Tuesday, August 7, 2012

Sequestration Planning Benefits from Enterprise Architecture-Driven Value Engineering

The next 5 months portend a spectacle of US Congressional battles to be waged ahead of the pending, mandatory “sequester” - automatic, mandatory federal government spending reductions of about $1 Trillion over 9 years, in non-exempt, discretionary appropriations, set to take effect 1/2/2013. Forward-thinking planners in government IT organizations, in large Programs that depend upon IT, and among the Systems Integration (SI) community are likely to dust off Enterprise Architecture skills for analyzing budget cut implications across their IT investment portfolios, and possible cost savings opportunities to offset them. Leveraging a methodical, EA-guided approach to both assess impacts and adjust spending priorities, while illuminating new areas of savings, is a sure route to mitigating serious risks and delays to delivery of critical citizen services.

Whether you’re dusting off the existing EA artifacts, or need to take a very rapid, optimized route to constructing initial enterprise IT models, the driving principle at this time will be rapid, absolute reduction in complexity with a clear line-of-sight to cost savings. “Complexity” here simply refers to an inefficient or needlessly detailed volume of time and resources applied to deliver IT solutions – time spent re-engineering processes, building redundant interfaces and monitors, installing hardware & software in a piecemeal fashion.

Driving complexity, and therefore introducing cost savings, out of engineered systems is the central tenet of “Value Engineering” – “the optimization of a system’s outputs by crafting a mix of performance (function) and costs”. Essentially, deliver the same capabilities with better value by driving down the cost to build and/or operate. Section 52.248-1 of the FAR (Federal Acquisition Regulations) describes the “Value Engineering Clause” that is inserted into many large Federal IT contracts – enabling the contractor to propose changes to the system being developed (i.e. a “Value Engineering Change Proposal”, or VECP). If the proposal is accepted, the actual or collateral savings derived by the government (through cost modification to the contract) can be shared with the contractor. It’s a win-win opportunity for the government, system beneficiaries and the contractor community to discover and propose engineering changes that will lower costs, yet still deliver the same or better results.

Continue reading at the Oracle Enterprise Architecture for Government Blog....