As our national and local economies continue to struggle, managing a technology budget is getting increasingly difficult. There are many unknowns as we head into fiscal year 2010, and state government budget problems are widespread.

 For example, Governor Schwarzenegger recently said, "I'm proud of California, even though we have our crisis. No one can point fingers, because as you can see, there are 30 states right now that have their fiscal year starting today that also don't have a budget, so I mean let's not get carried away and just look at California as we are the only state that cannot manage the budget." The Associated Press story went on to name other states who are struggling.

 Regardless of where your state or local government is at regarding an overall budget, technology leaders are being pressed to find hard savings now. In one sense, this may seem obvious. Isn't this just a central part of our job? Aren't we always on the lookout for ways to save money while being more innovative and tech savvy at the same time?

 Yes and no.  Hopefully, we can show a return on investment (ROI) on all of our technology projects. We consolidate datacenters and build partnerships and shared services to cut costs and become more efficient and effective. Nevertheless, our current economic situation is different in my opinion. This is not your traditional IT-budgeting 101. We need to go further.

Along with the fact that we have been consolidating technology and cutting costs in Michigan over the past five years, here are some of actions we are taking this summer to gain hard savings now within infrastructure - while still striving to improve customer service. Note that these activities are on top of other actions taken over the past twenty-four months such as a letter to vendors asking for a 10% reduction in costs. (Most vendors participated by the way.)

What are we doing?

1) Meeting with strategic vendors to examine every contract, maintenance agreement and platform. Asking questions like: how can we save hard dollars over the next fiscal year? Asking for options and a cost/benefit analysis for various options. Beware of short term increases in cost that will supposedly save money in the "out years." Everything should be on the table.  

  We've been pleasantly surprised by the creative alternatives that our partners have brought to the table. For example, we are working with EMC Corp to reduce the number of storage boxes, and thus maintenance costs, while still providing the same (or better) level of service.   

2)  Prioritizing existing projects to see what we must stop doing given existing resources. Many states are facing furlough days, cuts in overtime or even layoffs, so we need to be frugal.

  This project prioritization process is hard, but it is worth the effort. Despite value that we anticipated achieving over 3-5 years for several process improvement initiatives, we stopped or modified three large projects that would have cost the state almost $10 million over the next three years.  

  I will discuss how we went through this prioritization process in a future blog, but needless to say, you need a good methodology to ensure that the most essential IT projects continue. None of us wants to mortgage our government's IT future. But just as we make tough decisions in our family budget when overall income drops, these same decisions need to be made by many government technology teams now.

3)  Replaced overtime with flex schedules for many. We cut overtime by over 80%. Tougher standards were put in place to approve overtime for high-profile projects with tight schedules. Generally speaking, break/fix overtime continues for critical systems, but some non-critical systems must now wait longer to be fixed on off-hours, especially on furlough days.   

  No, this is not popular with staff. However, we emphasize the fact that we are saving precious dollars so that we can minimize any potential layoffs.

4) Continuing to examine options for contractor conversions. I discussed this topic in detail in a previous piece, so I'll just point you to that blog entry entitled: How Insourcing Jobs Can Save Dollars.

A few quick tips: some vendors will describe cost savings as "hard" when they really are "soft." For example, efficiencies that let you do more with less are nice, but you may need to layoff staff to actually save any money. Unless you actually plan to eliminate staff or contractors, the "productivity savings" are actually soft savings. (Note: it is also true that these staff can be moved to do other required functions, fill vacancies or start a new project. But again, watch the bottom line and make sure you've thought through the real savings.)

 Vendors often encourage us to spend $1 million to (hopefully) save $2 or $3 million over three or four years. The problem is that we don't have the current dollars. Make sure you can pay for any short term costs, if you agree to taking on new cost-saving projects. Finally, take this opportunity to ensure that previous cost-saving initiatives are panning out as expected.

Bottom line, we expect to save millions of dollars in the next fiscal year that we will pass along to our agency customers in the form of lower rates. In addition to hard savings, we are also capturing millions in cost avoidance (soft dollars).  I highly encourage an aggressive look at previous assumptions for usage levels across the board. Believe it or not, we may actually provide a better service when these efficiencies are put it place. I'm also learning a ton about our operational costs along the way.

What are your thoughts on saving IT dollars in tough times?        

The race has begun. Across America, state and local governments, private sector infrastructure providers, libraries, universities, non-profit groups, school districts and more are all scrambling to forge new coalitions, attend broadband summits, arrange meetings, dial into web conference calls and basically do whatever it takes to gain an edge in the broadband stimulus scramble for dollars. We are all sweating now that the submission countdown has begun.

 There are no shortage of articles on this subject. Starting with yesterday's Washington Post, we read Government Makes $4 Billion 'Down Payment' on Project to Expand Broadband. "Vice President Biden yesterday announced guidelines for $4 billion in stimulus funds to expand high-speed Internet access across the nation, jump-starting a program that has been criticized for taking too long to get off the ground.... The Commerce and Agriculture departments said yesterday that they will accept applications from private firms, nonprofit groups, and state and local governments for the first allotment of $4 billion from July 14 through Aug. 14."

Government Technology ran this article earlier this week: Broadband Stimulus Fund Requirements Released by Feds. Indeed, the pages of just about every government magazine describe some different aspect of the stimulus dollars that are coming to a town near you.

Just google "broadband stimulus," and you'll get almost seven million page views.

What I find fascinating, as we watch this new frenzy unfold, are the new coalitions, partnerships and cross-boundary deals being formed, and not being formed, before our eyes. A fundamental question that will soon be answered is this: what new, lasting governance structures will emerge to enable more effective use of these broadband dollars? I suspect the answers will be different in every state. Many states may have multiple answers. This is an exciting time that I am confident will be written about for many years to come.

Take good notes. There is no doubt that there will be winners and losers and whiners. The lack of government dollars due to the economic recession has caused some very unique situations to unfold, and everyone is hungry for local winners. Like the beginning of the season for your favorite sports team, everyone is getting in shape and anxiously hoping for success.

 The decisions made now are not only vital, they are the seeds of the future for governments working with together other governments and with the private sector on infrastructure. Beyond broadband networks, similar governance issues will also surface regarding health IT and other stimulus programs.

 We are all being tested. We've know this was coming for a while. Some of us will do well, and some not so well. The stakes are huge. One thing is for sure, a large part of our success will depend upon the best cross-boundary teams coming together with the best plans that have maximum benefit and deliver real results. Governance, before and after grant awards, will be key. Let the grant writing begin.

What's your view on governance for stimulus and this entire grant and loan process?

 Over the past few weeks, I've dedicated significant time and energy to learning more about the latest trends in cloud computing. I've been listening to analyst podcasts, watching webcasts and reading hot new articles and white papers from the best and brightest. As expected, opinions vary. The funny thing is, experts who are looking at the very same cloud often come to surprisingly different conclusions.

  Just when I'm almost won over to a supporting point of view for some near-term action, along comes a great war story of a scary storm in the clouds. Our current situation reminds me of that well-known adage: "Red sky in morning, sailors warning. Red sky at night, sailors delight." So you tell me: is it morning or evening for cloud computing?

 On the positive side, the web is full of cloud opportunities. A google search will yield over 30 million page views, and most of them are positive examples. Virtually every technology company has cloud offerings with free white papers on the topic. Government Technology Magazine has many stories on the cloud, and they recently offered an excellent video interview on this topic with Vivek Kundra, who starts by saying, "Everything is going to be in the cloud." 

  PCIO Magazine has also offered supportive commentary. They even printed an article by yours truly last year called: How Safe is Cloud Computing?   

  So what am I reading on the hesitant side? Start with this article in Business Week entitled: Busting Cloud Computing Myths. Pay attention to "Myth No. 7: A cloud provider can guarantee security - Even if a cloud provider has every security certification in the book, that's no guarantee your specific servers, apps, and networks are secure."

  The next article takes the storm clouds a bit further with: Is cloud computing inherently evil? Here's an interesting quote from an interview with Brad Templeton:

"The 4th amendment protects your personal data when it's in your house, and other places where you have a "reasonable expectation of privacy" to use the legal term. Unfortunately, the courts have ruled that you put information in the hands of 3rd parties, even if only for a very specific purpose, you can lose that expectation. So the DOJ regularly acts to seize data in 3rd party hands without warrants -- for example from webmail providers -- and this will surely expand to all sorts of cloud data."

I could go much further, but I suspect you get the point. You can find plenty of pro and con articles for cloud computing - and both sides have excellent stories to prove they're right. I often ask myself if anyone can be truly neutral in this (or numerous other) technology topics. We all have our biases before the first vendor powerpoint slide comes up.

On a recent call, one of my customers said, "All I want is cheap and secure."

The analyst responded, "You can't have both. You can have one or the other."

I doubt if there is a single right or wrong answer to this cloud question. The debate reminds me of non-stop (fun) arguments as a child. Growing up in Baltimore, I would spar with my dad, brothers and friends about who would finish first in Major League Baseball's American League East. (This was back in the 70s when the Orioles typically finished at or near the top every year.) As avid fans, each of us could argue for or against Boston, New York or Baltimore, but only time would ultimately answer that year's question.

I'm not suggesting the cloud debate is fruitless. In fact, I think each of us needs to built a government strategy that includes a plan for cloud computing. But there are always going to be technology leaders, followers and laggards. Every situation has different politics, funding, people, culture, levels of technical sophistication and other variables.

 My main point is that I am suspicious of those who eagerly push for or against cloud computing as "red hot." No doubt, the weather is hot and the cloud is red. But is it morning or evening for cloud computing?

What are your thoughts?

  A few months ago we held a one day management offsite which included some inspiring words from the top, a great (but free) motivational speaker, a Q/A open mike, a brainstorming session and updates on significant projects from across our enterprise. For the project updates, I challenged our infrastructure directors to come up with creative, entertaining and fun ways to present the required information and still keep everyone interested. No one wanted "death by powerpoint" after a big lunch.

  The entire team exceeded my expectations with funny skits, short videos, surprising pictures, and yes a few powerpoints slides that got across the information and intrigued the audience. One of the "no budget" videos was extremely well-done with slow-motion, music and more. I was blown-away by the talent in the group, and the teams even used their own home equipment. After the event, I starting thinking about how to capture that energy and continue to motivate and train the rest of our IT staff during these tough economic times when training budgets have been cut and out-of-state travel has been eliminated.

  Fast-forward two months and check-out our Michigan Department of Information Technology (MDIT) Service Management Center (SMC) Training Video.  This YouTube video actually achieves five significant objectives for us:

1)  Offers new staff a short (6-minute) overview of how we manage technology with the SMC processes and procedures.

2)  Offers (very low cost) improved training for exisiting staff who are asked to read and understand  fairly long (and somewhat boring) manuals on processes and procedures regarding how we manage incidents, what's a critical system, why the "red card" is so important, why we have a morning "day start" call, etc.

3) Shows our customers how we keep an "eye on government" in a 7x24x365 manner. We also discuss emergency response (for situations like virus outbreaks) at the SMC. The YouTube video offers an inexpensive form of communication and marketing for MDIT. 

4) Motivates staff. Help them understand the importance of what they do every day. YouTube and other new media channels are now the manner in which information is typically consumed for many in society. 

5) Brings our "way of life" in managing technology in Michigan to life for others. Videos with real people portray a story much easier than white papers or training manuals.

From a broader perspective, government technology professionals must be using new media to our advantage during these challenging budget times. Ken Theis, our MDIT Director and Michigan CIO, has articulated a vision for an online "MDIT University" which will provide our staff free (or very low-cost) technical training on various tracks from a myriad of Internet sources. All of these courses and training opportunities can be tracked in one portal to match indivdualized employee career advancement plans and professional interests.

 We're living in a time when our children and staff are uploading videos and pictures onto Internet sites every day at home. In my opinion, we can't afford not to use YouTube and other "hot" technology tools at work for training and other professional purposes.  

 At a time when MIT is offering over 1900 free courses online, we must relook at training. Likewise, Yale and many other universities are doing the same. There is even an iTunes university which enables mobile learning. The number of free webcasts, webinars and other technical training opportunities is exploding right now, and CxOs need to be taking advantage of what is cheap and free.   

What are you thoughts on low-cost training? Have you created your own government YouTube videos? Can you please share links in the comments section?

I'd also love to hear your views on our SMC YouTube video. (Remember that it was done in-house with a $0 budget.)

I was sitting in the back of the auditorium inside the Michigan State University's Kellogg Center in East Lansing. The event was the Michigan Broadband Summit, sponsored by the Library of Michigan and the American Library Association. The seats around me were full with a mix of government representatives, community stakeholders and librarians from around Michigan and surrounding states. 

The first speaker started off with the question, "How many of you have enough bandwidth?" A few hands went up while a couple of others started chuckling.

The opportunities seem endless. New online applications, fixing the digital divide and even advances for electronic libraries like the Michigan Electronic Library (MEL).  To get a good sense for the many issues and options available to Michigan and the nation regarding broadband connectivity and the stimulus dollars, I urge you to download and review the excellent powerpoint slides offered by John Windhausen Jr. from Telepoly Consulting.  

Four of John's main points include:

1) Broadband has become an essential service.

2) Broadband demand is exploding.

3) Industry is investing less than what America needs (microeconomics trumping macroeconomics).

4) The US is falling behind our international competitors.

Through a series of examples including voice, education, energy and TV, he makes the point that broadband is not only "AN" essential service, but "THE" essential service to enable all the others in the future.

I encourage you to review the rest of Windhausen's material, but more important, don't forget the libraries and other government partners as you prepare a broadband strategy in your state, county, township or city.  There are synergies that will build upon these relationships over time, and we can't afford to leave out important educational services that people depend upon. Citizens will expect high-speed connectivty at their local libraries, and most don't have enough bandwidth today.

Any thoughts on this library broadband topic?