Preface

Government agenciesⁱ have a responsibility to the public to make full use of information technology (IT) as a means to achieve their missions effectively and efficiently. This statement seems self-evident, but the reality is that full use of IT resources is difficult to achieve for many reasons. To begin with, it is not easy to envision the innovative ways that IT can be used to achieve program outcomes, especially when emergent technologies are in their developmental stages. For example, when the personal computer was introduced in the early 1980s, agencies continued to believe that mainframe computing was the best strategy. It took five or more years for most agencies to appreciate the benefits that could be achieved through personal computing and to implement adoption strategies for personal computers, local area networks, word processing, and integrated e-mail systems. Today no one can envision a world without these technologies.

Another barrier to fully using IT is the frequency of changes in senior leadership within an agency, which tends to disrupt the continuity of innovative initiatives. Changes in administration and the political appointment process often lead to dramatic policy shifts, resulting in the initiation of new projects and the termination of projects started under prior administrations. Political turnover is so common in the federal government that many career civil servants adopt a “wait and see” attitude toward new initiatives and requirements. As a result, initiatives can take longer or be discontinued before they are implemented.

Another factor is that program leaders often have a bias toward human- and process-centric innovation rather than technological innovation because they have higher comfort levels with and control over the former. It is only in recent years that non-IT managers have gained sufficient confidence and experience with IT to become significantly involved in technology discussions and decisions.

Maximizing return on IT investment requires a comprehensive, agency-wide process that recognizes and treats technology investments as capital assets. Capital planning and investment control (CPIC) is such a process. Implementing a CPIC methodology offers numerous benefits by:

1. Positioning technology as a key business enabler that increases potential for innovative application of technology to the achievement of mission and program objectives

2. Encouraging greater partnership and joint responsibility among program and IT leadership for applying IT resources for their greatest benefit and treating the entire portfolio of IT systems and applications as a critical enterprise asset

3. Changing the mindset from a project orientation to an agency-wide asset orientation, enabling optimal short- and long-term investment decision-making

4. Reducing the risk of IT initiatives

5. Providing visibility into IT asset performance throughout the asset life cycle

The purpose of this book is to guide executive leaders, senior program managers, and IT professionals through the full range of IT investment principles and practices in an effort to convey both an understanding and a methodology for implementing and using CPIC processes. We wrote it from a practitioner’s perspective rather than an academic one. The book targets managers and analysts at all levels and uses examples rather than models to convey concepts. The approaches represent our strategies based on a variety of written and personal influences. Some of the concepts and methodologies in the book may need to be adjusted as they are adapted and, over time, they may be overridden by regulatory changes by the Office of Management and Budget (OMB) or other federal agencies, but we have tried to offer a diverse set of topics that offer something for everyone.

For those who are new to the federal government or CPIC, the contents provide comprehensive coverage. For those who have extensive CPIC experience, the early chapters may simply communicate what they already know, but the later chapters may provide new insight regarding advanced topics.

If there is one single group that we most hope to influence through this book, it is senior agency program managers and policy makers. The Clinger-Cohen Act (formerly known as the Information Technology Management Reform Act of 1996)ⁱⁱ was enacted to get the attention of this group, to require them to become more involved, and to shape their involvement so that approval and funding of IT initiatives would better represent the efficient market forces that are the foundation of the U.S. economy. Their participation, as described in this book, would mimic Adam Smith’s “invisible hand,” serving to drive inefficient or poorly performing IT projects “out of business.” We hope that senior executives read this book and use it to shape agency culture in a way that benefits both their agencies and U.S. taxpayers.

How to Use This Book

This book provides federal executives, managers, analysts, and other staff members from program, IT, and administrative areas with extensive guidance for understanding, implementing, reviewing, and improving their IT governance processes. The requirements established by OMB following the passage of the Clinger-Cohen Act serve as a framework for guiding the discussion, but the principles set forth are intended to go well beyond mere compliance with those requirements.

IT projects are usually complex and risky. There is a long track record of projects that have not succeeded. This book was written to assist in the process of making positive changes, to inform new IT analysts and managers, and to provide assistance in implementing new and more rigorous reporting, monitoring, and management activities.

The 14 chapters cover a range of topics and are designed to provide both strategic and operational perspectives on IT capital planning and investment. Topics are discussed, for the most part, in nontechnical terms so that they appeal to a wide and diverse range of readers. As the chapters unfold, readers will sense the interrelationship and progression of topics. Readers who are new to the CPIC process are encouraged to read the book sequentially, while those with a good grounding can skip to the topics that interest them most.

The book is organized into an introduction and four parts. The introduction provides a description of CPIC and discusses the laws and regulations upon which it is based. Part I (Chapters 1–3) explains CPIC and describes the CPIC planning, selection, control, and evaluation phases. These chapters are most useful to those who are new to the federal CPIC process and those who are looking for ideas about how to improve existing processes.

Chapter 1 provides a thorough overview of the four CPIC phases—planning, selection, control, evaluation—and the roles and responsibilities of the people involved in the CPIC process. Chapter 2 provides a more detailed discussion of the planning and selection phases and provides criteria for assessing new investments. It also discusses how to integrate CPIC with the agency budget and use CPIC as a forum for discussing IT policy issues. Chapter 3 describes the CPIC control and evaluation phases. It reviews the function of an agency’s IT investment review board (ITIRB) and describes the ITIRB’s role in reviewing investment performance for assets that are either in development or already operational. Chapter 3 also introduces the earned-value management methodology and lays out a process for conducting control reviews.

Part II (Chapters 4–7) explains how to position CPIC as a global process within an agency. These chapters are useful to readers looking to improve the strategic use of technology throughout the agency. The chapters focus on the use of IT across an agency, aligning IT with strategic goals, and performance analysis of existing portfolio investments.

Chapter 4 provides the key elements necessary for an effective CPIC process and an audit tool for evaluating it and making improvements. Chapter 5 describes the importance of integrating the CPIC process with the agency’s enterprise architecture. This is an important subject, but one that often does not get sufficient attention from senior management because of perceptions that enterprise architecture is a technical initiative rather than an agency-wide strategic planning tool. The chapter is nontechnical and uses laymen’s terms and practical examples to illustrate why enterprise architecture is integral to an effective CPIC process.

Chapter 6 discusses portfolio analysis and evaluation techniques. It is useful to readers who are still trying to build and refine their IT portfolios and to use them in a meaningful way to make resource allocation decisions. Chapter 7 describes how to conduct operational analyses and post-implementation reviews for in-use investments. It also provides advice and guidance on which assets should be reviewed, how reviews should be conducted, potential outcomes, and actions that should be taken as a result.

Part III (Chapters 8–12) focuses on individual investments. Readers who are developing a business case or managing the development of a new IT asset will find these chapters especially helpful. Chapter 8 provides an overview of the business case: why it is necessary and how it is used, its components, and strategies for effectively writing the various sections. It also includes questions that ITIRB members can use when reviewing a business case and questioning the representatives of an investment team.

Chapter 9 describes an approach for identifying viable alternatives that achieve investment goals and requirements and explains how to develop cost-benefit analyses for each alternative. Chapter 10 provides a sobering view of the high failure rate of IT projects and the need for a strong risk-management strategy. Those who are embarking on a large IT investment will particularly benefit from reading this chapter.

Chapter 11 analyzes the use of the earned-value management (EVM) methodology for measuring cost and schedule variance. Because OMB requires that EVM be used for all major development projects, it is important that both oversight and project personnel understand EVM principles, concepts, and methodology. The chapter describes common EVM terms and calculations, and explains the relationship between EVM and CPIC.

Chapter 12 describes how to conduct an integrated baseline review (IBR). It explains what an IBR is and discusses IBR benefits, how to prepare for it, the team’s roles and responsibilities, evaluation criteria, and approaches for communicating results.

Part IV (Chapters 13 and 14) concludes the book by providing insight into how to realize the full benefits of the CPIC process. The content of Part IV is based on our extensive personal experience and observations. Chapter 13 addresses three special CPIC topics: infrastructure, security and privacy, and acquisition management. These areas deserve special attention because they have a more targeted focus than the overall CPIC process and they therefore present special challenges. Chapter 14, the final chapter, presents the critical success factors that differentiate success and failure in an IT investment. It also contains a list of typical questions that we have been asked by government officials charged with implementing and managing a CPIC process, and our responses to those questions.

The supplemental CD has over 40 additional resources to help you understand the IT investment process. It gives quick reference to public documents, current government management regulations, and federal enterprise architecture case studies, with links to a variety of online resources. The contents of the CD represent the latest information available as of February 2008. Readers should visit sites such as www.whitehouse.gov/omb, www.gao.gov, and www.cio.gov to obtain the most current information about IT CPIC.

Thomas G. Kessler

Patricia A. Kelley

ⁱ   Federal organizations are referred to as “agencies” throughout the book, even though there are various forms of organization, including departments, bureaus, and independent agencies.

ⁱⁱ Clinger-Cohen Act, U.S. Public Law 104-208, September 30, 1996. Online at http://www.cio.gov/Documents/it_management_reform_act_Feb_1996.html (accessed December 2007).