In 1989, Kodak contracted with IBM to outsource its IT operations, creating the IT outsourcing industry. Kodak’s IT outsourcing proved disastrous. With a 10-year, $250 Million contract, Kodak was anchored to a single company; significantly impacting their ability to be responsive to market changes.
IT outsourcing does not work. Private industry primarily abandoned full-scale IT outsourcing in by the early 2000s, but the government did not. By 2002, 46% of the software systems developed across $37 billion worth of DoD spending failed to meet real needs, even though they met written contractual specification.
In 2020, successful companies own their technical baseline. Google owns Google Cloud Platform, G-Drive; Amazon owns AWS, S3, EC2, and Lambda. In fact, Amazon Web Service was originally built to solve an internal Amazon problem of a tightly coupled, hard to change system architecture. From 2003 – 2006, Amazon decoupled its internal services into an API-first, modular architecture. But it’s important to note, the AWS transformation took 3-years and they started with internal IT teams.
The government’s digital transformation journey is starting from a deeper deficit when compared to Google and Amazon.
First, the majority of core capabilities within the DoD (e.g. air, land sea, space, and cyberspace superiority, intelligence, surveillance, reconnaissance (ISR), rapid global mobility, global strike, and command and control) have been outsourced to large defense contractors. This makes it extremely difficult to influence rapid change to the current business model, let alone the architecture baseline.
Second, the acquisition community views laws written to help digital transformations, like the Clinger Cohen Act, as bureaucratic red tape. Most people view the Clinger Cohen Act as acquisition queep. Acquisition queep is the annoying, time-wasting, and sometimes unnecessary duties associated with operating within the bureaucratic DoD acquisition process.
That was the start of a nice article by Matt Nelson, the COO of Rise8, “How the Clinger Cohen Act can accelerate your digital transformation.” He has really thoughtful approach.
One question Matt didn’t tackle here is the likely outcome of the make-buy analyses. What parts of the tech stack should government build itself and own? What parts should be contracted out? And then there’s another aspect, where government owns the standards and enterprise architecture, but contracts for the products and services that plug into that architecture.
I actually talked about a lot of this and much more with Matt Nelson and Bryon Kroger on a forthcoming podcast episode. Be on the look out!
Leave a Reply