Analysis 2009: Government Gets Into the Software Business

By Kurt Cagle
January 6, 2009

The incoming Obama administration has, even before taking office formally, pledged between $650 and $800 billion dollars worth of public works initiatives, a massive shift away from the laissez faire approach of the outgoing Bush administration.

Of that, it is likely that a significant portion of those funds will be going into automating health care systems, establishing carbon markets, improving business accounting and accountability processes, upgrading educational IT infrastructure and improving power generating infrastructures. One way of thinking about this is that over the course of the next two to three years, government is about to move into the Cloud, representing the largest growth of government IT investment in the industry's history.

What this will mean in practice is that, even as software jobs in particular disappear from the private economy, software engineers will be in high demand in the public economy. This process will likely start at the top and work its way down - with CTOs and system architects being brought into senior administrative positions in order to lay out the necessary personnel and infrastructure investment as well as to lay out the best potential architectures for those investments within the first three to six months of the Obama administration proper, followed both by the selections of companies to bid on software projects as well as significant hiring of software engineers internally to support a long term software development culture.

Obama has shown a surprisingly nuanced understanding of open source philosophy (as well as agile methodologies and a deep understanding of network effects), so it is likely that open source software and languages will play a fairly significant role in the IT infrastructure that is going to be used to power this move to the Cloud. A good indicator for this will be Obama's pick as the head of government IT, as it will likely be this person who will be establishing the broad patterns of software acquisition and usage, but I do not expect this to be an old school, proprietary software magnate. My guess, Bill Joy, co-founder of Sun.

By all indications, however, this does not necessarily mean that the government will directly hire software programmers for all of this (though it is likely that there will be a significant amount of government hiring of programmers - possibly as much as 10-15% of the total will be direct government hires). More likely what you will see is the government opening up bids for government projects to the private software sector, in many cases becoming the primary or even only client for a number of them.

Specific projects will almost certainly be along the lines laid out by Obama recently, amounting in essence to the introduction of intelligent networks that would be run in conjunction with physical or social infrastructure improvements. Physical instructure improvements will likely look first at transportation infrastructure, though moving away from the highway-centric approaches of years past and concentrating more on rebuilding the badly eroded train and light rail systems, aligning the systems more along the lines of recent efforts by China and Japan than towards pouring more money into highways that are already straining under their existing load (a significant upshot of this will be the potential of moving far more freight traffic by rail and reducing the number of two and three unit long trucks that do such a disproportionate amount of damage to highways).

Another area I suspect considerably more investment will be made is in hardening areas against weather-related disasters, as well as providing mechanisms to far better coordinate recovery efforts after a natural disaster such as a hurricane, tornado or earthquake. A significant portion of the GIS community had begun focusing efforts on disaster warning and recovery after Katrina and related storms - expect this particular sector to get additional funding as well in order to turn what are for the most part pilot projects that have been very poorly funded into fully functioning emergency defense systems (expect that FEMA will almost certainly get rerouted out of Homeland Security as well).

Healthcare will likely be a second major area of investment, again with three goals - increasing the number of doctors in a system that is suffering from chronic shortages and automating, standardizing the health care system, an area that likely will be a major source of jobs for IT workers, and providing a mechanism for reducing the complex and labyrinthine managed-care system. I expect that by the beginning of 2010, significant work will have begun on establishing standard electronic medical records, likely built on the HL7 model.

The educational system in the US (and to a certain extent in Canada) is nearly in as much trouble as the financial and physical infrastructure systems. The No Child Left Behind Act pushed extensive testing mandates (and fairly punative actions for schools that failed to meet what was often a crazy quilt of different educational expectations), while at the same time significantly underfunding the educational system at all levels. This has been exacerbated by the shift in recent years from college grants and scholarships to student loans, loans which are now becoming increasingly difficult to come by and consequently are making it increasingly difficult for even relatively affluent students to go to college.

Again this is a problem that will likely take a multipronged approach to solve - refunding education, making teaching more attractive as a profession, will help, but as with many of the situations that exist now, this is perhaps a good opportunity to rethink the educational structure overall. Negroponte's one laptop per child program turned out to be more daunting than originally hoped, especially given that too much of the focus ended up on the price points rather than the ultimate goal of providing access to appropriate online educational resources.

My personal feeling is that education at the primary and secondary levels need to recognize the shifting relationship that kids have with knowledge and information, and begin a fairly significant set of reforms at the teacher education level to rethink the role that teachers have in that process. Standardization needs to happen, certainly, but that standardization needs to occur (and I suspect likely will occur) not at standardized tests but a more consistent standardization of records and communication systems. Unfortunately I think that at least for the next couple of years, educational reform will be largely inchoate, because what's needed here is an evaluation of education itself.

One idea that has been floated (and I think offers some serious potential) is the development of an equivalent of the GI Bill that can be tied into other reforms, making it possible for people to earn college educations in exchange for government service outside of the military. Another reform may be the formal severing of research universities from teaching universities and a re-evaluation of the role that colleges play in the educational process. Educational costs have risen faster than every other sector but health care, yet the quality of that education has been declining steadily for years.

This is an economic reaction - pure and simple; the number of "seats" in most universities has remained more or less constant for the last two decades, even though the number of people seeking a college education have risen significantly. Building new colleges may help that situation somewhat, but in reality that option is going to be limited. What this means in practice is that distance-learning colleges, online certification programs, and related "electronic" schools will need to take up much of the slack. I expect to see more well-crystalized standards for such programs over the next couple of years that provides means for people to study without being on campus, to study in concentrated "marathon bursts" of two to three week 40+ hour courses and the rise of technical publishing companies as being the next generation of university (see my next point for more on this).

The financial crisis that is currently causing much of the pain in the economy has many roots, and as such no one solution will magically solve the problems that are now endemic to the financial system. However, improving the transparency of banks and other corporations would have made it much harder for much of the fraud and poor judgement to have taken place. It would also have made oversight of the financial regulatory mechanism much easier (something that's becoming increasingly obvious in the wake of Bernard Madoff's recently "discovered" massive Ponzi scheme (along with those of many of his peers).

I'm not necessarily a fan for increased regulation, but I do think that better regulation is definitely in order here. Again this points to a technological solution to what is ultimately a technological problem - monitoring trillions of dollars worth of financial transactions in real time. Business reporting is still mired at the level of the quarter, yet increasingly the tools are available to provide business reports at a daily level of granularity, especially for Fortune 1000 Companies. Many companies have resisted this, not so much because of the cost of implementing such a system but because such close monitoring makes it considerably more difficult to handle financial irregularities ... which is of course the whole point of the regulatory system in the first place.

My gut feeling is that the first year (indeed the first two to three) will likely not see immediate payoffs. The global economy is dealing with nearly forty years of economic excess - the idea that it will be solved in a year is laughable. By this time next year its likely that the initial planning will have been completed, the structures for building the structures put in place and the first real implementation phase just getting underway, which is why I see this as being very much a work in progress for 2009.

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