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Finding the right approach for sustainable federal IT cost reduction

Axe or chisel? What approach should federal leaders use to cut costs from federal IT, when they’ve already whittled off the “fat?”


The traditional approach of IT cost cutting has been to trim off the surface layer of programs or services that aren’t deemed essential, often by broadly cutting a fixed percentage. But where do you go from there? Federal IT can’t risk carving into the underlying layer of muscle that supports the mission. Digging too deeply in the wrong areas could leave you with a hollowed out IT shop, hindering your organization’s ability to deliver public service for the future.

IT cost reduction that only focuses on tangible, obvious components—e.g., hardware, software and data centers—won’t lead to sustainable savings. However, federal IT leaders who take a pragmatic approach to cost cutting can increase government efficiency and grow the ways in which IT can support the mission.


A more strategic approach to sustainable cost savings in federal IT calls for federal chief information officers (CIOs) is to first pause and ask the right questions of the agency and its key stakeholders. By speaking with those who use IT services—your customers—you can translate what end users are saying into funding targets, and direct cost-reduction measures elsewhere.

Several factors can get in the way of a federal IT cost-cutting plan. Agencies can be crippled by analysis paralysis. The culture may be risk-averse. Internal silos can create territorial demands or political pressure. Everyone from citizens to consultants may be weighing in with (sometimes conflicting) opinions on how you should transform.

The federal IT leaders that listen to customers, find innovative ways of meeting mission goals and look at every IT function as an opportunity to save—and serve—can achieve sustainable cost reductions while delivering public service for the future.


The private sector grapples with the same questions about how to balance IT priorities. IT leaders at more than 3,700 companies estimate that they spend an average 72 percent of their budgets on keep-the-lights-on functions, while only 28 percent of the money goes toward new projects.1

There is no magic formula because the percentages will vary based on the agency and its mission. For example, an agency driven by innovation, such as the National Aeronautics and Space Administration (NASA), may require a higher percentage of IT capabilities to grow and transform. One IT innovation alone can yield millions in savings that can be reinvested in the mission. When the U.S. Department of Homeland Security developed technology to allow use of multi-vendor matchers for its US-VISIT program (which uses biometrics to track international visitors to the US), the innovation not only eliminated the program’s dependence upon a single hardware vendor, but also led to a reduction in matching costs of more than 40 percent.2


These three steps can serve as your top-level course of action for strategic federal IT cost reduction.

  1. Mission measurement

    First, survey the agency’s mission goals and outline what IT can do to support those goals. This often requires looking at the end result—the problem you are trying to solve—and working back from there. Then, identify how IT is supporting or can support these mission goals. Don’t stop with the obvious; look to see if there are hidden opportunities that will allow you to increase the value that IT provides.

  2. Rank importance

    Once you’ve inventoried IT capabilities of value, it’s time to prioritize IT investments by determining what aligns with the mission.

  3. Align IT spend to priorities

    Federal agencies will get greater returns by matching IT dollars with mission objectives. There are methods for determining where to invest in federal IT.


1. Zetlin, Minda; Computerworld; “How to balance maintenance and IT innovation;” October 2013, online at

2. Accenture; “U.S. Department of Homeland Security: Security Management and Biometrics;”