Using Federal Funding to Invest in Technology Modernization? Why You Also Need This Solution

Over the last 18 months, the federal government has issued an unprecedented amount of federal aid, with more than $4 trillion in stimulus funds either obligated or dispersed to citizens, public and private sector organizations.

With the passage of the American Rescue Plan Act (ARPA) in March, state, local, tribal and territorial governments also have access to $350 billion in additional aid through the Coronavirus State and Local Fiscal Recovery Funds.

Funds must be obligated by Dec. 31, 2024 and spent by Dec. 31, 2026. Recent data show states already have begun to apply this funding to different modernization projects — from strengthening their remote and hybrid work infrastructure to expanding broadband access, investing in solutions to automate administrative processes in various departments, and purchasing cybersecurity solutions to increase their resilience.

Many would argue modernization is long overdue in the public sector. However, as state and local governments accelerate their digital transformations, they must take steps to ensure they make the right long-term investments and that they integrate solutions — such as IT portfolio planning and management tools — that reduce their operational risks while improving their agility.

How Stimulus Aid is Driving Government Digital Transformation

Compared to earlier rounds of federal stimulus aid, state and local governments have more flexibility for how to use ARP funding.

Generally, they can use it to offset costs related to their COVID-19 response, to invest in broadband, sewer and water infrastructure, to provide government services, replace lost revenue due to the pandemic, and improve their data and technology infrastructure. As policy experts note, “the most striking and under-discussed aspect of ARP is that it represents not only the largest positive fiscal jolt to state and local budgets in decades, but also the one most supportive of local discretion.”

With this increased local discretion, state and local governments have an incredible opportunity to transform themselves into digitally-enabled organizations. Recent surveys indicate many state and local governments already understand the opportunity before them. A joint Stanford University and CivicPulse Insights survey found that local governments plan to build on the technology improvements they made in 2020 during the early stages of the pandemic. Depending on the municipality’s size, between 31% and 39% of local governments plan to use federal aid on IT infrastructure spending, the survey found. Another 20% plan to use federal funding for broadband expansion. The survey also found that 47% of local governments have used previous rounds of federal stimulus aid to improve their IT infrastructure. At the state level, governments are using ARP funding to strengthen their cybersecurity programs and for broader IT modernization to support workforce development, correctional and criminal justice programs, call center optimization, capital infrastructure projects and emergency management operations, according to statewide data aggregated by the National Conference of State Legislatures (NCSL).

What’s clear is that state and local governments are set to rapidly modernize and we’ll likely see them onboard a range of new technologies to support key strategic initiatives, including remote work, IoT-driven, smart city development, citizen-facing self-service and AI-driven automation.

But as they embrace digital transformation and introduce new applications into their environment, governments must ensure they have complete visibility into their IT ecosystem to reduce their operational and financial risks long after federal aid subsides. This is where an IT portfolio management and planning solution can drive real value.

The Benefits of Better IT Portfolio Management & Planning

An IT portfolio planning and management tool can help governments improve and automate application rationalization for both existing and new applications within their environment.

With the solution, government agencies can maintain an up-to-date inventory of all their applications, understand the interdependencies between applications, how they share data with one another, and the business processes each application supports. In addition, an IT portfolio planning and management tool can capture all financial transactions an organization records in its ledger, categorize this information into cost pools and create IT cost towers to provide more insight into the costs of running and maintaining a specific application.

With this enabling technology, governments can ensure that, as they introduce more data and applications into their environment, they are better positioned to fully understand which of these technology investments continue to align with their mission, optimize their processes and provide value.

The influx of federal aid will help state and local governments innovate, reduce data silos and deliver more responsive service, but they run the risk of creating new IT challenges if they don’t also invest in tools that will help them better manage a growing array of digital technologies and applications. As governments look ahead to a new normal, they must make robust IT portfolio planning and management just as central to their modernization efforts as any cloud-based solution. By doing so, they can achieve long-lasting — and long awaited — digital transformation.