Agencies must use return on investment to judge IT buys

Once upon a time, an agency's empowerment to contract depended on a delegation of procurement authority (DPA) from the General Services Administration. But no more. ~The ClingerCohen Act returned contracting authority to agencies and changed the rules of the game. DPAs were out, and return on inve

Once upon a time, an agency's empowerment to contract depended on a delegation of procurement authority (DPA) from the General Services Administration. But no more. ~The Clinger-Cohen Act returned contracting authority to agencies and changed the rules of the game. DPAs were out, and return on investment (ROI) was in. Now, and in the future, empowerment— and budget authority— will be derived from this new management tool to justify acquisitions.

Unfortunately, the meaning and value of this tool is not broadly understood. ~Why? I believe it's partly because the gateway document that many people used to understand acquisition planning and justification— the Federal Information Resources Management Regulation— expired along with DPAs and GSA's oversight authority. It's partly because the Federal Acquisition Regulation was not seen as, and has not become, a replacement for the FIRMR. It's partly because too many people whose jobs are related to acquisition are not as familiar as they should be with Office of Management and Budget circulars, policy memoranda, capital planning, investments and budget guidance. And it's partly because too many officials still feel that financial analysis, benefit/ cost analysis and ROI are not within the province of information technology acquisition. They are wrong.

~Why is ROI so significant? Because major acquisitions are competing for a shrinking pool of funds. "Departments and agencies, which once could count on more funds from year to year, no longer can," according to the Clinton administration's 1999 budget proposal. Each proposed acquisition will be measured against others— first within the agency and then governmentwide at OMB— to determine which acquisitions "demonstrate a projected [ROI] that is clearly equal to or better than alternative uses of available public resources," as Raines' Rules established.

~"Return" is an especially important concept today because it is not limited to traditional indicators, such as net present value, benefit/cost ratio or break-even. Although these traditional measures remain important, current thinking about federal ROI is not so narrowly prescribed. Federal ROI may include improved mission performance, reduced cost, increased quality or speed, improved flexibility, or increased customer and employee satisfaction. This means ROI in the federal sector has two important components: dollar-quantified return (costs and benefits) and mission and performance return (outcomes). ROI is a way of valuing the proposed investment, or acquisition, compared with others.

~Congress and OMB have re-engineered the acquisition-approval process from one of procurement control to one of budgetary control. Agencies must now re-engineer their capabilities to become adept at analyzing their business needs and justifying acquisitions in terms of measurable returns. ~However, doing so will bring its own rewards. A good business case is the foundation for establishing goals, buying-in management and staff, being funded, staying on track and measuring to achieve results. Those who think "It's too hard" or who take the position that "this too shall pass" need to recall the public trust— and our obligation to spend the taxpayers' dollars wisely toward public-mandated goals.

-- Costello is the author of the report "Making a Business Case for Information Technology Acquisitions," being published by Acquisition Solutions Inc. Contact her at (703) 378-3226 or costella@erols.com.

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.