Get Wired

INFORMATION TECHNOLOGY

Get Wired

What you must do to manage in the information-age bureaucracy.

By Anne Laurent

osslyn Kleeman knows from personal experience how hard it is to get top managers wired up for the information age. She got her first look at government's information technology gap during General Accounting Office computer training in 1991. Then a director in GAO's General Government Division, Kleeman watched the gap materialize as staffers of all grade levels and occupations sat down in front of personal computers in the training room. Younger people fired up the PCs, clicked open the software and began fooling around with the programs.

"The older people, especially the executives and some managers, were embarrassed. They didn't know how to turn on the machines and here were these younger people who were very comfortable," says Kleeman, now distinguished executive in residence at George Washington University's public administration department.

As class time drew near, Kleeman saw one manager after another anxiously glance around the room, peer at his wristwatch and beat a hasty retreat after "remembering" an important meeting. The scenario played itself out in class after class, until GAO finally set up special sessions for bosses only. When managers continued ducking out of those sessions, exasperated trainers settled on teaching top people one-on-one in the safety of their own offices.

There's no longer any hiding from the need to get wired. Once the source of frustration, but little urgency, the long-standing gulf between technologists and generalists in government and business now stands in the way of life-or-death changes for many organizations. They must understand and adopt technology-dependent changes in business practices, or face deteriorating services, angry customers and even possible shutdown or absorption by other agencies.

Yet the problem of techno-shy executives remains common across agencies and in the private sector. "A lot of managers and executives don't want to go to training with their subordinates, especially in information technology," says Stephen Kennedy, Social Security Administration training director. "We found a lot of managers weren't signing up for courses or we were getting calls for tutorials or walk-throughs on new software. We started doing one-on-ones, recognizing their hesitancy to do general classes." In June, the Wall Street Journal reported that half of private sector CEOs don't use computers at work. "For people of my generation, who didn't grow up with technology, when someone mentions technology, their minds turn off," says John Koskinen, deputy director for management at the Office of Management and Budget.

Time to Wade In

Time has run out on general managers and executives reluctant to get wired. In a 1994 article in Forbes ASAP, management guru Peter Drucker had this warning for managers: "If you are not computer literate, do not expect anyone in your organization to respect you. The young people in your organization take it for granted; they expect at least literacy from the boss." In fact, mere computer literacy is no longer enough. Senior Executive Service core qualifications require executives to be able to acquire and administer information resources, identify and integrate technological issues, and ensure the development and utilization of management information systems and other technological resources.

General managers and executives no longer have the luxury of blaming the information systems shop when some huge technology project fails to deliver, busts its budget or falls so far behind schedule the equipment is obsolete before it's installed. Henceforth, tough new requirements to demonstrate tangible business returns for IT investments will fall on general managers, not IT experts. General managers will bear as much responsibility as technologists do for the success of information technology investments. To shoulder their new duties, general managers and executives should be spending 20 percent to 30 percent of their time on information technology issues, says Christopher Hoenig, associate director of information resources management policy and issues in GAO's Accounting and Information Management Division.

The performance focus of laws like the Government Performance and Results Act, Chief Financial Officers Act, Paperwork Reduction Act, Federal Acquisition Streamlining Act and Federal Acquisition Reform Act was extended to information technology this year with the Information Technology Management Reform Act. ITMRA was enacted along with FARA in February as part of the 1996 Defense authorization. "The legislation will fundamentally shift the government's focus on information technology from a technical issue to a management issue," said the bill's author, Sen. William Cohen, R-Maine, during hearings on the measure last year. "Information technology procurements under the current system have focused on things like the speed of the computer and the type of processor. Rarely, if ever, have they focused on whether the system was going to enhance the agency's mission by, for example, reducing benefit processing time or realize savings by reducing overhead expenditures."

The confluence of new laws and business necessity means the government manager of the future will be a lot more process-oriented, says Henry Philcox, former IRS CIO and now chief information officer (CIO) at DynCorp in Reston, Va. "Generalists will have to understand what work processes crosscut the organizational structure, what rewards make those processes work, and what IT underpinnings will make those processes more efficient."

Prism of Performance

In the ITMRA era, which began Aug. 8 when the law took effect, managers will view technical equipment and systems through the prism of performance. No more will information technology be treated as merely an expense. No longer will justifications like "We had to keep current," or "Everybody's using this now," suffice in accounting for technology purchases. Information technology will be treated as an investment to be measured in terms of cost savings, faster service delivery, efficiency improvements, customer satisfaction and even societal benefits like reduced pollution or lives saved.

Oversight agencies, such as GAO and OMB, won't be satisfied any longer merely tallying the number and cost of agencies' IT components; they'll be scrutinizing every IT investment. Potential IT investments will be traded off against one another and balanced against non-technical investments. What's more, Congress expects agencies to cut information technology costs 5 percent a year and use IT to increase efficiency of operations 5 percent a year.

Among many other requirements, ITMRA directs all managers to ask three questions before applying information technology to any process:

• Should the government perform the function?
• If the government should perform the function, should it be kept in house, or be moved to another agency or outsourced to the private sector?
• Have we reengineered the process?

Technology Replacing People

Even without the prodding of laws and regulations, most program managers and executives are beginning to understand they have no choice but to get up to speed technologically. They're caught in the squeeze play between budget and staffing reductions on the one hand and the growing expectations of their customers-both inside agencies and among the public-on the other. "As I sit here today, close to 200,000 people have actually left government," says Renato DiPentima, former Social Security Administration associate administrator for systems, now CIO at Systems Research and Applications in Reston, Va. "The pressure on government managers in controlling budget and positions is such that the only thing they have left is making the people they have left more efficient. They have to substitute capital for labor. The only game is the intelligent use of information technology."

The public is growing increasingly impatient with technologically backward government, says George Lindamood, former CIO for Washington state and a researcher with the Gartner Group, IT advisers to industry and government. "The private sector uses information technology to cater to customers, and thus people expect the same of government. They know there's a better way and it's being done by Wal-Mart."

IT has just become too big, too ubiquitous and too important to the business of government to be left in the hands of the information systems shop. Getting real returns on technology "means fitting it to the way you run the business," Hoenig says. "Otherwise it's just the IT people pushing a string." Technologists lack the operations know-how and the political power within organizations to plan and be responsible for IT decisions and investments, he says.

Computer Chaos

Numbers alone make a strong case for kicking IT responsibility to the top of the management chain. In the 10 years ending in 1994, the government spent more than $200 billion on computer systems. Annual computer expenditures are approximately 5 percent of all discretionary spending and 12 percent of government goods and services purchases, according to "Computer Chaos," a 1994 report by Sen. Cohen. This year's IT spending is expected to total $25 billion, excluding unreported Defense Department software spending totaling at least $25 billion, according to OMB. IT expenditures have increased in each of the last six years. But in many cases, government has little to show for its money.

The worst IT snafus are well-known:

• The IRS Tax Modernization System, likely to cost more than $8 billion without commensurate gains in efficiency or revenues collected. (See "System Error")
• The $37 billion Federal Aviation Administration modernization of air traffic control, including the advanced automation system, which was completely restructured last year after its projected costs tripled.
• The 7-year-old Defense Department corporate information management initiative, under which DoD spends $3 billion a year to modernize automated systems without significant benefit, according to GAO.
• The $5 billion National Weather Service modernization, now running five years behind its anticipated completion date.

Know Your Business

"Understanding your business-the work process, the decisions needed and the information needed for those decisions-is a more powerful way of taking advantage of technology than [taking] 'Information Technology for Business People'," says GAO's Hoenig. He should know. His shop, GAO's Accounting and Information Management Division, has been auditing agency automation efforts and finding them wanting for years. The division's consistent drumbeat of doom about IRS' tax modernization played a big role in a House vote to launch a shot across IRS' bow by taking back funds previously approved for the $8 billion program, cutting thousands of staffers and turning over its management to the Defense Department. Senators handling IRS funds also are taking a hard line on modernization, though they oppose bringing in DoD. The final 1997 IRS appropriation probably won't be as dire as its early versions, but legislators' ominous message will be clear. Agency officials already have announced plans to cut 5,000 jobs in fiscal 1997, most of them from information systems.

Even as it sternly rebukes agencies for mishandling IT investments, GAO has provided cover for IT-intimidated managers and executives. The audit agency made available in 1994 a management guide that describes 11 practices by which top organizations have effectively used information technology to improve performance. Hoenig reduces the simple but rigorous formula to: "Know your business more precisely." Before dipping a toe in the IT ocean, Hoenig says, general managers must know their core business process inside and out. "A lot of senior executives know their business intuitively but don't know it systematically, so they can't model the decision-making and data needed so it can be automated."

The first step toward systematic knowledge is ferreting out the true costs of the core business process. Those who can't currently tally costs-and they are legion, Hoenig says-should use activity-based costing to calculate the exact cost of labor and other factors influencing the process. Costs in hand, managers then must decide which elements of the business process are most critical to service and quality, that is, spots in the process with lots of customer interaction or points that are rife with error. Choose such a spot and pick it apart, Hoenig advises. Reconceptualize it, setting a new, more exacting performance target. Consider how information technology can speed, improve and even change the process. Develop a prototype of a better way of working, measure six months' worth of performance to see whether it hits the new target. If it does, test the reformed process widely and then bring it up to full operation.

What Hoenig is spelling out is reengineering and reinvention in spades. It's Performance-Based Management 101 and it's everywhere these days. From the 1993 Government Performance and Results Act to the 1994 Federal Acquisition Streamlining Act to ITMRA, the emphasis is on raising the performance bar and restructuring and streamlining to meet new goals. ITMRA's authors were conscious of this, according to a Cohen staffer involved in drafting the legislation. "We integrated [ITMRA and GPRA]. We wanted to make sure they were complementary." New acquisition rules also add performance pressure, says Steven Kelman, OMB administrator for procurement policy. "The main changes support results-oriented acquisition; changing [acquisition] requirements to make them more performance-oriented."

This harmonic convergence of laws requiring performance consciousness has led OMB to begin preparing a capital planning guide. Slated to be available for the 1999 budget process, the guide will tell managers how to plan and manage capital assets and will provide a single data collection point for all the new performance-based laws. For now, OMB is revising Circular A-11, "Preparation and Submission of Budget Estimates," to encourage capital planning. OMB already has published (as a supplement to Circular A-130, "Management of Federal Information Resources") a federal IT investment guide based on GAO's collection of 11 industry best practices. President Clinton's July 16 IT executive order sets out the duties of OMB, agency heads, CIOs and interagency groups under ITMRA.

In August, GSA's IT Management Division was to release "Performance-Based Management: Eight Steps for Developing and Using Information Technology Performance Measures Effectively." It distills the essence from agency experiences with selecting projects with the greatest value, developing measurements, measuring and communicating results and seeking ways to improve performance.

Overcoming Techno-Terror

As they get up close and personal with the core business, techno-timid managers and executives also should be developing a lively curiosity about computers and communications technology, says John Okay, deputy commissioner of the General Services Administration's Federal Telecommunications Service. They should get enough hands-on learning to calm keyboard fright, but shouldn't try to become experts. Hang on to your skepticism, Okay advises, to avoid falling prey to the notion that technology alone will solve all your problems.

General managers and executives should make learning about technology a second job, says GAO's Hoenig. Most large agencies, as well as the Office of Personnel Management and Federal Executive Institute, have incorporated information technology overviews into their management and executive development courses. GSA's Trail Boss program, aimed at helping managers deal with the pressures of planning, acquiring and installing IT systems, has won high marks from attendees and those who work with them. The National Defense University takes students from inside and outside the Defense Department for its many IT courses, most of which involve some hands-on experience in the university's technology laboratories. Schools like the Massachusetts Institute of Technology, University of Virginia, Carnegie Mellon University, Harvard and the University of California offer management courses with IT components.

If time and funds for formal study are lacking, don't despair, says SSA training director Kennedy-just look around. Techno-talk is everywhere. There's plenty to be learned from your colleagues, government reports, the popular business press and technology experts in your agency. Heck, Kennedy got the idea for SSA's new interactive distance learning system by watching a television commercial. And all it took to catapult former human resources manager Don Heffernan into the assistant CIO slot at GSA was buying his daughter a personal computer and a modem. "I'd been reading about the Internet so I hooked up to an online service," Heffernan says. "I learned the arcane Unix commands and became hooked on the community aspect of it. I experimented with Mosaic and other [World Wide Web] browsers and thought, 'Wow, this is easy.'"

If the thought of tackling technology this far into your career seems daunting, take heart: IT people, too, are under pressure. OMB's procurement policy chief Kelman wants technologists and procurement people to team up with line managers and executives earlier in the acquisition process, especially when IT purchases are involved. He wants to end the traditional practice of developing computer system requirements in a vacuum. "Traditionally we have developed requirements by having engineers locked in a room independent of what the commercial market has available and without understanding all the cost requirements," Kelman says. OMB management chief Koskinen expects technologists to consult with managers as they reengineer business processes.

Beyond Reengineering

The emphasis on reforming business processes to take advantage of IT solutions still is needed in many corners of the government. Such encouragement can help to overcome the skepticism common among many managers who view reengineering as a fad that will eventually go away, according to an October 1995 survey by the Information Technology Association of America.

Not only do federal managers need to master their businesses using technology and performance measurement, but they also need to get ready for the next big technology-based leap. That's the lesson coming from private industry experience.

Out where the bottom line rules, they're already beyond reengineering. That's even the title of the newest book by reengineering's inventor, Michael Hammer. In industry, the big new challenge is using technology in ways that go beyond core business improvement. "It's no longer enough to selectively use new technologies to respond to existing problems, automate existing processes, and cut costs," according to a report by Index Vanguard, a Cambridge, Mass., business think tank owned by Computer Sciences Corp. The group's report, "The 21st Century CEO: Senior Executive Insights for Now and the Future," says, "The question isn't any longer 'I have a business problem-can technology help?' It's 'Here are the latest technology developments-how can we use them to our advantage?' " Having trimmed bureaucracies, achieved efficiencies and cut costs, business is realizing "real progress doesn't come from just doing business better, faster and cheaper, but from finding ways to . . . make radical changes," according to the report.

Techno-Kids Take Over

Federal managers may find their next big challenge is lassoing the vast energy and creativity unleashed by mixing IT and better business practices. The chemistry catalyzes a vast redistribution of information widely and deeply through an organization. "The new computerization focuses not just on automating pre-existing routines, but on creating entirely new workflows and procedures," according to a recent study on IT leadership in government by Thomas Fletcher and Jerry Mechling of Harvard University's John F. Kennedy School of Government. But the fusion can blow up on managers ill-prepared to sort through and enact a wave of new ideas by making continuous, organization-rattling change. Fortunately for those managers, technology-led transformation is likely to be slower and less shattering in government than in industry. "Public agencies are built for caution, not speed," write Mechling and Fletcher. "We have been willing to sacrifice efficiency in the name of equity, integrity and democratic controls."

The great irony of the wave of techno-turbulence sweeping management ranks is that the hand-wringing and teeth-gnashing it inspires soon will be gone. The IT knowledge gap will be little more than a memory when the computer generation ascends to management. Wired and Webbed since childhood, these virtual realists won't need to be cajoled onto e-mail nor enticed into groupware. Drucker estimates they will tame technology, reroute and harness information streams inside and outside organizations and bend them to their will within 10 to 15 years. Then, "we won't have to talk about computer literacy, just as we no longer have to talk about how not to be afraid of the telephone," Drucker says.