Public Service, Private Industry, Public Good

FRAMINGHAM (05/01/2000) - Believe it or not, there are businesses in the United States that simply hand over money and resources to Uncle Sam to help make our government more efficient. They receive no remuneration for their efforts, no inside information, no pork-barrel legislative extras. These companies pony up $10,000 a year or more for the privilege of performing pro bono work for federal agencies, and they freely offer the executive-level expertise of their CIOs, CFOs and other senior technicians.

If you imagine that the only companies interested in such a socially responsible project are the makers of organic toothpaste or handmade ice cream, you're probably not alone. But you'd be wrong. Instead, it's powerhouse corporations like Boeing Co., Chase Manhattan, Ernst & Young, Northrop Grumman and PricewaterhouseCoopers LLP--all hand-picked, chosen performers in their fields that are members of the Washington, D.C.-based Private Sector Council (PSC).

Working with the PSC may be pro bono, but it's not without corporate benefit, members say. Helping the government increase its efficiency pays dividends to all domestic companies in the form of lower taxes and less red tape. PSC participants get early knowledge of new federal systems and programs that may affect their specific business processes. And finally, members report, the charitable spirit of council meetings leads to an unusual degree of openness and makes for top-notch networking.

The corporate members of the 17-year-old, nonpartisan council team up with such federal agencies as the U.S. Customs Service, Department of the Interior, General Accounting Office and Department of Agriculture to improve the efficiency, productivity and management of the federal government. "We don't go to government and point to matters that are problems; government comes to us," explains Thomas V. Fritz, PSC president, and chief executive officer and 33-year veteran of Ernst & Young. "We neither solicit nor accept grants from government, and that's one of the things that allows government to come to us and get an independent point of view. We're not even suspected of having an agenda."

The Private Sector Council was founded by Hewlett-Packard's David Packard and the late William Onsted, who had just finished working on the Reagan administration's Private Sector Survey on Cost Control. The PSC initially concentrated on financial and executive issues, and the CFO/Senior Executive Task Force remains its largest working group. The newer Information Management Technology (IMT) Group, formed in 1995, has attracted CIOs and other technology officers from corporations like BankAmerica, Dun & Bradstreet, J.C. Penney, Lucent Technologies, Mobil and US West (see box below).

The IMT hosts two meetings a year, attended by both private-sector members and representatives from such federal agencies as the Defense Department, the General Accounting Office, the Postal Service and the Treasury, at which hot-button issues like security, data consolidation and total cost of ownership are debated in what members say is an unusually frank arena. "The conversations are very open," says former U.S. Postal Service CIO Norman Lorentz, now CTO of EarthWeb. "The first meeting I went to, the GAO presented some valuable metrics on public versus private projects. It made me decide I wanted to go back," Lorentz recalls. "At the second meeting, the cochair did a key presentation on security that really heightened my awareness. If my hair could've gotten any grayer with worry, it would have," he jokes.

Apart from these biannual roundtables, the IMT's real work lies in matching member companies with federal agencies on technology projects. In 1999, various IMT members pitched in on the Department of the Interior's Financial Management Systems Migration plan; participated in the GAO's study of effective CIO practices in leading organizations; reviewed and commented on the Department of the Interior's efforts to streamline business and financial processes; helped fine-tune the Federal CIO Council's strategic plan; assisted in ground-floor development of the Government Information Technology Services Board's forthcoming Center of Excellence for Information Technology; and continued work with the U.S. Customs Service on its multiyear IT architecture and modernization project, which has been plagued by ongoing funding difficulties.

(See "When Bad Things Happen to Good Projects," Page 198.) The Private Sector Council's lean, six-person staff is responsible for making sure these projects and the others it tackles, about 12 to 15 each year, are as effective as possible. The application process itself is informal--a phone call from a federal agency to Fritz or one of his staffers is all it takes to get the ball rolling, followed up with a two-page statement of work. In contrast, the criteria for accepting a project are quite rigorously defined and adhered to, according to Fritz. "Will [the project] bring better efficiency to government?" Fritz asks. "Does it have leadership and ownership within government? Do we have members who have the skill that is being sought? And is it likely to be a project that our members would find interesting?"

Once a project is accepted, Fritz and PSC Project Coordinator Erica Prentice determine which member companies have skill sets and experience that most closely fit the bill, then Prentice sends a project summary via e-mail or a letter to the top half-dozen to gauge interest and narrow a list of possible partners. On the receiving end, corporate CFOs and CIOs identify one or two of their employees who are able and willing to participate, and the partnership--usually a series of D.C.-based meetings--proceeds from there.

NOT A STATIC THING To ensure successful partnerships, Fritz, Prentice and the IMT cochairs keep close tabs on member companies. PSC is thoroughly briefed on each company's specific skill sets and interests and makes sure that each member is still on top of the best practices in his or her field. "We're constantly looking at companies that are at the head of the game and inviting those companies to participate," says John Puckett, cochair of the IMT group and CIO at Toysmart.com. Membership in the PSC is not a static thing, says Puckett. "We're always asking what value [member companies] can provide."

Participation is strictly strategic and scrupulously nonpolitical. "One of the keys that has made PSC successful over the years is that they're not involved in any matter related to government policy," says William Crowell, an IMT group member and CIO at Meredith Corp., the Des Moines, Iowa-based publisher of Better Homes and Gardens and other magazines. "PSC is into process improvement, not mission or goals."

That means that the PSC would be happy to look at the operation of the education department to help improve its effectiveness, explains Crowell, but it would decline to talk about what policies would produce better-educated children. "They try to keep focused on the effectiveness of government and steer clear of policy and politics," he adds.

In the quest to remain apolitical, IMT members may actually be aided and abetted by their profession. "We're IT professionals, and as such we're able to use a kind of universal language that adapts itself to any kind of business or technology issue," says Jerry Knutson, vice president of communications information services for US West in Denver and the other cochair of the IMT group. "The approach to creating solutions is universal regardless of what the business problem might be or what agency of the government you're dealing with."

What, specifically, does the private sector bring to the table that government can't provide on its own? Members on both sides of the partnership emphasize that the PSC isn't there to bail out government projects or ride in on a white horse with a faster, better, cheaper solution. But both groups acknowledge that there are some areas where the private sector excels over its public counterpart. In particular, federal agencies want to learn about methodologies and practices, strategies and technologies, and what's worked and what hasn't in the corporate environment.

Government wants to know about technologies that have been deployed successfully and the decision-making processes behind them, says Puckett. "They ask, Is this or that technology sound? What's the return on investment? How much effort is required to support this? What are your plans for the future?'" he says.

Former USPS CIO Lorentz, who has experience in both the private and public sectors, says management and mind-set are two areas where the government can use corporate insight. "Government is fixated on the fact that it's different, but it's really not. We try to focus on the customer and make sure the IT infrastructure fits the business, just like anybody else," Lorentz says. One key difference, he says, is that private projects are nearly always keyed to business metrics, while public projects are often driven by program budgets, which may or may not be politically motivated. "Business metrics drive costs, and that's what drives the private sector. Government could stand to be more like that."

THE WAITING GAME Government, members say, could also stand to fund at least some of its projects in a more linear way. The U.S. Customs Service, which is currently two-plus years into a massive modernization effort to update its technology strategy and develop an architecture framework, called on Private Sector Council IMT group members Hewlett-Packard, Innovative Systems, Mobil and US West for input at several key junctures. But at press time, the future of the upgrade effort's central component--a new shipment-processing system designed to improve the quality and efficiency of services provided by Customs--was questionable in the face of persistent reluctance from Congress to fund such a large project in one fell swoop.

Customs initially turned to the PSC two years ago after the General Accounting Office complained that the agency hadn't done enough work on its architecture.

"The PSC sat down with us and helped us fill out the architecture and review the development process," says Charles Armstrong, director of the Customs Modernization Office. Team members are currently working with Customs to refine the migration strategy from the legacy system to the automated commercial environment processing system (ACE) and waiting, along with many others, to see if the project receives sufficient funding over the long term.

Armstrong says he was pleased with the informal but effective give-and-take nature of negotiations with PSC on building a team to work on the project. "We were upfront. We knew where our vulnerabilities were and where we needed to focus our efforts." In return, Fritz and PSC front-office staff identified member companies with experience in large-systems development, customs and architecture development.

One such expert is Madeleine Le, information systems director of tax, licensing, customs and logistics for Hewlett-Packard in Palo Alto, Calif.

With Customs officials, Le has examined personnel issues such as how to recruit and motivate people, management issues such as identifying the project's owners and determining who will be responsible for the system's data and architecture, and rollout concerns like mitigating risk and transitioning from the old system to the new.

These high-level, far-ranging discussions require a couple of hours of her time every two or three months, with day-long meetings in Washington, D.C., at longer intervals. Why do private-sector corporations like Hewlett-Packard lend out top-tier employees like Le? For many reasons, executives say, but chief among them is a genuine feeling of civic duty. Fritz talks of the need to "help our government become better." Puckett mentions wanting to "make a difference in the way the country is being run." Knutson alludes to "being a good corporate citizen and doing our thing for the public sector."

If those comments sound like they're coming from a bunch of Boy Scouts, think of them as Boy Scouts working on their capitalism badge.

In the big picture, executives hope that helping government become more efficient will eventually pay back all U.S. businesses in the form of lower taxes, fewer bureaucratic burdens and streamlined government interactions.

Meredith's Crowell, who characterizes his company's involvement in PSC as more bottom-line oriented than altruistic, says, "If we can make government more efficient and reduce waste, we'll see reduced taxes and greater economic growth."

On a more personal level, the IMT group's biannual meetings are simply a great networking night out, regardless of which side of the public-private divide an organization happens to fall. Because members are gathered for a good cause, competitiveness and defensiveness are replaced with candor and a willingness to share failures as well as successes, executives report. "The other CIOs on the council are pretty impressive. We talk and share our experiences in the private sector--all new things that we're doing and the issues we've found--and we're all learning from each other," says Toysmart.com's Puckett. "I appreciate feeling like I can give any of them a call, and I'm sure the same applies equally to the government agencies that come."

Finally, it's a rare corporation that can say with impunity that it's not somehow influenced by the government's business. By participating in PSC projects and roundtables, companies gain firsthand, early knowledge of issues that can have a significant impact on their own bottom lines.

The spirit is one of colleagues in collaboration rather than of commerce dictating to civil government. It's a tone that the PSC has set since its inception, says Fritz. "The private sector does not know more or everything about how government should be managed, but because of funding and political implications, government has fallen behind in modernizing technology," he says.

"We want to work with the people in government who want to change government.

We want to be the carrot."

Interested in socially responsible IT projects? Let Managing Editor Elaine Cummings know at cummings@cio.com. Freelance writer Tracy Mayor can be reached at tmayor@shore.net.

INFORMATION MANAGEMENT TECHNOLOGY GROUP MEMBERS, 1999 BankAmerica CNF Transportation DMR Consulting Group Dun & Bradstreet Innovative Systems Interpublic Group of Companies, The J.C. Penney Lucent Technologies Marsh & McLennan Companies Meredith Mobil Northrop Grumman SAP Toysmart.com United States Postal Service US West Department of Agriculture Department of Commerce Department of Housing and Urban Development Department of the Treasury General Accounting Office General Services Administration International Y2K Cooperation Center WHEN BAD THINGS HAPPEN TO GOOD PROJECTS Government bureaucracy at its best (and worst) If its work with the U.S. Customs is any indication, the Private Sector Council needn't disband anytime soon: In one key area at least--funding--the government still has a long way to go before it will look anything like corporate America.

"We've been working on trying to get a business case and funding together for ACE for several years," says Charles Armstrong, director of the Customs Modernization Office, referring to his agency's Automated Commercial Environment (ACE) processing system. In February, however, Customs suspended the project because it was almost certain Congress wouldn't approve its budget request for $15 million, the cost to keep the pilot and project preparation activities up and running. That figure is just a fraction of the $210 billion needed to build the first phase, to say nothing of the $1.4 billion to $1.8 billion needed over the life of the upgrade.

A $3 million infusion from the Treasury Department, pulled together in March, is now keeping the pilot system running temporarily, but people working on the project, including PSC volunteer companies, aren't overly optimistic.

"This is one of the most major tech projects that the government would ever undertake, and they're trying to fund the front end in a year when there is an election," observes Thomas V. Fritz, president of the Private Sector Council and CEO of Ernst & Young. ACE won't be completed and its benefits won't be realized until long after the election, Fritz points out. "Is there a hesitancy in those who are elected to vote for a project like this? The short answer is yes," he says. "But politicians are very often myopic. It's just one of the problems that our democratic form of government has to deal with."

While a trade coalition of large retailers lobbies for Customs to continue work on the project, PSC volunteer companies like Hewlett-Packard try gently to suggest workarounds to the current funding impasse, with little success thus far.

"We have a lot of passion to contribute and to make things work, but there are so many barriers to getting things done with the government," concedes Madeleine Le, information systems director of tax, licensing, customs and logistics for Hewlett-Packard in Palo Alto, Calif.

When it became clear that funding was in jeopardy, Le and Jerry Knutson, vice president of communications information services for US West in Denver and cochair of the PSC's Information Management/Technology group, suggested that Customs accept help--in the form of workers--from companies like HP, which has a direct interest in seeing a faster, more efficient import-processing system in place.

"They're concerned about not being able to recruit, but we can recruit people, so we offered up the idea," Le relates. "But then they came back and said that they don't want to use outside people because of all their security clearances."

For all her disappointment, Le is quick to reaffirm her belief in the system and her hope that eventually it will see the light of day. It's a sentiment echoed by PSC's Fritz, who counsels his volunteer organizations to take the longest view whenever possible. "Someday our efforts will bear fruit," he says.

"Customs has a good team with a good plan, and we're there helping to advance their efforts and right now just hoping for the best." -T. Mayor WANT TO HELP? NEED SOME HELP? Federal agencies looking for insight and private-sector IT executives willing to share their companies' expertise are invited to contact the Private Sector Council at 202 822-3910 or drop an e-mail to privsect@aol.com. The organization's website can be found at www.privatesectorcouncil.org.

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