Digitization, the chief data officer, and the shifting labor story are major trends affecting the commercial market that will have a major impact on government contractors. Here are four things you need to know.
Non-public sector events such as the MIT Sloan CIO Symposium I recently attended often shed light on issues and trends that could affect the future of federal IT. The good news is the public sector is already addressing some of the issues highlighted by this year’s theme, “Thriving in the Digital Economy.”
Here are a few takeaways relevant to the federal government.
Clearly, the digitization of everything has launched a data economy. An excellent session moderated by Barbara Wixom of the MIT Sloan Center for Information Systems Research, for example, discussed the practice of “data wrapping,” which uses data and analytics to enrich product and service offerings. The panelists described the evolutionary paths their organizations were taking to uncover increased value for their customers. It was good to know that the same is starting to happen in the federal space.
With President Obama’s 2013 executive order that made open and machine-readable data the new default for government information, the digitization of government has already taken hold with the open government and open data movements. Data.gov is another great example. In addition, government agencies, particularly regulatory, are currently contemplating what it means to be data driven.
The Rise of the Chief Data Officer
Security, cloud, mobility and other new technologies are turning the CIO world upside down. CIO panelists welcomed the creation of a chief data/digital analytics officer with the role of being a new partner to the CIO.
A few years ago, the term chief data officer (CDO) didn't exist in government. Now the number of CDOs are in the teens. With the addition of chief data scientists, geospatial information officers and others, scores of senior government staff are focused on data. This increased attention can lead agencies to become more data-centric, which can lead to a faster, more effective government.
The Digital Economy is Shifting the Labor Story
Automation in the service and supply chain is driving the adoption of platform business models with rich ecosystems at either end, connecting business-to-business and labor-to-business in new ways. Airbnb, Uber and Amazon Marketplace are good examples.
With this shift, there are winners and losers. The winners are highly-skilled workers who command higher incomes by disintermediating the corporation as the middleman. The losers are lower-skilled workers whose tasks are commoditized. Yes, the workers get increased workday flexibility, but the trade-off is lower wages.
As anyone knows in the IT service sector, today’s labor laws are often at odds with the demands of labor. The morning of the conference, the Department of Labor finalized changes to the Fair Labor Standards rules. These changes increase the salary thresholds significantly for nonexempt workers and remove the exemption for IT workers, thereby making overtime pay required. Will this protect low-skilled workers or hurt them by accelerating the drive to labor commoditization for low paying jobs?
The federal IT sector is behind the curve. Through its contracting mechanisms, it treats almost all IT labor as commodity labor. Contracts are often evaluated by comparing Labor Category rate cards that already have been loaded with hours. Yet, at the same time, the government wants to adopt leading methodologies like agile, Lean, DevOps and the cloud. As the marketplace for IT labor partitions into specialized skills and commodity labor, the federal IT sector finds itself ignoring the specialized skills that are desperately needed to lead the aforementioned adoptions. This applies to the federal workforce, too.
Other sessions dealt with new technology, such as the Internet of Things and blockchain, with the latter being highly attended by financial services firms. Blockchain is a term for the set of data structures and algorithms underlying the Bitcoin application. In theory, blockchain can be applied anywhere a broker exists to provide trust between two or more parties, and it can do so at a lower cost of operation. Blockchain provides a way to automatically determine when digital transactions occurred and in a way that is totally open to inspection by anyone.
Today, Bitcoin is arguably the only viable application of blockchain, but that isn’t stopping organizations from experimenting to find other applications. Some governments, particularly Estonia, have announced they are embracing blockchain for many government records.
What does this mean for the federal government? It could soon see the value of blockchain, especially how it can support applications that include land records, licenses, patent filings, e-Health records and many other official government documents.
The government contracting community always seeks the latest innovation it can deliver. Whether it be a new technology or a new approach to an existing application, we must look to see what other markets are doing and then incorporate their innovations into what we deliver to our customers.
To do this, however, we need to address the innovation adoption curve first. I’ll be first in line for that event.
NEXT STORY: Do you know who your most dangerous employee is?