Corporate Partner Advisory Group

Survey Series

Addressing the Fiscal ChallengeLeveraging Information Technology to Drive Government Efficiency

January 2014 CIO Survey

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Table of ContentsExecutive Summary ............................................................................. 3

About the Survey.................................................................................. 4

Innovation .............................................................................................. 5

Analytics ................................................................................................ 8

Cyber Security .................................................................................... 10

Human Capital .................................................................................... 12

Conclusion ........................................................................................... 14

Survey ContributorsAGA

Relmond Van Daniker, DBA, CPA Executive Director

Kevin Johnson, MPA Director of Education and Research

Accenture Federal Services

Kevin Greer, Managing Director

Tom Greiner, Managing Director

Karen Wilson, Senior Manager

Michael Alipui, Manager

Mark Ahlman, Manager

Accenture is a global management consulting, technology services and outsourcing company, with approximately 275,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$28.6 billion for the fiscal year ended Aug. 31, 2013. Its home page is www.accenture.com.

Accenture Federal Services is a U.S. company, with offices in Arlington, Va., and is a wholly owned subsidiary of Accenture LLP. Accenture’s federal business serves every cabinet-level department and 20 of the largest federal organizations with clients at defense, intelligence, public safety and civilian agencies.

AGA is the member organization for financial professionals in government. We lead and encourage change that benefits our field and all citizens. Our networking events, professional certification, publications and ongoing education help members build their skills and advance their careers.

AGA’s Corporate Partner Advisory Group are a network of public accounting firms, major system integrators, IT companies, management consulting firms, financial services organizations and education & training companies. These organizations all have long-term commitments to supporting the financial management community and choose to partner with and help AGA in its mission of advancing government accountability.

Executive Summary

AGA thanks its Corporate Partner, Accenture Federal Services, for their support in making this survey possible.

INNOVATION: Even though many IT leaders see innovation as a way to achieving some of President Obama’s goals in his ‘Campaign to Cut Waste,’ many IT leaders find themselves without sufficient funding to invest in innovative solutions due to current budget constraints or future reductions. Surprisingly, even when the idea of shared services presents itself as an innovative solution to meet require-ments, the IT leader is often faced with pushback from within their own orga-nization along with the lack of funding. This highlights the need for greater communication of the shared services benefits or leadership-focused marketing campaigns to grow support within each agency for the solutions.

ANALYTICS: Another facet of the ‘Campaign to Cut Waste’ is a focus on data transparency. In 2012 the adminis-tration released the ‘Strategy on Digital Government,’ outlining principles — one of which refers to an ‘information-centric’ approach designed to move us from managing ‘documents’ to managing discrete pieces of open data and content which can be tagged, shared, secured, mashed up and presented in the way most useful for the consumer of that information. Yet, 95 percent of respon-dents indicated that their organization is experiencing challenges in meeting its data requirements, further indicating the potential gap between growing data requirements and existing analytics capabilities. When asked how they would

close this gap, most saw internal training as a higher-priority solution than invest-ing in technology or software, or looking for external support due to the constant pressure to reduce costs.

CYBER SECURITY:We regularly hear about network attacks. Governments are frequently the targets—and ours is no exception. As the need for data increases and our ability to consolidate information from data improves, our need for security grows exponentially. To respond to threats, we implement various strategies to combat attacks. As we improve our defense, our enemies improve their offense. Having only a defensive posture by merely creat-ing barriers or responding to attacks is not enough. While 67 percent of

Information technology (IT) leaders in the federal government face operational and strategic challenges caused by the combined effect of constrained budgets, continuous advancements in technology, competing business requirements, compliance mandates and an aging workforce that creates knowledge gaps. In addition, federal IT leaders must identify new ways of doing business to maximize the limited monetary and human capital resources available to them while aligning their IT function to their agency’s mission and strategic direction. It was in this environment that we surveyed federal Chief Information Officers (CIOs) and other federal IT professionals. Our survey focused on strategic areas of innovation, analytics, cyber security and human capital in an attempt to understand how the IT leader is navigating through this challenging environment.

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The Association of Government Accountants (AGA), in partnership with Accenture Federal Services, conducted a survey aimed at identifying federal IT leaders’ key issues and approaches to dealing with these issues in today’s environment of reduced budgets. Major topics include: innovation, analytics, cyber security and human capital.

Survey Goals: The primary goal was to understand how leaders in the

federal government IT community are responding to competing requirements, technology trends and other challenges in the current budget-constrained environment.

Survey Methodology: The survey team distributed an online question-naire, consisting of 24 questions, to members of the IT and financial communities between May and August 2013. We received 100 responses from

individuals in IT and finance leadership roles throughout the federal government. Also, the team met with five federal gov-ernment CIOs to gain additional context and anecdotal evidence regarding the survey topics. The following summarizes our findings.

The online questionnaire can be found at AGA 2013 Technology Survey.

About the Survey

respondents had access to real-time or near real-time data, only 14 percent had cyber threat analytics as a key component of their IT cyber security program. This observation presents an opportunity for IT functions throughout the federal government to use the information they collect during monitor-ing to improve security capability and move toward an active defense posture. Much like the strategy for analytics, most look internally for answers to increase their defensive posture due to constant financial pressures.

HUMAN CAPITAL: Only 50 percent of the respondents predicted headcount reduction as a likely outcome of budget cuts. Considering the potential impact

of losing trained resources, it was reassuring to know force reduction is not a primary concern of the IT leader-ship. Not surprisingly, IT leaders find it very hard to recruit and retain talented resources when pitted against more flexible commercial hiring processes that offer better benefits and pay for junior employees. When queried to identify those key skills hardest to acquire, software (including programming, troubleshooting and development), project management and creative think-ing were high on their list of both gaps and importance. With cross-training as the number one method being used within their current budget to improve their knowledge gaps, how effective will cross-training be without the right skill

set(s) at the onset? As a result, broader business skills and critical thinking are skills typically acquired through experi-ence because they are more difficult to train or teach.

BOTTOM LINE: Looking forward, agency CIOs will increasingly find that innovation in the face of tightening budget constraints will necessitate tighter collaboration with sister agencies to leverage proven solutions and staff. They will also need to seek alternative contract-ing arrangements with the private sector, where the fees paid are contingent on the business case being realized and where the cost of that service moves from being an up-front capital expense to a more predictable operating expense over time.

Federal government organizations found innovation to be a critical component to reducing costs, enabling flexibility and enabling adaptability, but budget constraints frequently challenge them in implementing new trends.

Importance of innovation“Doing More With Less,” the

headline to the Federal Information Technology FY 2013 Budget Priorities, has become an operating certainty that the federal government continues to address. Program budgets continue to face downward pressure as the economic outlook remains uncertain. Despite this, services requested by citi-zens and mission requirements continue to grow. In response, federal IT leaders must adopt innovative approaches and technologies to create operational efficiencies that create and sustain cost savings into the future. Innovative trends

that respondents identified in the survey, include: shared services, mobility and analytics/big data. Adoption of shared services across the federal government represents a significant opportunity to eliminate redundancy, increase effi-ciency, and redirect limited resources from administrative functions to agency mission and priorities.

The emergence of mobile tech-nologies and communications has the potential to transform how the federal government does business. Citizens are increasingly using mobile devices to access information about govern-ment programs. Federal agencies must respond to this demand to better accomplish their mission and engage

Innovation

Figure 1: What do you see as the primary constraint in adopting innovative trends within your organization?

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with the public. Agency-wide adoption of mobile technologies also allows employees to collaborate in new ways and work remotely in real time. Agencies that are able to effectively adopt mobile technologies and utilize mobility’s full potential can realize increases in worker productivity, engage with their constitu-ents more successfully and drive mission success—all while reducing costs.

Most agencies see innovation as very important to the success of their IT function, but more than 52 percent feel current and future budgetary constraints are the primary limitation to adopting innovative trends.

The Role of Innovation Looking Forward

Organizations agree that innovation plays a key role in their ability to meet competing priorities over the next 10 years. Survey respondents indicated that the top three ways innovation would be used by their organization to meet future priorities, were to reduce costs and operate more efficiently, to provide mission-critical information in a timely and accurate manner and to increase workforce productivity. However, most organizations find themselves unable to implement due to budget constraints, whether planned or unforeseen. This creates a dilemma where organizations find that methods available to reduce costs and increase efficiency are not viable because they lack funding for initial investment.

One possible solution to this dilemma is innovative contracting agreements such as ‘as a service’ (aaS) arrangements under the new cloud computing con-structs. Under such agreements, federal agencies do not have to pay upfront costs typically incurred when business

processes are significantly changed or moved to a service provider. Rather, the service provider would pay all upfront costs (including network connectivity, servers, storage and labor to perform a business function). These arrangements greatly lower costs and mitigate risks associated with the adoption of shared service offerings and cloud computing.

Shared Services Innovation

As the federal government continues to push for the adoption of shared services, the majority of organizations across all levels see shared services as useful. When asked which shared services were applicable to their organization, 90 percent of participants responded that at least three were applicable to their organization, with 50 percent stating that eight or more options were applicable. The three most applicable offerings were financial

Figure 2: Thinking about your IT function, what are the top three roles that innovation plays in meeting your competing priorities over the next 10 years?

management, IT management and information system security services.

Even when shared services are deemed useful, organiza-tional buy-in is seen as the primary barrier to adoption. Other barriers include reduced funding and perceived skills gaps. The observation of employee skills gaps as one of the top three barriers to adoption of shared services is interesting because adoption typically occurs after organizations conclude another entity can provide a particular service more effectively and efficiently. Skills gaps within the organization can be mitigated by migrating functions to a service provider. Conversely, service providers can minimize skills gaps at client organiza-tions by providing robust transition support. Agencies with appropriate budgeting or contracting authority can also ask their new provider to transfer transition costs into the subse-quent recurring service charge to significantly reduce concerns about budget limitations.

Figure 3: With the emphasis on shared services and the U.S. Office of Management and Budget (OMB) guidance for agencies to leverage shared services for IT implementations, of the following shared services which ones are applicable to your organization?

Figure 4: If there is a shared service applicable to your organization that has not been implemented, what do you think is the primary barrier(s) preventing implementation?

The emergence of mobile technologies and communications has the potential to transform how the federal government does business.

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Federal organizations see analytics as a valuable means to achieve organizational strategies and mission requirements, but few are effective in their use of analytics, despite the growing need for meaningful data analysis.

Adoption of AnalyticsThe federal government, like most

major organizations, is heavily reliant on technology. This has resulted in genera-tion of massive amounts of data. The ability to gain insight from data allows organizations to make better and faster decisions. How do federal organizations view the value of analytics, and how are they applying analytics today? We asked respondents to answer how valuable they find analytics in achieving the strat-egies and goals of their organization.

Approximately 72 percent of respon-dents indicated that analytics is highly valued as a means to achieve organiza-tion strategies and goals.

We also asked respondents to describe how their organization is using analytics. Options ranged from routinely using analytics to having some analytical capabilities that require improvement to very limited or no analytical capabili-ties. The results identified that only 15 percent of respondents are using ana-lytics strategically and in an integrated, enterprise-wide manner, thus indicating

an opportunity for organizations to make improvements in their use of analytics.

Use of Data to Satisfy Transparency and Auditability Requirements

Federal organizations face growing data requirements around auditability and transparency. Our survey responses

Analytics

Figure 5: How valuable is analytics in achieving the strategies and goals of your organization?

indicate that 39 percent, or four out of ten organizations, feel they are able to meet these growing data requirements. This identifies a potential gap as many federal organizations currently lack access to robust data analytics capabilities necessary to analyze and make sense of ever-increasing data.

We also asked respondents to indicate specific key challenges in analyzing data and meeting auditability and transparency requirements.

Figure 6: Please indicate your organization’s key challenges in analyzing data and meeting auditability and transparency requirements?

The most common challenge mentioned by respondents was determining the value of data. This may include under-standing how available data can be used, and what data is relevant or actionable. This also raises the question, are federal organizations collecting the right data to generate actionable insights?

Data integration was the second most common challenge cited. This is not particularly surprising, given the large quantities of assorted data that federal organizations have due to legacy systems with varying data formats, and the need to integrate data from external sources and other agencies.

Overall, 95 percent of respondents indicated that their organization is experiencing challenges in meeting auditability and transparency requirements, further inferring the potential gap between growing data requirements and existing analytics capabilities within federal organizations. Federal CIOs may be in a position to help close this gap and gain business insight from data by becoming strategic business partners for their organization, and designing for analytics as part of the upfront process in outlining road maps for systems.

Challenges and Future DirectionRespondents were asked to provide insight into how their

organization will resolve difficulties in analyzing data, and meeting auditability and transparency requirements in today’s challenging budget environment. The most common answer was to hire from within or train teams internally. This may indicate a trend of federal organizations looking internally prior to seeking help from outside experts. It could also indicate that, given budget constraints, federal IT leaders feel training existing employees is their best option.

To gauge future direction, we asked about their approach to analytics over the next three to five years.

Figure 7: How will your IT function approach analytics over the next three to five years?

The most common result was to increase employee training to leverage analytical tools and data. This aligns with respondents’ answers to how they would resolve existing data analysis challenges, indicating a strong trend toward looking internally for solutions. Many said they did not know their IT function’s strategy for the next three to five years. This may indicate a lack of focus on increasing analytics capabilities. It could also indicate that IT organizations are less able to, or more hesitant to, invest in future capabilities due to the unpredictable nature of the current budget environment.

Additional insight into how the federal government is using data analytics can be found in a complimentary report produced by AGA titled, “Leveraging Data Analytics in Federal Organizations”. The report can be downloaded at www.agacgfm.org/researchpublications.

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Federal IT leaders are responding to reduced funding by improving processes throughout the organization to address cyber security concerns and by prioritizing technology investments over non-essential full-time employees.

Security ThreatsRecent incidents and media reports

have raised cyber security concerns throughout government. Federal IT leaders must weigh security risks associ-ated with new technologies, such as cloud computing and mobility, against the increased productivity and cost efficiencies that adoption may provide. They must also determine how to direct limited resources toward improving security baselines and implementing a cyber security regime that actively anticipates and defends against increasingly complex threats.

Our first step was to identify threats most frequently encountered by respon-dents. Malware, phishing and hacking are the most commonly encountered security threats. Results also indicate compromise or theft of information is commonly encountered.

Cyber Security

Figure 8: What are the top three cyber security threats your organization monitors/encounters?

Key Components of Cyber Security Programs

To combat these and other threats, federal IT leaders must continuously improve their IT function’s cyber security capability. Survey respondents indicated the most critical components of their cyber security program are cyber secu-rity monitoring, and identity and access management.

Given the volume and sensitivity of data generated and stored on federal IT systems, robust access control and identity management is not only a com-pliance mandate for federal agencies, but also a mission-critical consideration. Agencies’ IT infrastructure, systems and applications must be continuously assessed to ensure that strong measures are in place to properly restrict access to sensitive information and that the public’s trust is not violated by careless handling of data. Survey results support this conclusion, and indicate federal IT leaders recognize the importance of identity and access management.

Effective cyber security monitoring is dependent on the collection and analysis of security data. Unfortunately, some IT functions analyze this data only as a forensic activity after security breaches have already occurred. High-performing IT functions use real-time data to anticipate threats before they are encountered, and to immediately isolate and limit the damage caused by ongoing incidents.

We asked survey respondents if their cyber security monitoring capability involved real- time data. We found that, while 67 percent of respondents had access to real-time or near real-time data, only 14 percent had cyber threat analytics as a key component of their IT cyber security program. This observation presents an opportunity for IT functions throughout the federal government to use data collected during monitoring to improve security capability and move toward an ‘active defense’ posture.

Funding Impact on Cyber Security Approach

Organizations must deal with increasingly sophisticated threats and expanded cyber-security mandates — all while facing budget uncertainty. We asked IT leaders what strategies their organization’s IT function has adopted to maintain strong organizational security posture, despite reduced funding. Given a choice of six strategies to choose from to select their top three, 47 percent of respondents said they were implement-ing process improvements to efficiently incorporate cyber security at all levels of the organization, 42 percent of respondents said they were prioritizing spend on technology investments while reducing non-essential FTEs and 37 percent of respondents chose having Lines of business work tightly together with a central security function as one of their top three.

Figure 9: Please indicate the key components of your IT function’s cyber security program.

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To address skills gaps as their top challenge, many organizations are turning to cross-training. However, their greatest gaps are in soft-skill areas that are not easily “trained,” but rather developed with experience.

Impact of Budget Cuts on the Workforce

Many federal organizations have problems filling highly skilled technical positions due to difficulties recruiting and retaining talent, lack of funding to support the right resources and being unable to find internal candidates with the right skills. When asked about the impact of current budget cuts on their workforce, 50 percent of the individuals surveyed saw the continuing trend in budget reductions resulting in further reduction in force, thus compounding already difficult tasks.

Human Capital

Figure 10: How likely are workforce reductions in your IT function as a result of budget cuts?

Current Skill Levels Within Organizations

When asked what individuals viewed as the most valuable skills to their IT function, in-depth technical software skills, critical thinking and stronger project management were the top three. However, in-depth technical (hardware skills and IT procurement) were the only skills that the organization had the needed talent.

How do organizations plan to meet the challenge of maxi-mizing efficiency with a reduced workforce? Cross-training, extending the useful life of existing systems and leveraging shared services were the top three responses; prompting the question, how effective can cross-training be if an agency doesn’t possess at the onset, the skill set in areas such as broader business skills and critical thinking? These are skills that are typically acquired through experience and are more difficult to train or teach.

Figure 11: Thinking about the IT function and the resources available from within the workforce, please select the most valuable skills to your organization and current skill level.

Figure 12: How will your IT function meet the challenge of maximizing efficiency with a reduced workforce?

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There is an increasing push for agencies to adopt shared services and other innovations. Many of the shared services offerings seem applicable to most organizations. However, an internal reluctance to implement exists. Although this reluctance was once thought to be caused by lack of applicability of specific shared services or due to the shared service construct not being a proven solution; our findings do not support these earlier assumptions.

The federal government’s increased reliance on IT has led to generation of massive amounts of data. In many cases, agencies have not adopted the use of data analysis tools to perform statistical and quantitative analysis or predictive and explanatory modeling. IT leaders will continue to face the challenge of determining how best to use available data to support agency missions and meet growing data requirements around auditability and transparency — all while dealing with budget pressures.

Manpower concerns are relevant in every discussion, as are the impact of

budget constraints. Having the budget to hire is only successful when the qual-ified candidates are willing to take the positions. Failing to capture talent, some organizations see cross-training as an effective means to increase internal skill sets. However, employees have gaps in skill areas most commonly filled through practical experience. Without the suf-ficient budget and offerings to attract higher-skilled workers, some agencies could soon experience greater impacts as a result of its aging workforce.

Looking forward, agency CIOs will increasingly find that innovation in the face of tightening budget constraints will necessitate collaboration with sister agencies to leverage proven solutions and staff. They will need to seek alterna-tive contracting arrangements with the private sector, such that fees paid are contingent on the business case being realized, and where the cost of that service moves from being an up-front capital expense to a more predictable operating expense over time.

Conclusion

The federal government’s increased reliance on IT has led to generation of massive amounts of data.

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