OMB urges IT consolidation

Agencies could save billions in coming years by consolidating information technology projects, under Office of Management and Budget orders to look for opportunities, said Mark Forman, administrator of OMB's Office of E-government and IT.

Testifying July 15 before the House Government Reform Committee's Technology, Information Policy, Intergovernmental Relations and the Census Subcommittee, Forman said that agencies have identified 364 fiscal 2004 projects that could potentially be consolidated across agencies, eliminating old "stovepipe" systems in favor of new technologies that share data easily.

The government has a "huge opportunity" for savings, he said. "How this will actually come out of a business case analysis, I can't predict."

OMB is developing an enterprise licensing system called SmartBuy that will allow governmentwide licenses for common software applications, another consolidation step.

OMB divided the projects into six broad "lines of business." The government could save about $3 billion during the next few years by consolidating about $2.8 billion worth of projects in the four lines of business that cut most broadly across agencies, Forman said. However, he declined to predict the savings more precisely.

"There's no question there will be savings. There's no question it will be in the billions," Forman said.

Business cases for the consolidation projects are due in September, he said. The four lines of business Forman considers priorities are public health information systems, criminal investigation, human resources systems and financial management applications.

Financial management and HR systems especially look ripe for savings, he said. "These are areas where we spend billions for business processes that are fundamentally common."

OMB has been pushing agencies in this direction for months. Forman first began discussing it in February, calling it the second phase of the effort that began with the e-government initiatives of 2001.

Executives from Oracle Corp. and PeopleSoft Inc. — which is fighting a hostile takeover attempt from Oracle — also testified on the value of consolidation.

PeopleSoft chief executive officer Craig Conway pointed to the Defense Integrated Military Human Resources Systems, which his company is deploying, as a successful example. The defense system consolidates 79 HR systems into one.

"Many agencies are reinventing the same business processes," he said. "How many HR systems do you need in agencies? How many ways are there to pay federal employees?"

Kevin Fitzgerald, senior vice president of Oracle's government, education and health care division, emphasized the importance of a unified data model in successful consolidation. The alternative approach is to "stitch together" systems that were never mean to interoperate, he said.

"The cost of stitching and maintaining disparate systems is enormous. And you haven't solved the problem," he said.

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