government it challenges during the global economic...
TRANSCRIPT
Government IT Challenges During
the Global Economic DownturnCort Isernhagen,
Vice President, Asia/Pacific
IDC/Government Insights
Discussion
• The Economic Downturn and the Government’s Response in Asia
• Impact on Public Sector IT Investments
• Four Themes for Government IT Executives
• Guidance for CIO’s
About Government Insights
Government Insights, an IDC Company, is a global advisory services and market research firm, that assists government executives achieve mission critical success by maximizing the value of technology investments.
– Maximize the business value of their technology investments
– Drive technology-enabled business innovation
– Minimize technology risk through accurate planning
– Make informed technology decisions
The Economic Downturn and the Government’s Response in
Asia
Government Response to Economic Downturn
Over US$1 Trillion announced by Asia/Pacific Governments in economic stimulus plans since August 2008
– Another US$340 Billion is expected to be announced
– Stimulus plans have generally had three main areas of focus1. Job Creation
2. Improvement of Government Citizen Services
3. Economic Stabilization
Countries Announced in: Stimulus Package (s) Value in USD
Australia Aug 2008
Dec 2008
Feb 2009
Economic Security Strategy (ESS)
Phase 1:
A$10.4 billion to assist groups most affected by the flow-on effects of the global
recession, including low/middle-income families, pensioners and carers, and 1st home
buyers.
____________________________
Phase 2:
(i) A$6.2 billion (US$4 billion)New Car plan for a Green Future
(ii) A$300 million (US$195 million) Regional and Local Community Infrastructure
program to build community infrastructure in local council areas.
(iii) A$15.2 billion (US$9.9 billion) COAG (Council of Australian Governments) funding
package focused on education and health
(iv) A$4.7 billion (US$3.1 billion) Nation Building Package (NBP) announced in
December 2008.
____________________________
On 3 Feb 09, government unveiled A$42 billion Nation Building and Jobs Plan (NBJP)
to support jobs and invest in future long term economic growth. It includes aggressive
infrastructure spending plans to stimulate activity and create jobs.
Phase 1
US$6.8 billion
____________________________
Phase 2 (total around US$17.2 billion)
____________________________
NBJP = US$27.4 billion
Hong Kong Dec 2008 Hong Kong Chief Executive Donald Tsang has unveiled a US$12.9 billion dollar
rescue package for small and medium-sized enterprises. Under the plan, the business
loan ceiling will be raised to US$769,230, while more than 60,000 jobs will be created
next year.
US$12.9 billion
India Dec 2008 Announced a stimulus package of about US$8 billion
Plans for a 2nd stimulus package is underway and not yet announced.
US$8 billion
Indonesia Jan 2009 Government to spend more than 72 trillion rupiah on infrastructure and other projects
to boost growth and create jobs.
US$6.6 billion
Korea Nov 2008 Government announced 14 trillion won of stimulus package US$9 billion
Malaysia Nov 2008
Mar 2009
Government announced RM7 billion worth of stimulus measures
2nd stimulus package was announced at RM60 billion to be spent over 2 years
US$1.9 billion
US$16.2 billion
New Zealand December 2008 Stimulus package to inject about NZ$7 billion into the economy over two years.
First tranche of stimulus is NZ$500m (US$259 million) package to fast-track road
upgrades, build new schools and improve state housing
US$3.6 billion
The Philippines Jan 2009 PhP300 billion Economic Resiliency Plan US$6 billion
PRC Nov 2009 US$586 billion Stimulus Package by 2010
However, the real size of the package may not be as large as the government has
described. “Some of the measures announced in the stimulus package appear to have
been already introduced or even implemented earlier. Hence, the size of this stimulus
package—which is expected to be in the form of additional spending—may have been
overstated.”
US$586 billion
Singapore Feb 2009 Adopted an 'expansionary budget' of over S$40 billion
Resilience package of S$20.5 billion (part of expansionary budget)
Total 2009 national budget over = US$26.2
billion
Resilience package = US$13.4 billion
Taiwan Taiwan plans to boost its economic stimulus package to 500 billion Taiwan dollars
amid signs of growing economic deterioration.
US$14.4 billion
Thailand A Bt116-billion economic stimulus and social-welfare package is the first in a series of
funding boosts expected to total Bt300 billion this year
US$3 billion
(expected to reach US$8,4 billion)
Vietnam Jan 2009 VND17 trillion economic stimulus package for 2009. US$1 billion
Japan Dec 2008
Feb 2009
Japan unveiled a giant US$255 billion stimulus package.
A fresh stimulus of US$325 billion is the plans.
US$255 billion
(plus possibly another US$325 billion)
Countries Announced in: Stimulus Package (s) Value in USD
Australia Aug 2008
Dec 2008
Feb 2009
Economic Security Strategy (ESS)
Phase 1:
A$10.4 billion to assist groups most affected by the flow-on effects of the global
recession, including low/middle-income families, pensioners and carers, and 1st home
buyers.
____________________________
Phase 2:
(i) A$6.2 billion (US$4 billion)New Car plan for a Green Future
(ii) A$300 million (US$195 million) Regional and Local Community Infrastructure
program to build community infrastructure in local council areas.
(iii) A$15.2 billion (US$9.9 billion) COAG (Council of Australian Governments) funding
package focused on education and health
(iv) A$4.7 billion (US$3.1 billion) Nation Building Package (NBP) announced in
December 2008.
____________________________
On 3 Feb 09, government unveiled A$42 billion Nation Building and Jobs Plan
(NBJP) to support jobs and invest in future long term economic growth. It includes
aggressive infrastructure spending plans to stimulate activity and create jobs.
Phase 1
US$6.8 billion
____________________________
Phase 2 (total around US$17.2 billion)
____________________________
NBJP = US$27.4 billion
Hong Kong Dec 2008 Hong Kong Chief Executive Donald Tsang has unveiled a US$12.9 billion dollar
rescue package for small and medium-sized enterprises. Under the plan, the
business loan ceiling will be raised to US$769,230, while more than 60,000 jobs will
be created next year.
US$12.9 billion
India Dec 2008 Announced a stimulus package of about US$8 billion
Plans for a 2nd stimulus package is underway and not yet announced.
US$8 billion
Indonesia Jan 2009 Government to spend more than 72 trillion rupiah on infrastructure and other projects
to boost growth and create jobs.
US$6.6 billion
Korea Nov 2008 Government announced 14 trillion won of stimulus package US$9 billion
Malaysia Nov 2008
Mar 2009
Government announced RM7 billion worth of stimulus measures
2nd stimulus package was announced at RM60 billion to be spent over 2 years
US$1.9 billion
US$16.2 billion
New Zealand December 2008 Stimulus package to inject about NZ$7 billion into the economy over two years.
First tranche of stimulus is NZ$500m (US$259 million) package to fast-track road
upgrades, build new schools and improve state housing
US$3.6 billion
The Philippines Jan 2009 PhP300 billion Economic Resiliency Plan US$6 billion
PRC Nov 2009 US$586 billion Stimulus Package by 2010
However, the real size of the package may not be as large as the government has
described. “Some of the measures announced in the stimulus package appear to have
been already introduced or even implemented earlier. Hence, the size of this stimulus
package—which is expected to be in the form of additional spending—may have been
overstated.”
US$586 billion
Singapore Feb 2009 Adopted an 'expansionary budget' of over S$40 billion
Resilience package of S$20.5 billion (part of expansionary budget)
Total 2009 national budget over = US$26.2
billion
Resilience package = US$13.4 billion
Taiwan Taiwan plans to boost its economic stimulus package to 500 billion Taiwan dollars
amid signs of growing economic deterioration.
US$14.4 billion
Thailand A Bt116-billion economic stimulus and social-welfare package is the first in a series of
funding boosts expected to total Bt300 billion this year
US$3 billion
(expected to reach US$8,4 billion)
Vietnam Jan 2009 VND17 trillion economic stimulus package for 2009. US$1 billion
Japan Dec 2008
Feb 2009
Japan unveiled a giant US$255 billion stimulus package.
A fresh stimulus of US$325 billion is the plans.
US$255 billion
(plus possibly another US$325 billion)
Stimulus Program Focus Areas
Citizen
Services
• Education
Programs
• Healthcare
Programs
Economic
Stabilization
• SME Support
• Tax Incentives
• Currency
Support
Jobs Creation
• “Shovel ready”
projects
• Workforce
Skills Upgrade
Sweet Spot!
• Programs that
touch at least 2 of
the 3 areas
CIO’s Must Respond to Forces Other Than the Economy
Key Issues…..
Other than the Economy• Homeland security
• Public safety
• Citizen health and welfare
Economy
Election
IT
Understand
• State & Local Budget
Problems
• Citizens need more
services
• Impact of Stimulus
• New
roles/regulations
• New IT
requirements
• More Transparency
and Accountability
Anticipate
• Leadership changes
• More centralization of
procurement
• Increased oversight
• New sourcing models
• Geo-political trends
Four Themes for Government IT Executives
Four Key Themes in 2009
Government’s New Business Role
Investment Optimization
Future Schools for Competitive and Inclusive Economies
Public Safety and Security
Government’s New Business Role
Changes ICT Impact CIO Impact
Gov. will more actively
support domestic
business
Planning, forecasting,
and business
analytics applications
Adding new,
unfamiliar applications
to the portfolio
Web 2.0, blogs, wikis,
social networking
applications
Create applications for
workflows that have
not been tried before
Citizens require
transparency and
accountability
Risk management,
compliance, mgmt.
dashboards
Operate using private
sector metrics
Gov. will need to
operate like a
business itself
IT Investment Optimization
Changes ICT Impact CIO Impact
Gov. will use a whole-
of-government
approach
Virtualization, system
and data center
consolidation,
Multi-agency
collaboration –
willingness to partner
Outsourcing, PPP,
more defined SLA’s,
vendor consolidation
New types of vendor
agreements
Agencies will seek
more service for same
budget
Interoperability and
security concerns
New processes to
handle cyber attacks
or data leakage
Share data across
government
departments
Future Schools for Competitive, Inclusive Economies
Changes ICT Impact CIO Impact
Gov. will use IT to
retool/retrain
workforce
Management of large
scale deployments
Understand what
future IT requirements
will be
Communication and
collaboration solutions
Technologies are
typically bandwidth or
storage intensive
Schools will require
ICT upgrades to
deliver
Leverage existing
infrastructure (mobile
over public networks)
M-education & e-
learning have unique
content requirements
Schools will reach out
to underserved/rural
areas
Public Safety and Security
Changes ICT Impact CIO Impact
New demands on sub-
agencies, defense,
crime, immigration
Interoperability, real
time access, data
security issues
Holistic, cross-agency
view of security
across all
departments
Biometric solutions,
collaborative
technologies,
analytics
Create rules of
engagement for
collaboration
Increased cross-
border collaboration
Mobility solutions,
storage/retrieval
solutions
Ensure all staff
understand value of
the data
Security will be on the
agenda at local levels
Guidance for Government CIO’s
Guidance For Government CIOs
Manage IT Projects as a “Portfolio”
Optimize IT Investments
Refine Procurement
Align IT to the Business Strategy or Government Mission
Align IT to the Government MissionTwo Goals of Effective IT/Business Alignment
Innovation
happens here!
Compliance
happens here!
Align IT to the Government MissionCreate a Governance Committee
1. Prioritize portfolio of projects
2. Collaborate across groups
3. Share best practices
Important!
Make sure you have senior executive participation
or support!
Group Determining
Priorities
Formal,
permanent
committee
34%
Formal,
temporary
project team
or committee
12%
Informal,
temporary, ad
hoc group
19%
Informal,
uncoordinate
d
11%
Done soley by
a single
individual
13%
Don't know
11%
Source: IDC SWDC Q107 Survey, 2007, n=808
Align IT to the Government MissionPrioritize Using Pareto Analysis
How to do a Pareto Analysis
• Sort planned 2009 project spend into a descending list
• Divide into quintiles; I.e., 5 buckets of equal planned spend
• Analyze spend by bucket
• Critical question – how much of the planned 2009 spend is strategic versus low return maintenance . . .
?Is 80% of your IT spend going to the
top 20% of your strategic initiatives?
Manage IT Projects as a “Portfolio”Balancing the Overall IT Portfolio
• 80-90% of IT work is non-discretionary, or “lights on”
• 14-18% of IT work are riskier initiatives that are more evolutionary
• 2-6% of IT work is the highest risk and most radically transformative projects
Did you know????
Manage IT Projects as a “Portfolio”Balancing the Overall IT Portfolio
4.90%
5.30%
10.40%
13.40%
14.50%
14.70%
16.20%
20.70%
0.00% 5.00% 10.00% 15.00% 20.00% 25.00%
Virtualization
management
No hurdle
Outsourcing
Project prioritization
Multi-threaded softw are
Internal
Staff ing/Resources
Financial
Resources/Budget
Time to implement/Pace
of change
Top challenges to managing your project portfolio?
• Balancing is hard.
• Prioritizing is the key.
• Make sure your resources are used on the most important things.
Source: IDC 1Q08 Quality Survey, 2008
Refine ProcurementUnderstand the Dynamics of Multi-Year Deals
Answer these questions…
• How long should contracts be? 1 year, 3 years….?
• Should I use a single source or use multiple vendors?
• How do I create reasonable SLA’s?
• How do I create value over the life of the contract?
Refine Procurement
• Despite the economy, IT investment will continue
• It will be hard to compare pricing. Contract terms and pricing will fluctuate greatly.
• IT Suppliers will offer attractive short term deals, but you need to plan long term too.
• Compare pricing of short term vs. long term contracts.
Optimize IT Investments
• Decreased Investment in Hardware & Peripherals
• Increased Investment in Some Software, Cloud, SaaS, Outsourcing
• Invest in what you need today, but plan for the future
Optimize IT InvestmentsQn: What does cost reduction/savings in ICT
mean?
19.6%
80.4%
Buying lower-end products, services & solutions
Deploying solutions in an innovative way to save cost
•Optimization does not always mean cost reduction
•“Innovation” to save costs is the preferred approach
Summary Guidance
• Find the Sweet Spot! Invest in projects that touch 2 or 3 pillars of economic stimulus packages.
• Understand the key themes for governments.
• Optimize your IT investments– align them to the needs of the business
– manage a portfolio of projects with differing levels of risk
– review procurement processes.
Contact Information
• Cort Isernhagen
www.government-insights.com
www.idc.com