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July 27, 2012

It's time for a new way of thinking about public services

Posted by Jim Havelka (View Profile | View All Posts) at 7:34 AM

Government organizations have an undeserved reputation of working on less challenging business issues and being technology laggards. Yet many US Government agencies support missions which are highly complex and directly impacted by the effects of globalization, growing and aging populations, global threats and the recent US economic issues.

US Government organizations such as Veterans Affairs, National Institute of Health, Postal Service, Treasury and Department of Defense operate enterprises for example which would be classified as one of the largest global hospital groups, R&D organizations, supply chain management organizations, financial institutions and retail organizations, respectively.  Additionally, many government agencies have IT infrastructure, datacenters and data analytics applications supporting their mission that dwarf those of industry leaders such as GE, Citicorp, Google or Amazon - Treasury/Internal Revenue Service (IRS), Health and Human Services (HHS) and Department of Homeland Security (DHS) quickly come to mind who spent a combined $16B ($USD) on IT Infrastructure and Services in 2011.   

Today, both US Federal Civilian and State governments are facing concurrent transformational challenges of modernizing large enterprise legacy systems, expanding the range of citizen services and addressing the utilization of Big Data management; challenges that are driving them to spend approximately $60B ($USD) in 2012 on IT services. 

The public services landscape has shifted over the past several years and we're seeing a new model emerge for how governments approach IT and how vendors are responding.  The financial crisis compounded some of these issues by forcing Government agencies to provide higher service levels with much more effective IT infrastructure, systems and processes to support lower operating budgets.  Government agencies are facing the same challenges we see in the private sector, including a squeeze on operating budgets, addressing inefficient operations and cost impacts due to mismanagement.  These challenges have occurred at traditional Government agencies as well as quasi-government organizations such as Fannie Mae, Freddie Mac and the US Postal Service, where the government has taken a more active role in managing these organizations. 

IT solution providers no doubt anticipate huge opportunities to solve these client challenges but the game has changed.  Quite frankly, many of the issues that governments have with their inflexible and costly legacy systems were created by entrenched IT vendors who were able to lock-up multi-year contracts and were less focused on driving cost efficiencies, let alone innovation.   Not surprisingly, government agencies are now demanding more from their vendors and looking to new high quality and innovative IT providers.  Government agencies want to reduce operating cost, free up resources, and run their technology infrastructure more efficiently so they can focus on more strategic pursuits like enterprise modernization, application innovation or adoption of disruptive technologies such as cloud, mobility and big data/data analytics. 

Successful providers will be able to capture market share by leveraging the experience, skills and innovation usually associated with the private sector, especially from lessons learned from similar disruptive changes within the financial services, healthcare and transportation industries. The new table stakes in this game include driving more value with tax-payer money and continuously demonstrating predictable outcomes on IT programs and services.  Building relationships based on performance and trust doesn't disappear either and providers will need to adopt more collaborative delivery models that drive results and co-creation while sharing operational risk. Government clients are no longer going to wait ten years to see the full benefit of their investments.

Government agencies are selecting IT vendors who can deliver cost effective, industry proven and innovative solutions with supporting best practices that reduce risk.  Being successful in the private sector requires an understanding of client needs better than the client.  The same applies to the public sector.  Infosys public services is well positioned to assist our government clients in solving their business and IT challenges.

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