2012.Both of these conferences were held in Ottawa. We received 207 responses.
Over 70% of respondents believe that FreeBalance software has a much lower TCO in government financial management than ERP. Almost 70% suggested that the FreeBalance TCO was between 10 and 50%.
Analysis of GRP vs. ERP 5 Year TCO
FreeBalance competes internationally against major ERP providers. Price quotations are often made public during bid openings in many countries. Most of the international requirements call for all costs over a 3 or 5 year period including software licenses, implementation, support, training, middleware and hardware. Although some of the proposals were not this 5 Year TCO, Tier 1 ERP prices average 191% FreeBalance prices.
They represent, in my description of it, what happens to a business when a major change takes place in its competitive environment. A major change due to introduction of new technologies. A major change due to the introduction of a different regulatory environment. The major change can be simply a change in the customers’ values, a change in what customers prefer. … But what is common to all of them and what is key is that they require a fundamental change in business strategy, and that’s almost a definition of a Strategic Inflection Point. A Strategic Inflection Point is that which causes you to make a fundamental change in business strategy. Nothing less is sufficient.
This is a strategic inflection point for the way that governments manage information technology and the way in which software vendors support governments.
This “double dip” strategic inflection point is driven by:
Innovation Necessity: Budget constraints at a time of citizens demanding improved government performance and transparency at lower cost.
Value, Risk and Innovation Paradigm: Traditional methods to understand value have become obsolete in the age of social media.
Digital Darwinism: IT agility challenges incumbent Government IT providers.
The Metamovement is a movement of movements. Not all these movements are similar; no two are exactly like; each can be readily distinguished from the next. The Arab Spring is part of the Metamovement; the London Riots were part of the Metamovement; protests spreading across America, under the banner of Occupy Wall St, are all part of the Metamovement.
The Metamovement questions institutions. It demands a change in the status quo of how governments interact with citizens. This has a huge impact on policy and regulation. This is manifested in a demand for improved transparency through Government IT.
Takeaway for Government IT: the government performance and transparency demand is a cornerstone of the Metamovement. Initiatives like the Open Government Partnership is likely the “end of the beginning” for open government data. IT information silos, proprietary technology and focus on IT “control” in government inhibit the ability for countries to respond effectively to citizen demands.
2. Value, Risk and Innovation Paradigm
Government IT decisions tend to be risk-adverse. Small steps are taken, primarily with incumbent software vendors. Yet, this can create an environment that limits innovation and cost savings through what former American Federal Government CIO Vivek Kundra calls “IT Cartels.” This can result in attempting to find cost-savings through legacy technology“economies of scale” when modern technology can generate technology can generate more agility while reducing costs and aligning performance with budgets.
Moore’s central premise in this well written, actionable and highly recommended book, is that companies have a structural bias for investing in things today that cause it to starve out the new products and services that will generate growth in the next 2 -3 years.
My sense is that this “starving out” reflects Government IT and incumbent vendor approaches to innovation.
Takeaway for Government IT: there needs to be a new approach to risk & results in increasingly transparent world. The Metamovement does not demand tweaking. It does not want a 10% improvement. Traditional approaches to risk in Government IT have become increasingly risky because it is almost certain that these approaches will not result in what citizens want.
The reality is that we live and compete in a perpetual era of Digital Darwinism, the evolution of consumer behavior when society and technology evolve faster than our ability to adapt.
Nothing today is too big to fail nor too small to succeed. Disruption not only faces every business, its effects are already spreading through customer markets and the channels that influence decisions and behavior. What works against you also works for you. And, it is what you do now that defines your ability to compete for today and the future. You already recognize the importance technology plays in your business. That’s why you’re here. But recognizing the difference between emerging and disruptive technology and measuring its impact on your business, customer relationships, and products is a necessary discipline to successfully evolve.
Solis also connects the Metamovement with this change in IT in video trailer.
For the next generation of knowledge workers, entering the workplace often feels like entering a computer science museum
Takeaway for Government IT: There are significant limits to innovation among many Government IT providers. Make no mistake, governments will innovate the relationship with citizens. The key is that Information Technology should enable these changes. Old models, legacy technology can ensure that ‘big’ will fail.