Managing expectations

Ten years from now, will we look back and remember the dot-gov bubble?

The forces of supply and demand are creating a volatile and potentially dangerous mix in today's federal technology marketplace.

On the demand side, federal technology budgets are on a strong growth path. The spending is fueled by citizen demand for e-government, mission requirements to integrate and present real-time information for greater national security, and a management agenda with teeth that drives outsourcing. Continued double-digit growth in federal information technology spending has become the expectation.

On the supply side, the commercial economy's lethargy is driving hundreds of technology companies into the government market and, more significantly, increasing the expectations of firms already well established there. The only things growing faster than the federal IT budget are federal IT businesses' revenue targets. The federal IT industry is booming. Occasional hiccups, such as continuing resolutions or slow reorganizations, mean occasional missed targets. But the prevailing view is that, overall, the market is robust and sustainable.

How long will the heightened demand continue? With the deficit in fiscal 2004 set to exceed $500 billion, tax cuts likely to be extended and the need for a strong defense budget widely accepted, Wall Street is starting to get nervous about the macroeconomic picture. The fiscal 2005 budget guidance to agencies is close to a "current services," or flat, level. Inevitably, budgets will get tighter.

But what do tighter budgets mean for IT? A common reaction on Capitol Hill is that IT is an administrative cost and thus easily cut. Members of Congress miss the link between information and mission.

The Agriculture Department's 2004 budget is a case in point. The House denied the Bush administration's $44 million requested increase for replacing aging business and technology systems, streamlining business procedures and sharing information, in favor of commodity, nutrition and research programs representatives perceive as more mission-oriented.

Although agencies are getting better at making the mission-linked business case for technology investments to the Office of Management and Budget, industry is still behind the curve when it comes to walking the walk and talking the talk. Walking the walk means producing savings and mission-performance improvements. Talking the talk means publicizing these successes to decision-makers.

The dot-com bubble burst when promised successes were not delivered. As Gertrude Stein said, those who fail to learn from history are forced to repeat it, and the rest of us are forced to repeat it with them. Let's organize to make the case that information, and the technology that supports it, does matter.

McConnell, former chief of information policy and technology at the Office of Management and Budget, is president of McConnell International LLC (www.mcconnellinternational.com).

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