Why subscription-based models are the future of federal IT investments

As we look ahead to the new fiscal year, federal agencies will be planning investments in technology and related infrastructure that meet the goals outlined in key policies and initiatives that we’ve seen recently, such as the 21st Century IDEA and the President’s Management Agenda.


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However, limited funding often hinders their plans to completely replace legacy systems with newer applications, and large amounts of the budget go towards upkeep. In fact, many agencies allocate roughly 90 percent of their IT budgets on operation and maintenance costs to keep existing systems running, despite it being incapable of meeting the needs of our 21st-century government.

We know that there is a constant revolving door of federal IT directives that agencies must meet – it is part and parcel of working in government. However, what most IT decision makers do not realize is that the most efficient way to be compliant with these requirements is to move away from investing in single applications and instead adopt subscription-based models. This minimizes their spending on legacy systems and instead embraces more modern forms of technology.

But why do I believe that adopting subscription-based models will become the new norm in federal procurement?

Greater Cost Benefits

In recent years, American consumers experienced a philosophical shift in the way they utilize everyday services, whether it’s instantaneously streaming the newest season of their favorite television series or ordering a rideshare through their mobile device.

Purchasing demographics have evolved from one-time payment and receiving a product/service, to lease and subscription models that enable consumers to receive the latest, newest and greatest on demand. As a result, consumers have grown accustomed to making ongoing investments on a weekly, monthly, or annual basis and in return, receiving high quality services that are reliable and tailored to meet their specific needs.

As best-in-class, enterprise technology shifts to this same type of subscription-based model, federal agencies can realize immediate returns on their investments when moving to cloud-based subscription services. It ensures that government will be armed with innovative technologies that are not only secure, but also sophisticated enough to meet the demands of citizens and government employees.

Higher Customer Satisfaction Rates

IT modernization has remained a bipartisan focal point in and around the beltway for nearly a decade – and policymakers, the presidential administration as well as agency leaders continue to look for technology that can achieve government’s goal of maximizing the quality of service delivery without depleting its budget. While some of these outcomes include greater cost savings and stronger retention of IT talent, customer experience has risen to the top of the priority list largely because it’s a common pain point for federal agencies and sucks up time and resources. 

In fact, the 2018 American Customer Satisfaction Index ranks the federal government among the bottom of all U.S. industries in delivering customer satisfaction. The Customer Experience Act of 2019 categorizes customer satisfaction as providing quality services to individuals and improving the aforementioned services to individuals through the use of technology in addition to data collection and standardization.

However, optimal customer experience can’t be achieved when federal agencies are continuing to operate using outdated, paper-based processes and collecting data that lives in siloes across a broad swath of applications. This is where subscription-based models can have a profound impact on improving the experience of both citizens and employees.

By adopting a mature and forward-leaning, subscription-based technology, federal agencies can transition to 4-6 platforms, seamlessly aggregating and normalizing their data. In addition, agencies can create custom applications within these platforms, which can yield higher delivery rates and an overall quality experience for customers.

Paving the Way for Government’s Digital Transformation

The federal government’s modernization journey has gradually evolved over time – years of planning and enacting policies have set the stage for agencies to take a course of action and begin adopting innovative forms of technology. Both the administration and Congress agree that technology is a channel to achieve the architectural vision of a 21st century government. However, with limited additional funding allocated to reach these goals, the federal government’s embrace of modern technology is simply limited to individual agencies and is devoid of a cohesive strategy.

The transformative architecture of subscription-based technology is the missing link between funding and IT-centric policy enactments. As subscription-based technology can yield higher returns on investment in short periods of time, the success of this model may ultimately entice federal decision-makers to allocate more funds to support government’s common mission objectives. In turn, the federal government can further its progress in the digital transformation.

With the start of the new fiscal year on the horizon, federal agencies will need to be increasingly poised to identify and invest in reliable subscription-based technology that can empower them to maximize their budgets, improve customer satisfaction and streamline their digital transformation.

About the Author

Bob Osborn is the federal chief technology officer for ServiceNow.

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