New Evaluation Methodology Saves VA $30 Million

A new methodology of evaluating information technology investments has allowed the Department of Veterans Affairs to save $30 million, according to a case study released Sept. 6 by the Federal Chief Information Officers Council.

The Hubbard Decision Research Co., Glen Ellyn, Ill., carried out the evaluation using applied information economics, and determined that the department's $30 million intrusion detection project would not reduce losses from security breaches. VA subsequently dropped the program.

Hubbard also concluded the department's information security program should reduce losses through security incidents from $2.4 billion to $1.1 billion, thereby affirming the program's value to the VA.

The study cost under $100,000, according to Ruth Anderson, project manager for the department. This study, along with a second one applying more traditional, "balanced scorecard" methodology, was commissioned by the IT capital planning committee and the subcommittee on IT performance management of the Federal CIO Council.

The twin case studies were done to demonstrate different IT measurement methodologies in response to the Clinger-Cohen Act of 1996, which requires federal agencies to evaluate whether IT investments achieve the mission results.

The studies were released during the Interagency Resources Management Conference in Hershey, Pa., a conference for government IT leaders to exchange ideas.

According to the two-volume report, "Measuring the Contribution of Information Technology to Mission Results," the applied information economics-based methodology uses a cost-benefit analysis often employed by insurance actuaries and financial analysts.

However, this study is the first to apply the methodology to evaluate returns on investment in the IT field, according to Doug Hubbard, president of Hubbard Decision Research.

The second study, also released Sept. 6, evaluated the plans for the Department of Agriculture's Food Acquisition and Tracking System, a replacement system to administer domestic and international food commodity programs.

That study was done by consulting company The Balanced Scorecard for Government Inc., McLean, VA. Through the balanced scorecard approach, it allowed the agency to reach consensus on critical objectives for the implementation of the new system.