The End of the Custom Technology Era

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Connecting state and local government leaders

The public sector is still waking up to the realities of the cloud software market.

Technology developed for government and industry, referred to as “the enterprise software market,” is at a critical crossroads, and state and local leaders must move away from what has become a broken model.

Historically, government software implementation has followed a well-known pattern:

  1. A government agency identifies a process that needs to be automated or a problem they want to solve through technology. This could be anything from increasing the navigability of the governor’s website, to overhauling the internal DMV system, to upgrading a city’s 3-1-1 services to include more offerings responsive to constituent needs.
  1. The agency or department issues a request for proposals to the private marketplace and receives a variety of responses that usually offer multi-year, multi-million dollar custom-made solutions to solve the problem at hand.
  1. The winner of the bid delivers the promised software but often late and over-budget. By the time the project is finished the problem being solved has itself evolved or diminished to the point that the original scope has mutated.

The era of custom-made technological responses has made it abundantly clear that the amount of time and dollars spent on a government project do not equate with success. Until very recently, though, this recurring cycle of inefficiency has been governments’ only option for new technological innovations.

In the last three years, accessible and affordable cloud services—like those from Amazon and Microsoft—have given rise to a tech community that works across state-lines creating solutions that save government entities considerable time, resources and heartache—and build on some of the most successful business model innovations from Silicon Valley.

Unlike past custom-built technology, these cloud-based companies—often startups— offer technological solutions that are fully built and tested before they apply for government contracts. Their software easily fits into or integrates with existing systems without having to be built from scratch. For added benefit, born-in-the-cloud platforms are highly configurable and offer ongoing research and development, which means that the software can nimbly evolve with changing needs.

There are many companies offering government entities consumer efficient, ready-made technologies to answer a number of pressing needs.

One such startup is Kansas City, Missouri-based PayIt, which created software that allows constituents to conduct transactions with any government agency on a state or local level via an app. Using this app, constituents can collectively save thousands of hours by, for example, not waiting in line at the DMV or trying to figure out how to pay a water bill online. PayIt does not cost the government agencies a dime and is presently used in Kansas and Florida, as well as the cities Grand Rapids, Michigan and St. Louis, Missouri. Best yet, the ready-built platform up and running for the clients 90 days after they greenlit the project.

Another example is Atlanta-based, women-owned, Acivilate. Their team created Pokket, a software-as-a-service, or SaaS, that overcomes the privacy barriers faced by government agencies interacting with probationers and parolees, and allows them to create a coordinated provider plan that reduces the likelihood of recidivism. Because SaaS technology uses a subscription model based on number of users, pilot programs such as the ones being implemented by Utah’s state government and by Gwinnett County, Georgia are ready to be tested mere days from approval.  

Both PayIt and Acivilate are examples of burgeoning startup companies responding to government needs quickly, efficiently and powerfully. In addition, cloud-based softwares allow for elements of customization—for example, branding that allows city and state agencies to “own” the product, or technological modifications that can be designed to solve a particular outlier within a system. Since neither the provider nor the client have to reinvent the wheel every time an implementation or upgrade is needed, the entire process is cheaper, faster, and better-tested. Systems that historically came with delivery horizons at the half-decade mark can now be up and running almost immediately.

In order for government to gain access to the widest spectrum of best and cheapest solutions to pressing problems, they must update antiquated procurement restrictions that arrest innovation.

Common requirements, such as companies “must have three years of financials to share” or “must have physical presence in the state” need to be eliminated. Many of these requirements were established to reduce risk, but they significantly limit governments’ opportunities. In a time of limited budgets and increasingly-pressing problems, limiting options to the enterprise software incumbents is no longer a sustainable model for government procurements.

There is a wide-spread and untapped market of cloud-based technological solutions that are ready for governments to utilize, and the time has come to enable government agencies to consider these innovations when comparing RFPs.   

While government agencies should be cautious when spending constituent dollars on contracts with new technologies and companies, cloud-based technologies are less risky than custom-made projects. First, cloud-based vendors can easily implement pilot programs to ensure solution viability before a final contract is signed and implemented. Secondly, in response to changing government needs, cloud-based companies can pivot quickly and cheaply as opposed to the costly revisions to custom-based solutions. Finally, many of these cloud-based companies are attracting some of the best and brightest civic-minded talent from around the world, who are eager to offer new solutions to previously intractable problems. Since the Industrial Revolution, governments have engaged with new technologies to provide the highest quality services while protecting taxpayer dollars.

In the 21st century that means opening the doors to cloud-based technologies.

Rachel Stern is the Senior Director for Washington, D.C.-based InState Partners

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