Cash-strapped feds eye tech startups

As federal budgets enter into a deep freeze, it's a great time for purpose-driven startups to augment agencies' missions in areas like health IT and energy

Government agencies have been feeling the squeeze in their budgets for some time, but looking ahead the spending cuts can only be expected to slice deeper, regardless of whether or not lawmakers manage to avoid the so-called fiscal cliff, a looming set of cuts and tax increases set to take effect in January absent congressional action.

But as the feds head into a what looks like a time of austerity, expectations for government services remain high. That could translate into a greater reliance on lean, tech-driven private-sector players that can tap into the deep reservoirs of federal and industry data to provide novel, citizen-facing applications, according to Tom Davis, a former Republican congressman from Virginia who now serves as director of government affairs with the consultancy Deloitte & Touche.

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"Politically, while the leaders have been kicking the can down the road, we have this intersection where there are opportunities and government's going to have to do more with less," Davis said in remarks in Washington at the Reboot America conference, an event focused on the intersection of public policy and technology, particularly startups.

"This is a great opportunity for those of you with innovative ideas," he added. "Now is the time you're going to have to do it, because the money just isn't there."

The conference also featured a panel of socially-minded entrepreneurs who are either working with government groups or other sectors to apply technology to advance a particular cause, such as RxAnte, which deploys predictive modeling to make precise determinations about which patients are likely to need reminders to adhere to their medication.

In the energy sector, Opower has partnered with around 70 utility companies to convert their raw usage data into a novel way for consumers to visualize -- and, hopefully, reduce -- their electricity consumption. Opower also makes the data it gleans from its utility partners available through APIs, inviting developers -- and potential competitors -- to create their own applications relating to energy usage.

"From the business side, it makes us a platform," said Michael Sachse, Opower's general counsel and vice president of regulatory affairs. "We have the APIs, and so everyone's coming through us to get to the utility. We feel very comfortable about that position. But also we feel comfortable about the idea that, you know, we want to develop a system in which you're going to get lots of different tools to lots of different people.

"And we feel like we have a mass-communication system which we're very comfortable with, and if someone can come in and build on top of that, that's exciting for us. We get new ideas. Maybe we can get inspired by some of those ideas. But also it makes our other objective -- not just a business end, but an efficiency end -- more likely because you've got more and more people engaging with energy usage in creative ways," he added.

Ventures such as RxAnte and Opower mine large, unstructured sets of data to develop smart applications. That same potential was a catalyst for Data.gov, an online repository of nonsensitive federal data that the administration's tech team set up, with an invitation to developers to build applications on top of it.

Dan Kasun, Microsoft's senior director of public-sector evangelism, explained that those types of applications have only become viable thanks to some relatively recent developments in the tech world.

"From a technology platform standpoint, the key things that we're seeing that are enablers for all these types of solutions -- one would be universal connectivity, the fact that anything can get to that data because pretty much everybody's on the network," Kasun said. "The other one would be fairly ubiquity of compute and storage, meaning that's going to be a lot of data sooner or later -- the fact that it's available incredibly inexpensively and it's going out all the time, and the compute power to take advantage of that is also coming down significantly.

"Ten years ago, if I wanted to build a high-end analytics system to take that data and do something functional with it, I had a tremendous capital outlay. You can do it today for pennies on the hour. So it's something that's changed the model, and that means that organizations who want to invest in an innovative segment can do so in a way that they've never been able to do before," he added.

Kasun also pointed to the rise of sensor technology that is bringing network capabilities to a raft of new devices, so that, for example, household appliances like a dishwasher can modulate its energy usage to avoid peak load periods, a phenomenon often described as "the Internet of things."

"We're going to get data in ways and about things that we never ever thought about before," he said.

Initiatives like RxAnte and Opower also align with White House priorities like health IT and smart grid technology. But the administration, as a matter of political and fiscal reality, can only extend so much direct support to emerging industries.

In that light, the White House has launched a variety of initiatives to cultivate broader collaboration with the private sector, such as the Startup America Partnership, a coalition of businesses and philanthropic leaders the administration convened last January.

Then, earlier this year, the administration announced the Presidential Innovation Fellows program, a sort of cross-pollination effort through which members of the private sector begin a six-month residency within the government, where they work with government employees to develop cost-effective and tech-driven applications and programs that aim to address social problems while also improving efficiency within government and strengthening ties with the business community.

"As a general matter what you hear today ... are examples of people who are finding gaps in the marketplace that they can fill through innovative solutions that not only create a market value and opportunity for business development and job creation, but also have a social outcome as well," said Ari Matusiak, director of private-sector engagement at the White House.

"And so we've really taken an approach here that has been about bringing in the best entrepreneurs to work collaboratively within government in a lean startup mode to accomplish two basic goals. One is to make your government work better," he added. "Then the second is, in doing that, to facilitate a more effective collaboration with private-sector entrepreneurs."

Kenneth Corbin is a Washington, D.C.-based writer who covers government and regulatory issues for CIO.com.

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This story, "Cash-strapped feds eye tech startups" was originally published by CIO .

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