Navigating The Modernizing Government Technology Act Accelerating .
Navigating the Modernizing Government Technology Act Accelerating Information Technology and Cybersecurity Modernization This article—the second in a Federal CFO insights series on the Modernizing Government Technology (MGT) Act—is aimed at C-suite leaders and explores leading practices and considerations for information technology and cybersecurity modernization. Don’t miss the first article in this series: Making the Most out of the Modernizing Government Technology Act, for information on establishing agency-level Working Capital Funds under the MGT Act.
Navigating the Modernizing Government Technology Act The Modernizing Government Technology Act The Modernizing Government Technology Act brings increased attention to Information Technology (IT) Modernization and Cybersecurity challenges facing the Federal government. Recent GAO studies on Information Technology1 and Information Security2 found that the Federal Government’s aging IT infrastructure and systems are becoming increasingly obsolete, costly and vulnerable. The number of cybersecurity incidents involving the government’s aging systems has grown by 1,120% since FY 2006, leading Inspectors General at 23 of the 24 CFO Act agencies to cite information security as a major management challenge for their organizations3. Many aging systems have poor interoperability with contemporary IT, hindering the adoption of modern and more cost-effective solutions. Maintaining these aging systems also consumes the vast majority of federal IT budgets. The Government’s IT budget for Fiscal Year 1 2 3 4 5 6 7 8 (FY) 2018 is estimated to be 95.7 billion; with 78.5% of funding reported to date on operations and maintenance (O&M) of existing systems 4. Signed into law in December 2017, the MGT Act sets clear direction from Congress that Federal agencies must accelerate efforts to modernize IT and strengthen cybersecurity, and establishes two concurrent initiatives to jumpstart these efforts. MGT provides blanket authorization to CFO Act agencies to establish a Working Capital Fund (WCF) for IT modernization and information security (see Deloitte’s first article in this series: Making the Most out of the Modernizing Government Technology Act for perspectives on leading practices and considerations on this subject). In addition, MGT provides for a centralized Technology Modernization Fund (TMF) to be administered by the General Services Administration and overseen by the Technology Modernization Board. The Board’s responsibilities include evaluating proposals submitted for TMF funding, and monitoring the progress of approved projects. Unlike the WCF provision, the TMF is not limited to CFO Act agencies. As of this article’s publication date, this fund is currently authorized for 100M in appropriations for FY20185, with an additional 210M requested for FY20196 to help agencies jumpstart modernization efforts. In February 2018, the Office of Management and Budget (OMB) issued implementation and funding guidelines, business case templates, and additional resources for agencies planning to submit project proposals to the TMF. While the size of the TMF is relatively small in comparison to the over 95 billion7 annual Federal IT budget, there is increasing attention from Congress through the passage of MGT and the Administration through the release of the President’s Management Agenda8 and the American Technology Council (ATC) IT The MGT Act provides guidance on the intended scope of IT Modernization in Sec. 1077 (b)(3) Use of Funds The Information Security Act of 2014 provides a definition for information security as used in this document Information Security: Cyber Threats and Data Breaches Illustrate Need for Stronger Controls Across Federal Agencies, U.S. Government Accountability Office, 2015. Analytical Perspectives: Budget of the U. S. Government Fiscal Year 2018, Office of Management and Budget, 2018. FY2018 Omnibus; H.R. 1625 Consolidated Appropriations Act, HR1625-224, U.S. General Services Administration, 2018. U.S. General Services Administration FY 2019 Congressional Justification, 2018. Analytical Perspectives: Budget of the U. S. Government Fiscal Year 2018, Office of Management and Budget, 2018. President’s Management Agenda, Office of Management and Budget, 2018. 2
Navigating the Modernizing Government Technology Act Modernization Report9 to the President. This environment presents opportunities for agencies to act now to identify potential IT modernization projects—funded either via the TMF, agency-level working capital funds, or appropriations—that improve mission effectiveness, provide cost savings, and reduce cybersecurity risks and vulnerabilities. The Case for Accelerating IT and Cybersecurity Modernization When properly executed, IT modernization may not only reduce the current cost of IT operations, but can also provide the engine to optimize business processes, improve customer experience, and allow for the adoption of new technologies, tools, and best practices. Recognition that aging IT infrastructure and systems introduce significant cybersecurity risks and vulnerabilities can be another powerful motivational force to accelerate IT modernization efforts. In the face of ever-more-sophisticated cybersecurity threats, cybersecurity tools, techniques, and best practices are constantly evolving to meet these increasing challenges, yet computer systems that are 50 or 60 years old are typically unable to leverage modern innovations to repel today’s hackers and purveyors of malware. Former federal CIO Tony Scott often used the analogy of how difficult it is to add air bags to a 1965 Mustang. Similarly, outdated mainframe systems can preclude the rapid adoption of cutting-edge digital and cybersecurity advances. Agencies must address the serious vulnerabilities that result from old equipment no longer supported and old software no longer patched. Without IT modernization, the intellectual capital of our nation is at risk. Expanding the IT Aperture and Prioritizing Modernization Solutions Nearly eight years after the White House issued a “cloud first” policy as a part of OMB’s Federal Cloud Computing Strategy10, cloud migration remains a top priority for federal leaders seeking to get their agencies out of the business of maintaining IT infrastructure. While this is an important first step, IT modernization entails so much more than just moving infrastructure to the cloud. A spectrum of solutions exists to achieve the benefits of IT modernization, and prioritization of efforts should reflect the agency’s most compelling needs and vulnerabilities. Government leaders should identify and rationalize the numerous legacy systems their agencies maintain, with a keen eye as to what to retire, what to replace, and what to refresh. This strategic planning is key, and will depend on close collaboration and agile decision-making between agency CIOs, CFOs, and other C-suite leaders. An effective approach is for the C-suite to collaborate on IT investment strategies that answer the MGT Act’s call to drive the agency mission forward through business process optimization, improved cybersecurity and the introduction of new technology, measuring progress to validate return on investment. The solutions highlighted below provide a roadmap of tools and accelerators agency leaders may consider as they build or refine existing IT modernization plans. The use of Portfolio Management tools can help improve and accelerate IT modernization and rationalization efforts. Depending on the challenges an agency currently faces beyond transitioning to the cloud, opportunities exist to automatically update or “refactor” the COBOL code for old but reliable legacy mainframe systems, introduce process robotics, improve customer-facing services by “going digital”, move to new commercial off-the-shelf (COTS) solutions, migrate to capabilities as a service, and upgrade critical cybersecurity capabilities. Portfolio Management. In focusing an agency’s IT modernization efforts, CFOs, CIOs and CTOs are working to make portfolio decisions quantitative, not qualitative. Using available system and organizational data, they are informing governance and providing analyticsbased answers to difficult portfolio questions. Analytics-based solutions can help to mitigate multiple issues that come up as a result of modernizing, consolidating, or changing the existing architecture by giving an understanding of the portfolio down to the data level. Portfolios comprised of multiple potentially duplicative, interconnected systems that all rely on similar data to operate must be adequately understood to confirm that no loss of functionality occurs during the modernization process. Portfolio Management Use Case: The Military Health System (MHS) used SEMOSS portfolio management to prioritize and plan IT modernization efforts. By determining the data that passed between systems and comparing aspects such as user base, deployment footprint, and alignment to requirements, the MHS identified which systems could be decommissioned in favor of a new electronic health record (EHR) versus those that needed to be sustained or modernized to effectively support EHR. Analytics platforms such as Semantic Open Source Software (SEMOSS) are currently used within a number of Federal and commercial enterprises to eliminate the “art” and move portfolio management to quantitative exercise. By collecting the underlying data that comprises the enterprise portfolio (to include capabilities, business processes, activities, data, interface, infrastructure, cost), and federating the data elements to understand how they each affect one another, Government leaders can begin to understand how changes to the portfolio impact multiple other systems or system components. By considering portfolio elements down to the data level and leveraging data driven analytics tools, the C-suite can make much more informed decisions by considering functional, architecture and cost-related impacts to drive decisions. 9 Report to the President on Federal IT Modernization, American Technology Council, 2017. 10 Federal Cloud Computing Strategy, Office of the U.S. Chief Information Officer, 2011. 3
Navigating the Modernizing Government Technology Act Cloud. Moving aging IT infrastructure and data centers to the cloud is an important early step for most agencies in their modernization journey. The value proposition of moving to commercial cloud solutions is clear. In the face of continuing budget uncertainty and the perils imposed by the lack of appropriations and reliance on funding through continuing resolutions, agencies can re-purpose O&M funding currently spent on outdated systems for use in consumption-based cloud buying, eliminating capital investments in favor of paying only for what an agency uses. Cloud also provides the ability to rapidly scale, provides agility, and paves the way for the rapid adoption of innovative new technologies and tools. Migration to Federal Risk and Authorization Management Program (FedRAMP)-authorized commercial cloud solutions can also focus legacy program managers on taking the steps necessary to modernize their systems to take advantage of the cloud value proposition. Application Modernization. Agency leaders should consider using automation technology to update the COBOL, Natural or PL/1-based mainframe systems that are still plentiful in government. Indeed, a number of critical government missions depend on these systems—some of which date back to the age of punch cards and green screens. Reliance on obsolete technology opens government agencies to serious risks, and the increased cost to maintain mainframe systems can prevent the investments required to modernize. Automation technologies can be applied to system modernization, resulting in a low-risk, low-cost approach. The legacy system is used as the starting point and then the COBOL, Natural, or PL/1-based code is automatically converted to a modern programming language. Because of the speed of automated technologies, the overall risk of modernization is typically reduced, and less time and fewer resources are generally needed. Using automation, it usually takes 18 to 24 months to complete a project. In a typical modernization, it may take that long to gather requirements. Once a system update is completed, agencies can start saving money on operations and maintenance, as well as evolving the system iteratively. Agencies can attract professionals with up-to-date skills, and can enhance cybersecurity capabilities. In addition, agencies will have a platform that takes advantage of other powerful, costeffective strategies, such as virtualization and cloud computing. Application Modernization in Action: The Texas Department of Motor Vehicles used automated technology to upgrade its more than 30 year-old license and registration system from a costly mainframe environment to commodity hardware. In just 12 months, the frontend, point-of-sale, and reporting systems were transformed from COBOL to Java and then off the mainframe system. entirely after 22 months. Process Robotics. The use of process robotics is reshaping how the Federal Government delivers services to its citizens and the nation. This computer-coded, rulesbased software uses ‘bots’ to automate human activities for repetitive, lower-value tasks. Process robotics replicates these actions in the same user interface layer and security setting as a given end user, automating processes without compromising the underlying IT infrastructure. Furthermore, process robotics can be directly implemented in a physical (i.e., desktop) or virtual environment, providing the flexibility to quickly and cost effectively deploy onto an organization’s existing hardware. Because it requires minimal system integration, agencies may be able to deploy process robotics in as little as a few weeks depending on the complexity of the process. Process robotics can be introduced as part of the agency’s IT modernization efforts to shift funding from back-office to mission delivery, reduce backlogs and improve service levels, typically without large investments. Potential benefits of process robotics implementations include: 01. Reduced costs by automating timeconsuming, error prone, and repetitive transactions; 02. Improved ability to allocate limited resources to high-value tasks; and 03. Improved statutory compliance. Other indirect potential benefits may also include improved workforce morale and productivity through reallocation of existing resources to more meaningful and impactful activities, and customer satisfaction through improved service delivery. Given the abundance of high-volume, transactionbased processes, constrained resources, and complex technical environments in the Federal Government, the potential applications and impacts of this technology are almost endless. Finally, software vendors are introducing machine learning-based tools which open new and powerful capabilities to move beyond simple task automation. Digital. Government leaders are also recognizing how a new generation of digital innovators are using the combination of cloud computing, mobile devices and analytics to reform and modernize longstanding processes within government and overcome the barriers of legacy systems. In accelerating digital transformation efforts at their agencies, leaders should focus on five major areas: 01. Developing a clear digital strategy and roadmap that addresses the key elements of digital transformation: culture, leadership, workforce, and procurement. But the strategy must be accompanied by a mechanism to track and measure progress against the digital goals. 02. Focusing on “User-centricity.” A key tenet of digital delivery is to start with the user. Yet many government organizations are still not engaging citizens in service design, and lack user-centered design skills in their workforce. 03. Culture. As organizations mature digitally, they learn to increasingly employ digital trends and technologies to reinforce a culture of innovation and collaboration. Even designating space and time for groups to collaboratively work on solutions, ideas, and challenges could go a long way toward building a culture of innovation. 4
Navigating the Modernizing Government Technology Act 04. Workforce skills. Workforce skills can be the most challenging area for digital evolution. Many government agencies lack the skills to take full advantage of digital transformation. Digital strategists need to develop a plan that pinpoints what workforce capabilities they need and how they are going to secure them. 05. Procurement. Digital transformation reveals the importance of addressing procurement challenges by focusing on agile development, less restrictive terms and conditions, and a more decentralized procurement approach. Commercial Solutions. Sometimes the best option for an IT modernization effort is to retire an outdated system and leverage a commercial off the shelf (COTS) software solution. A COTS package solution works well to support standard commodity business process, and leverages economies of scale from this standardization to reduce cost, streamline software maintenance, and facilitate end user support. Use of COTS solutions can also drive much needed business process change/optimization by avoiding the temptation to customize the COTS software and instead aligning the process to leading industry practices. Capabilities as a Service. Finally, some agencies are recognizing the reality that certain support functions are best performed by the private sector, freeing up government personnel to focus on core mission responsibilities and inherently governmental work. When deciding to outsource a support function, agency leaders are recognizing the power of contracting for an outcome rather than building yet another new system. Using consumption-based buying approaches long established for seat management and cloud computing contracts, agencies can likewise buy a “capability as a service” and improve access to commercial innovation, reduce capital investments and use funding to pay for results rather than development efforts. Achieving IT Modernization Goals The MGT Act further reinforces the Federal Government’s push for IT and cybersecurity modernization, and provides funding via the TMF to launch or accelerate these efforts. There are many solutions available, and each agency’s course will depend on their most pressing priorities. Creating or improving agency IT modernization plans requires the C-suite to make key prioritization decisions via strategic planning, agile decisionmaking, and ongoing communication and coordination. The government need not retire every legacy system immediately, but the future is a digital, web-based, mobile app world, and the government must make strides to adapt to this new digital landscape. No matter where an agency is in its modernization journey, effective prioritization, planning, and implementation of the solutions discussed above can help government leaders achieve their goals. Article authors and contributors include David Wennergren, Managing Director; Brian Siegel, Principal; Jon Holladay, Specialist Executive; Mike Kaczowka, Manager; Mike Kuchler, Senior Consultant; and Tim Gerlach, Senior Consultant; Deloitte Consulting LLP. Deloitte Federal CFO Insights are developed with the guidance of Federal CFO Program Leaders Alla Bishop, Partner, Deloitte & Touche LLP; Cindy Stockman, Specialist Executive; and Grant Mooney, Manager, Federal CFO Program Manager, Deloitte Consulting LLP. Contact us: David Wennergren Managing Director Deloitte Consulting LLP Tel: 1 571 814 7419 Email: dwennergren@deloitte.com Kyle Cruley Principal Deloitte Consulting LLP Tel: 1 571 882 7927 Email: kcruley@deloitte.com Scott Buchholz CTO, Government Practice Deloitte Consulting LLP Tel: 1 571 814 7110 Email: sbuchholz@deloitte.com Brian Siegel Principal Deloitte Consulting LLP Tel: 1 571 882 8849 Email: brisiegel@deloitte.com 5
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Modernizing Government Technology (MGT) Act—is aimed at C-suite leaders and explores leading practices and considerations for information technology and cybersecurity modernization. Don't miss the first article in this series: Making the Most out of the Modernizing Government Technology Act, for information on establishing agency-level
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