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According to projections from the Congressional Budget Office, the US Federal Government will accumulate more than $7 trillion in new debt between 2010 and 2019. These projections suggest the Federal Government faces an estimated annual structural deficit of $500 billion to $700 billion with the International Monetary Fund estimating the annual deficit could reach $1 trillion by 2015.
Additionally, the Federal Government must adjust their missions to align with today’s demands and expectations instead of simply learning to do more with less. Many best practices have been developed to help organizations save money while becoming more competitive. By implementing these approaches, the Federal Government can improve performance while reducing costs in a more meaningful way – one that will enhance mission value provided by Federal departments and agencies. IBM can help.
The United States is on an unsustainable fiscal path – government spending is on the rise and revenues are falling short, requiring the Federal Government to borrow huge sums of money to make up the difference. In 2010, for example, Federal spending was nearly 24 percent of the Gross Domestic Product (GDP) – only during World War II was federal spending a larger part of the economy.
Since the last time the federal budget was balanced, in 2001, the federal debt has increased dramatically. According to projections from the Congressional Budge Office, the US Federal Government will accumulate more than $7 trillion in new debt between 2010 and 2019. These projections suggest the Federal Government faces an estimated annual structural deficit of $500 billion to $700 billion with the International Monetary Fund estimating the annual deficit could reach $1 trillion by 2015.
The scale of this challenge is unprecedented. As such, a fiscal imbalance poses severe risks to the country – the need for an aggressive plan to reign-in spending and reduce (ultimately eliminate) the structural deficit is clear. If Federal agencies do not act, our current rate of spending and debt accumulation could lead to inflation, currency instability, a stagnant economy in both public and private sectors, and a struggle to grow and create jobs.
It is believed that the National Commission on Fiscal Responsibility and Reform (The Debt Commission), which is charged with developing such a plan, may set a target of reducing the Federal deficit by about $7 trillion over a 10-year period. For a goal like this to be realized, the Federal Government must employ an aggressive spending reduction program that includes reform, assessment of the effectiveness of government programs and agencies, and the adoption of commercial best practices into government operations.
The unprecedented fiscal challenges of the Government today present a tremendous opportunity for public officials to redefine the business and operating models of departments and agencies in ways that will reduce costs and enhance the quality of services in the long run. Understanding where cost savings opportunities exist is a first step in proactively identifying initiatives to undertake.
IBM has identified seven places to look for savings:
- Consolidate Information Technology (IT) Infrastructure
- Streamline Government Supply Chains
- Reduce Energy Use
- Move to Shared Services for Mission Support Activities
- Apply Advanced Business Analytics to Reduce Improper Payments
- Reduce Field Operations Footprint and Move to Electronic Self-Service
- Monetize the Government’s Assets
Deficit reduction efforts could generate more than $1.5 trillion over 10 years and if aggressively pursued, $1 trillion in savings over five years, as shown below.
IBM understands the “what you need to do” and the “how you do it,” as it relates to reducing the cost of doing business and improving performance.
With nearly 100 years of experience, IBM is able to draw on learnings and best practices based on both internal and external efforts. Externally, we have Federal experience working with over 40 countries worldwide to help solve their most critical challenges, and internally, IBM has used ourselves as a guinea pig to establish a set of cost-saving strategies and initiatives.
If we set priorities, if we apply the principles of Edwards Deming and of Peter Drucker ... we can focus on transforming, not just cutting. The choice becomes not just do you want more or do you want less, but are there ways to do it better? Can we learn from the private sector, can we learn from Ford, IBM, from Microsoft, from what General Motors has had to go through?
–Newt Gingrich, Former Speaker of the House
Strategic Insight Accelerator
Federal managers can use this as an opportunity to reduce costs but also improve performance. With the right plan in place, it can be an opportunity to streamline business processes, shed unnecessary functions, and optimize information technology to create sustainable reforms.
Our Strategic Insight Accelerator Assessment utilizes best practices, and a low cost six-week strategy engagement based on your scope and identified priority areas. Benchmarking and peer group comparisons are performed in order to help your agency maximize cost savings opportunity. At the end of this engagement, the IBM team will present a report that includes cost savings and performance data sources and targeted focus areas, and achievable steps by identifying immediate initiatives and quick wins to get started.
So, what are you waiting for? Let’s get started today.