Is your IT capital budget stifling innovation?

I remember taking over as CIO in March 2011; it was three years into the worst economic downturn many of us had ever seen. Revenues were down, expenses were up and the organization was turning to technology to bridge gaps in its own business models.  Meanwhile, I was staring down my own severe reductions in resources (i.e. people and money for technology), tackling enormous modernization needs and facing an ever growing line of customers knocking at the door.

To make matters worse (and yes, they were worse), the organization I work for does not have a capital budget for technology (insert shock here). There is no guarantee that PCs or servers will be replaced on any particular timeline, nor is there an automatic “next” upgrade every few years for major application.  The good news is I don’t have to fill out all those forms and attend all those meetings that governments are required to complete for such benefits. Instead, our challenge is to compete against the City’s desire for public safety in the annual budget process for the ever shrinking piece of the general fund pie. Consequently, a few of us go very hungry.

It is said that necessity is the mother of invention. If that is true, then desperation is the mother of innovation. But can there really be innovation in government, or is that an oxymoron? As I prepared for the upcoming budget cuts (6 months in advance because even reductions take a long time in government), I began to review operations and discovered three interesting things:

• Doing tomorrow’s job with yesterday’s tools was much harder, so modernization was mandatory.
• Even without a capital program, a significant amount of money was being spent simply on maintaining the status quo.
• Bridging the gap meant being creative with investment strategies.  Fortunately, there was always someone waiting to take our money.

But where better to learn about innovation than in the heart of Silicon Valley? After all, most startups don’t have large capital programs. Startups have cash in and cash out – plain and simple.  We have a shrinking operating budget and a matching set of expenditures – plain and simple. As a result, we reviewed existing solutions to see if they drove value.  Those solutions that did not drive value, became the new currency to transform the technology landscape.

• The aging core network was replaced for less than the cost of the annual maintenance on the previous network design by implementing a new network as a commodity.
• We identified fiercely competitive segments of the technology marketplace where vendors were often forced to offer more than simply cost reductions off of list prices.
• We leveraged existing assets in new and unique ways.

Over three years, we implemented a new core network, moved email and the phone system to the cloud, deployed the one of the nation’s fastest outdoor mesh wireless networks and upgraded office productivity software for the entire City with limited new investments.

What if you were suddenly faced with no ongoing capital investment?  Or, what if you never had a capital budget to begin with?

Send me your comments and questions in the box below.

Vijay Sammeta is CIO of San Jose, Calif.