All too often local government CIOs have walked away from budget meetings in frustration: Public managers and elected leaders alike, have often turned down requests for upgrades in technology on the basis that there is insufficient funding available and the reality that IT competes with other departments or services for resources.
Unfortunately, in this competition, IT often loses.
IT also faces the dilemma of the time-old adage “if it ain’t broke – don’t fix it.” It is easy to “see” the deterioration in a street or sidewalk, to see rust on a vehicle, to see something that needs fixing or replacement. For the untrained eye it is difficult to see an IT system that needs replacement. After all, LED lights blink convincingly regardless of age.
This has meant delays in equipment refresh, deferred maintenance to tech systems, and delays in IT modernization. Yet, IT continues to function, thus supporting the mindset to “just keep what works for the time being – simply because it still works.”
Never mind that a software company no longer provides support for a particular application, or that IT staff can no longer provide the best protection from ransomware or loss of data due to lack of resources.
During lean times, public managers are often faced with no-win choices. And this is underscored by a demanding public that continues to want more and at the same time strongly resist paying more in taxes.
One outcome of the Great Recession of 2007-2009, was an historic shift in budgeting, whereby the advantages of moving many key operations to the cloud became a new norm. With proof of concepts that demonstrated that cloud security was at least as secure as on-premise operations, it became a solid alternative to having to support expensive in-house infrastructure.
Local governments then went a step further with full-blown adaption of a managed services, where you either pay as you go or pay for what you need. This provided them with greater flexibility and provided ways to better control budgets. Thus we moved from a capex (Capital Expenditure) to opex (Operating Expenditure) modeling environment.
Capex is where most hardware and software expenditures are capitalized and thus amortized over a span of years. Opex is where you are paying for services now – mostly on an annual operating budget basis. Over the years, many arguments have been made as to which format is more advantageous - but in the end, it all comes down to each local government’s capacity and staffing and unique needs.
With the COVID-19 pandemic appearing to remain a lot longer than many expected or hoped, there is little doubt that most local government budgets will be severely impacted for the next several years.
Those with on-premise systems will most likely be forced to delay upgrades and needed modernization. But for those local governments who have embraced cloud and managed service solutions, they face a different set of challenges. Fixed contracts require fixed and timely payments. Think of this on a personal level, at some point failure to pay you cellular phone bill will lead to a cut-off from service. Local governments risk losing access to key citizen facing applications and the possibility of loss of access to data, and more. Local governments can’t just take back their data and then run on their old in-house infrastructure.
The burden to pay for cloud and managed services will now be a priority and this can be viewed as good news for those who manage IT. If managed properly, CIOs will not have to face the wrath of budget cuts as before.Today’s CIOs have truly shown their capabilities in pivoting in record time to move to remote operations and a telework environment.
Now with the realization that local government budgets will be facing shortfalls in revenue and increased competition for resources, those organizations that operate in an opex environment will have an easier time in managing their operations, and at least in theory have more breathing room against arbitrary budget cuts.
