Agencies, cut your budgets!

On August 19, AP reported that “White House budget chief Jacob Lew has ordered agency heads to submit spending plans for the upcoming budget at least 5 percent below this year’s levels. He also wants them to propose ways to trim a total of at least 10 percent of their spending.” And, “Lew’s letter suggests that savings can be found by eliminating unneeded programs and making agencies more efficient. It also invites agency heads to propose initiatives that would spark economic growth.” To read the story, click here .

Lew is probably right that to “trim” next year’s budget by 5 percent, an Agency will have to eliminate some programs. But are they “unneeded” programs? If they are unneeded, then why do they exist to begin with. Perhaps a better choice of words would have called them “lower prioritized” programs.

While immediate savings are desirable, I wish OMB and the federal Agencies would start thinking about long range plans to reduce administration costs not by eliminating programs but by reconfiguring business processes and retooling supporting infrastructure so that they eventually deliver even better services at lower costs. This is not something that can be done in a year or two, but I am quite certain that in many cases it is doable over a period of perhaps five to ten years. After studying the Social Security Administration, I became convinced that it was doable there by 2020.

Let’s see how SSA deals with reduced funding. SSA’s FY2012 budget will be approximately a billion dollars less than the President’s request. How will SSA deal with the shortfall? It will reduce working hours, thereby reducing overtime pay; see . This means that some services will be cut. Which ones? The public will have half an hour less a day to visit SSA field offices. While this indeed solves the problem of reducing costs, it does nothing to enhance the efficiency of SSA service delivery. Perhaps the shorter open-to-the-public day will get more people to interact with SSA online, but there is no analysis that shows that overall, this will increase efficiency. What is certain is that services to some people will be delayed.

SSA, as indeed, all federal Agencies, has to not only accommodate immediate needs but also start planning for the long term. Ideally, such long term planning is done when money is not so tight. But we are now where we are, and delaying long-term planning to when money is not so tight is a poor option. That’s because the longer we delay such planning and eventually executing on such plans, the more we get entrenched (and entrapped) in legacy environments that are becoming increasingly complex and costly. That is, the longer we postpone making meaningful changes, the more expensive making such changes will become in the future.

Read about my views regarding long-range vision and strategy in my paper Social Security 2020: Vision and Strategy .


Vivek’s “Cloud First”- Right On!

A few days ago, I read Vivek Kundra’s “Reflections on Public Service.” It is a wonderful document that tells about his aspirations for and accomplishments with government IT. You can access it by clicking here . Presently, I want to comment on how important Vivek’s Cloud First concept is to the Social Security Administration.

Vivek nails it when he calls for “reducing the Federal Government’s reliance on what we call “Big Iron” and shifting to the cloud.” But what does this mean at SSA? When we considered the obvious moves to the cloud- like moving email and collaboration to the cloud- we could not see significant gains. And the idea of moving core applications to the cloud, whether private or public, seemed impractical, if not impossible. It is too enormous a task to take SSA’s core IT functions and rewrite them for the cloud.

So where does the cloud come in? It forces SSA to rethink how it does its core functions. Simply rewriting its core functions for the cloud is not the way to go. The “Cloud First” principle forces us to redesign our core business processes for handling our core functions in a modern IT environment. It shifts our thinking from “rewrite” to “transform.” And Vivek is absolutely correct in saying that this is the way to go. Rethinking our business processes and moving them to the cloud will, indeed, allow Social Security to deliver better services at significantly reduced costs.

Vivek should be proud of his accomplishments. His initiatives have already shown some successes. But, I believe more importantly, his forcing us to rethink how we do IT in government will have much greater impact five and ten years down the road. As more and more people in government realize how much more they can do with modern IT environments and paradigms, and become less scared of making the change, we will see big savings and, simultaneously, significant improvement in government service delivery.

Thank you, Vivek, for pushing your vision and good luck at Harvard.

The Inspector General’s Report on SSA’s (still missing) Service Delivery Plan

On July 29, 2011, the Social Security Office of the Inspector General sent a report to Rep. Sam Johnson (R, TX), Chairman of the Subcommittee on Social Security, House Ways and Means Committee, on Social Security’s Service Delivery Plan. There is no plan; there are some indications of what service delivery is expected to be like in the next three to five years. But even this is very sketchy.

A major item in the report is that Social Security wants customers to interact more online. There is an implicit assumption that online interactions are more efficient than in-person or via-the-phone interactions. This is probably true, but this has yet to be shown. Several years ago, SSA hired Booze-Allen-Hamilton that claimed to show this. But the report is flawed. It showed that whereas in-person application processing for RSI (Retirement and Survivors Insurance) claims takes on average 36 minutes of employee time, online applications take, on average, 24 minutes. First, notice that online application does not mean automated application; there is still considerable human intervention. Second, the 36 minutes for in-person processing time does not reflect what SSA’s own accounting folks say- average RSI task is over 70 minutes. Amazingly, SSA folks cite the online advantage based on this one report that is glaringly not consistent with its own accounting numbers. Does anybody at SSA actually read these reports, for which they (actually, we, the taxpayers) pay handsomely?

With more than half of online applications, customer reps have to call the applicants back for more information, or to inform them that they have various options that were not made available to them online. Sometimes reps have to make several calls, leave messages, try again, until they reach the applicant. SSA cannot track when these happens. Often, people call for help with their online applications, while they are applying or before or after applying, but here too SSA cannot track when this happens. It may happen that applicants visit in person after applying online, just to make sure they understand what is going on, and SSA cannot keep track of that. Bottom line, we really do not know how much more efficient online applications are in terms of saving time. And we certainly don’t know if the online process is less costly (IT is very expensive at SSA). What we do know is that the average OASI (Old Age and Survivors Insurance) administration cost per OASI beneficiary has been steadily increasing during the past decade.

The other problem with current online applications is that they are not as informative as in-person applications. This is something that the unions have been pointing to for years, but SSA leaders dismiss because they are so determined to get people to apply online. A service delivery plan should include not just more online applications, but online applications wherein the experience is as rich as that of applying in person, with the added convenience that one does not have to deal with the hassles of traveling to an office.

Thus, when a future service delivery plan is finally created, in its discussion of electronic services, it should do more than just say that SSA will have more folks interacting with the Agency online. It should demonstrate that these interactions with be as informative as in-person interactions and also would reduce overall costs of delivering Social Security services.

The report says, “Since SSA does not have a long-term customer service delivery plan, we identified issues that SSA should address when it develops such a plan. Specifically, SSA should address the following issues:

• Electronic services
• Information technology (IT) environment
• Staffing
• Physical infrastructure
• Performance metrics
• Potential challenges”

I will add that all these must be addressed in the context of very tight budgets, expected increases in workloads, and serious staffing problems (which the report mentions).

The report concludes- “SSA must develop a long-term customer service delivery plan that serves as a roadmap for ensuring the Agency is technologically and structurally prepared with appropriate staff to address increased workloads and provide service delivery in an electronic environment. The plan must identify what the service delivery environment will be in the future, including what services customers will expect and how they will want to receive services. The plan must also include timelines and performance metrics to reach its long-term customer delivery goals. In addition, SSA must exert strong leadership to implement the long-term service delivery plan. In commenting on our draft report, the Agency agreed that a long-term customer service delivery plan is needed. The Agency further stated that it will develop a long-term plan.”

My paper, Social Security 2020: Vision and Strategy , has a section on Operational Vision for SSA in the coming decade and an Appendix that lists capabilities that a Twenty First Century Social Security must have. It would be interesting to see whether the promised service delivery plan will actually deliver. But even before that, when are we going to see this promised service delivery plan? We have been promised one for a long time.

You can read the Inspector General’s report at .

In Context of the Bigger Picture

We are torn apart by two seemingly incompatible political/economic philosophies. One asserts that government is incompetent, so it is best to minimize its role. The other asserts that we need government to take care of our social responsibilities as a nation, so it is sometimes necessary to grow it. Being a democracy, the two sides must compromise for the country to run, but compromise is difficult because neither side sees any element of truth in the position of the other.

The way I see it, both camps have elements of truth. My experience at Social Security taught me that government is, if not incompetent, at least very backwards and unwilling to take the necessary steps to catch up. The actual administration of Social Security services is too expensive and not responsive to the desires of the citizens or its own workers. Senior management will tell you otherwise; but field workers know that this is true, and to new hires, this is obvious. Furthermore, SSA’s plans for the future will only make its service delivery more expensive and still not satisfy the demands of its constituents. On the other hand, more and more Americans will need Social Security services in the coming decades.

What is most disturbing is that SSA’s leadership never addresses this dichotomy. There is no serious effort to reshape Social Security so that fundamentally its service delivery will become simultaneously better and more efficient. Quite the contrary, the attitude at SSA is that either it gets more money to continue business as usual or that its services will degrade. You will not find a single Agency approved SSA document that challenges this basic alternative scenario.

I find the same to be true in all of our Federal agencies. I have never seen a single document that discusses fundamentally changing how things are done in any of the agencies so that ultimately it can deliver better services at reduced costs. We see initiatives that try to save money here and there, but they do not take into account their overall effects on agency efficiency. The discussion is always, “what can we cut?” It is never, “how can we do even more with less money?”

I think the reason that this is happening is that we have become intellectually both lazy and cowardly. We are scared of big challenges. It is easy to slash a budget and then see what results. It is easy to increase funding to do more of the same. But to actually think of what an agency should look like, say, ten years from now, how different should it be from what it is today, that is beyond our scope. But this is exactly what I think we have to start doing.

When I was at Social Security, I asked myself, if we had to redo Social Security today from scratch, without changing any of the laws, what would it look like? It turned out that it would look quite different from what it does today and from what it will look like in several years if SSA continues with its current projects. It would run much more efficiently, more accurately, provide much better services, have happier employees, and cost a lot less to administer. Getting to this new SSA would be quite a challenge; you have to build it and transition from the old to the new, and do this all within a very tight budget environment. But it is doable; one only needs the right leadership and encouragement. Of course, if we also allow changing the laws, we could do a lot more. But even with the constraint of keeping the law as is, the exercise provided sufficient insight into how much better we could do.

To me, spending some time and money on considering this option, especially in light of the fact that the alternative is clearly heading the wrong way, is a no-brainer. But SSA’s leaders refused to even think along these lines. Psychologically, they locked themselves into the belief that this is undoable; of course it is doable, and we Americans are excellent at meeting such tough challenges when we are motivated to do so. Instead of creating a clear vision of the future, SSA leaders inundate each other and their constituents with enormous details, which only continue to add to the complexity that has grown over decades of legacy accretion. They are all so immersed with details that they never get a chance to consider the fundamentals. SSA leaders are experts at diverting real discussions with such tactics.

SSA’s leaders are not malicious people. I believe that in their hearts they want the best for both the agency and the American people. But they have been indoctrinated by the current ethos of “either-or” without any consideration for creative destruction, the type that drives the private sector to modernize. Where I do fault them, however, is for their refusal to act, even on a minimal level, when a serious alternative was presented. Instead of engaging external experts, they made it impossible to do so and relied on insiders with no real knowledge of modern information systems. Instead of talking to supporters of the type of change I was proposing, they unilaterally quashed it.

What is Social Security’s services delivery plan? What is their Agency Strategic Plan? How are they addressing the looming crisis as simultaneously budgets are shrinking while service demands are increasing? We must insist that SSA’s leaders answer these questions. And if they cannot, we have to find new leaders who can.

Read my paper, Social Security 2020: Vision and Strategy

Back from Vacation

My wife and I just spent two weeks driving across the country- from my former apartment near Washington DC to our home in San Diego, CA. We covered over 3,800 miles, 15 states, 4 national parks, plenty of unbelievably beautiful scenery throughout, quite a few quaint restaurants, a small dog breeding farm and a very hot music spot. We saw old friends, met wonderful people, ate well, camped out, and spent a lot of time just the two of us together, talking, listening, watching in silence, hiking, feeling very peaceful. Throughout, it reinforced my internal conviction about the goodness of our country and how we must all endeavor to contribute to its future success. Beauty and abundance are all around us here. We must preserve what has been handed down to us and allow our children to inherit that which we are so lucky to enjoy.

I have been away from this blog while I was on the road. During that time, the country was undergoing another irrational political dance, this time around a default non-issue. My tenure at SSA has taught me that irrational political dancing is the norm. What was irrational (to me) at SSA? I looked at its modernization plan and I asked myself- suppose SSA totally succeeded in executing its plan- on time and on budget- what would the agency look like in five years? The answer I came up with is- not good. It would not be able to do the many things we all wished we could do, and administrative costs would still be increasing. I also asked those who made those plans the same question. Their response was that it is impossible to predict what SSA would look like in five years. Now that’s irrational. I was asking for the most optimistic scenario. Certainly, one would not proceed spending our hard earned tax money if one did not have at least some notion of progress in the most optimistic scenario. That’s what planning is supposed to be all about. But that’s not acceptable thinking at SSA.

We spent hundreds of people-hours arguing what IT projects should be funded, and never addressing the train wreck that we all knew is coming. I bet this is still going on. Why are we arguing whether tonight’s dinner should be fish or beef, whether tonight’s entertainment should be a movie or a dance, or if we should even have entertainment tonight, when the ship is heading towards an iceberg? The answer is that we are all doing another irrational political dance. This one involves the internal politics of a large government bureaucracy. The incentives and fear motives are so structured that the only way people feel secure moving forward is by avoiding the real issues, leaving them to whoever takes over next, and simply playing the game they are all comfortable with. The game is quite simple- just keep asking for more and more money and keep blaming shortcomings on lack of money.

Yes, I am back from my trip and as charged up as ever to continue the fight. We can actually achieve our dreams, deliver better services at reduced costs, make our employees and our customers happier, and create a Social Security for the twenty first century.