IT solutions are not helicopters…

Posted on December 23, 2010 by Tim Harder

We all know the pace of innovation in technology. New technologies are coming out daily and making the technologies developed the day before obsolete. If you’re going to purchase IT systems or solutions, you have to do it quickly, or the solutions you’re purchasing may no longer be worth the investment by the time it’s approved, purchased and integrated.

In this environment, it would seem counterproductive to handle the acquisition of IT solutions, such as cloud services, the same way you would, say, a new military helicopter. Sadly, that’s the way that the Department of Defense has been purchasing IT solutions for the past three decades.

According to a recent Federal News Radio article, the DoD is working to diverge and differentiate the IT acquisition process from the process for acquiring weapons systems. In fact, they recently released a 19 page report that was mandated by the 2010 Defense Authorization Bill and outlines the steps that they’re going to take to streamline the acquisition process for IT.

The DoD currently funds IT projects through three distinct appropriations (research and development, procurement, and operations and maintenance), which is designed more for weapons systems rather than IT. In the report, they state that this might need to become more flexible for IT, since not all solutions need to be custom developed and some can be purchased off the shelf.

The DoD is also toying with the idea of a non-expiring revolving fund for IT. Congress would still control which projects would be paid for with the fund, but DoD officials could authorize programs and give Congress a heads-up after the fact.

Also recommended was a shift in how the Pentagon approaches its IT spending. Currently, large projects and systems are developed and acquired over a long time frame. The new mentality would have the Pentagon approve funding based on desired capabilities, which means funding could be shifted to new products or services that have proven they can provide the capabilities desired. They will also shift the focus onto short-duration, “incremental” IT projects.

The way the DoD was developing and acquiring IT solutions was broken and forcing the agency as a whole to move much slower than the private sector in adoption of new, beneficial IT solutions. With new technological advances, such as the cloud, becoming more widely embraced and adopted due to their ability to make organizations more effective and efficient, it was time for the DoD to make a change and find a way to move at the speed of innovation.

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American innovation takes another one on the chin

Posted on December 9, 2010 by Tim Harder

America was always the nation that built things. We were the leaders in innovation and research. We made the first automobile on a mass production assembly line. We invented the telephone. We sent the first man to the moon. Heck, we invented the pop-up toaster (seriously…look it up).

Unfortunately, our country has been losing its edge in the world of research and development (R&D). As science, technology, engineering and math (STEM) education has fallen behind and other global industrial powers have emerged, we’ve started to lose our reputation as an innovator.

Last December, something happened that could finally stick a fork in America as the world’s center of science, innovation and R&D. Surprisingly, it’s flown under the radar and many Americans aren’t really aware of it. The R&D tax credits, which have powered innovation and research in our country for nearly three decades, were allowed to expire and have yet to be extended by Congress.

Now, we’re all aware that the government is currently in a bit of a financial bind and facing a $1.3 trillion deficit. Regardless, the government is practically ensuring that America remains behind in innovation and invention by not sustaining the R&D tax credits.

The R&D tax credits allows medium-sized and large companies to spend multiple year’s worth of money all at once on new technologies that they’re looking to bring to market and then deduct that figure from applicable corporate taxes. This is important because the largest part of the innovation process involves funding and paying smart people to conduct R&D.

If there is no guidance and consistency on the tax credits, it could seriously damage a company or sector’s ability to innovate.

What’s worse, if there’s no net tax credit, companies will have to reconsider how and where they do their R&D. This could lead them to move R&D and innovation to other countries or jurisdictions that have more favorable taxes and treatment for R&D spending.

This means that R&D and innovation dollars go to nations like China or India that are competing with us in the global economy. But there’s another problem with these product development lifecycles going through nations like China.

Our government takes away the R&D tax credits and then pays a company to innovate or invent something. That company is conducting its R&D in China, India or somewhere else. However, our government has already said that they don’t trust product lifecycles that run through these countries.

To have exquisite supply chains, R&D needs to be conducted in America. The R&D tax credits, or something similar, need to be kept in place for American companies to remain innovative and for the government’s supply chain excellence to remain in tact.

Some of the most innovative companies in America spend 10-15% of their revenue on R&D. That’s an activity that we want to continue. If we’re going to continue to create the cloud technologies, IT solutions and other advances that will power our government and economy into the future, Congress needs to extend these tax credits and get America innovating again!

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