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Applying Category Management Principles to Software Management Practices

Today, OMB released a Category Management policy to drive greater efficiency into how the Federal Government buys and manages software and save taxpayer dollars.

Today, the Office of Management and Budget (OMB) issued the second in a series of information technology (IT) policies to make the acquisition and management of common IT goods and services more efficient and save taxpayer dollars.

The new policy is another step forward in implementing the President’s vision for a modern government, one that leverages private-sector best practices to achieve a Federal Government that is smarter, savvier and more effective in delivering for the American people.

Today’s policy, in combination with the Administration’s policies on workstations and mobile services, will help drive greater efficiencies in the $8 billion spent each year on PCs, software licenses, and mobile devices. And like these other policies, it is based on category management principles that have already resulted in big savings, better efficiencies, and further improved performance. For example:

  • Since 2009, we’ve realized nearly $2 billion in savings by driving smarter buying practices through the Category Management initiative. 
  • We’ve seen prices drop by as much as 50 percent for personal computers since the release of the workstation policy.
  • We’re eliminating more than 700 duplicative professional services contracts, which is estimated to save the Government nearly $4 million over the next five years with sustained annual savings of $1.3 million thereafter.

By the end 2016, 45 percent of the $1.1 billion spent in annual purchases for desktops and laptops will be consolidated into three government-wide contracts. And 10,000 government contracting officers will be using GSA’s Acquisition Gateway, a new online portal for contract information sharing.

While it is important to take stock of this progress, much work remains. For instance, each year the Federal Government spends billions on software through tens of thousands of transactions – from large delivery orders on established contracts to individual purchases from commercial catalogs.

To take advantage of this buying power, reduce duplication and fragmentation, and ultimately save money, the policy released today will help agencies move to a more centralized and collaborative software management approach. It calls on agencies to appoint a software manager to centrally manage software buys and reduce underutilization, to maintain a continual inventory of software licenses and better track usage, to consolidate redundant applications while identifying other savings, and to maximize the use of best-in-class solutions.

Moreover, this policy charges the Enterprise Software Category Team (ESCT)—a cross-governmental, cross-functional team of senior IT and acquisition professionals—to lead our software effort and help break down silos in the Federal Government IT acquisition space that can result in decentralization, lack of transparency, and other challenges. Specifically, the team will help drive and monitor the development of government-wide software strategies, such as increasing the number and use of government-wide software agreements and improving software license management practices.

The ESCT has already been hard at work. For instance, the team renegotiated a government-wide agreement with Environmental Systems Research Institute, a geospatial software provider representing 27 percent of Federal spending in this category. As a result of the renegotiated agreement, agencies are already saving over 14 percent on their orders, and the Federal Government is estimated to save over $1.5 million in FY 2016 and over $3 million in future years.

Examples of the other work the ESCT will take on include consolidating software requirements across multiple agencies to begin the process of negotiating two additional government-wide enterprise license agreements by the end of the year, recommending further policy changes, sharing best practices across the government to improve how we buy and use software, and monitoring agency progress toward reducing duplicative agreements.

Smarter acquisition strategies typically don’t garner a lot of headlines or attention. But they matter. Through the category management principles outlined throughout this policy—such as leveraging the government’s vast buying power, reducing duplication, and implementing common sense demand management policies—we can save taxpayers’ money and deliver more value for the American people. 

Anne Rung is the U.S. Chief Acquisition Officer.

Tony Scott is the U.S. Chief Information Officer.