Obama vs. Romney on Government IT Services in 2013: Expect Catastrophic Budget Cuts

    We are ramping up to an election now just a few weeks away and while both presidential candidates will likely cut budgets for IT sharply, they are likely to go about it in very different ways.

    Obama, who seemed to start out being the first president who understood IT, has turned out to be not that different from his predecessors in practice. And while Romney shows no IT inclination, he has clearly run and managed the turnaround or packaging for sales of firms while at Bain Capital, and you don’t do that job these days without an IT mandate.

    People change when they get the job of president and during their second terms, so there is risk to looking back at what both men have done to predict their future actions. 

    Same Goals: Cost Containment

    While the reasons driving cost containment for both men will be different, the result will likely appear somewhat similar at the top line. Obama will be working to assure his legacy in his second term and reducing costs sharply under his control that have to do with services he supplies to government workers. He showed little resistance to reducing government staffing during the first term and will be likely to feel even less worried about backlash during the second.  

    Romney enters with his primary measurement being containing government cost and he has already promised to increase military spending, which will drive sharp cost reductions elsewhere. If he doesn’t accomplish this task quickly, he’ll likely be in the same position Obama is this cycle and at risk of being a one-term president (typically remembered as failures) and he’ll resource making sure he avoids that. 

    So regardless of who wins, government IT costs at the federal level will be cut sharply and these practices should trickle down to state and local governments throughout the year as federal funding is cut. The only exception would be costs related to security: Both men will likely continue to fund improvements in security, though both likely still at inadequate levels given the massively increasing risks. 

    Different Approaches

    Obama has been a shared-pain kind of president much like Jimmy Carter was and he will likely apply cost cutting very evenly across the organizations and I doubt there will be much that you can do to prevent this. But I’d certainly suggest putting on any pressure you can to assure your budgets are in place now before the mandates are passed down. Security and embarrassing outages are likely your best vector at this stage. 

    Someone trained in turnarounds and packaging companies is likely going to behave very differently and be very metrics-focused. This suggests that if you have metrics that can be validated (these executive types, if successful, have a pretty good BS sense), this will be your best vector to defend your budgets. He will likely also fund efforts that will increase the quality and quantity of metrics. Current-generation private sector executives, particularly those who fix or package acquired companies have a great hunger for things like dashboards that give them a view of things they are responsible for quickly and these dashboards are metrics-based. He will include funding in the initial years of his administration to get those metrics so he can make smart decisions that will show dividends before the ramp to re-election, dividends he can then showcase (avoiding some of President Obama’s problems showcasing progress) will likely have a very high priority.  

    Romney is also far more likely to outsource but to domestic companies that provide the services he needs. There are two reasons for this: Firms like HP are tied to his election and will be tied to his re-election and these firms can address problems through hosting, which will avoid his having to increase his capital spending dramatically.  

    I would expect HP to be the biggest technology company winner and Google the biggest loser if Romney wins. (There is a growing sense that Google may be influencing the election results through its near-monopoly position on search to favor Obama).   

    Wrapping Up: Get Ready to Tighten Your Belts

    Regardless of who wins, government IT budgets are likely to be slashed in 2013 as a result of a desperate need to dramatically reduce government spending. This does provide opportunities for companies to volunteer resources in exchange for political access and for government IT executives to find creative ways to provide services at low cost.  

    The best approach will likely be to view this as a collective threat that needs a collective response and to collaboratively work with other departments to pool resources and address what will likely be a massive common threat. Or put another way: If you are working in government IT, hang together or you likely will be hung out to dry separately.  

    Rob Enderle
    Rob Enderle
    As President and Principal Analyst of the Enderle Group, Rob provides regional and global companies with guidance in how to create credible dialogue with the market, target customer needs, create new business opportunities, anticipate technology changes, select vendors and products, and practice zero dollar marketing. For over 20 years Rob has worked for and with companies like Microsoft, HP, IBM, Dell, Toshiba, Gateway, Sony, USAA, Texas Instruments, AMD, Intel, Credit Suisse First Boston, ROLM, and Siemens.

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