Is this the new way of modernizing old systems?

Chris WiedemannMGT Act, tech modernization

By Chris Wiedemann, consultant

If you attended the Civilian FY18 Federal Budget Briefing at immixGroup’s most recent Government IT Sales Summit, one theme should have resonated throughout: the new ways government agencies are approaching the old problem of legacy system modernization.

It can be challenging to separate rhetoric from action sometimes, but there’s real energy in government around addressing the challenges of technology overhauls. Agencies are taking a customer-centric approach to design and development, with agile methodologies and human-centric design really becoming deep-rooted in civilian IT groups – and, perhaps more importantly, they’ve gotten an assist from Congress in the form of the Modernizing Government Technology (MGT) Act, which was signed into law as part of the FY18 National Defense Authorization Act (NDAA).

The MGT Act essentially does two things that make it easier for government customers to invest in modern technology. It creates a central modernization fund managed by the Office of Management and Budget (OMB) and the General Services Administration (GSA) that agencies can use to fund modernization projects. Unfortunately, Congress needs to appropriate money for that fund, so don’t hold your breath this fiscal year.

However, more importantly, the MGT Act creates a working capital fund at every agency. The way it’s supposed to work is simple: agencies that can cut maintenance costs by modernizing old systems will be able to invest those savings into their working capital funds, rather than returning them to the Treasury. This creates a real incentive to save since the money won’t be lost. Instead, it’ll be moved to the cap-ex side of the ledger.

That’s great news for our customers – and great news for industry as well. On the one hand, there’s a pure commercial play here for anyone who can help customers measure the total cost of ownership for their systems.

More broadly, however, this is a good opportunity for you to demonstrate value and customer knowledge by identifying areas where you know customers have an opportunity to modernize, showing them how you can get them there, and really driving the savings that MGT will require.

Nevertheless, there are challenges that we face in FY18. Some are the same as ever, but some are new and reflect the times. There’s no avoiding the fact that this administration has a different view on appropriate spending levels for non-defense agencies than the last few administrations. And while the President can’t unilaterally set agency spending levels, we expect there to be downward pressure on discretionary budgets from the White House.

That makes the flexibility provided by MGT even more crucial, but it also increases the difficulty of selling into the environment. Customers will be dealing with less money, and in many cases less defined leadership, moving forward. They need help from technology partners to ensure there are no gaps in mission delivery.

They also need us to help demonstrate total cost of ownership and really prove to OMB and other stakeholders that their planned modernization efforts will result in cost savings down the line. Salespeople who can effectively speak about long-term cost reductions are going to serve themselves doubly well – winning the initial business while also setting themselves up to benefit from MGT dollars down the line.

To hear more government trends, view on-demand videos of the 4th annual Government IT Sales Summit.

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