The good news for state and local governments is the ongoing recovery in revenue and spending, with a 7 percent overall increase in spending that can facilitate more IT projects.

The head-scratching news, shared by representatives from state and local government at a recent conference, is that more IT consolidation and flexible infrastructures are needed to help governments operate and serve residents on time and on budget.

Speakers at the Beyond the Beltway Conference -- Co-hosted March 6 in Tysons Corner, Va., by the Center for Digital Government, Government Technology and ITAA -- gave an overview of state and local technology initiatives, upcoming business opportunities in key jurisdictions and emerging trends across the country.

Several common themes emerged from presentations given by state and local IT officials and industry insiders, whose target audience was IT service providers.

Always budget-conscious, officials spoke of the need for governments to demonstrate tangible returns on investment in IT, and to find visible, lasting ways to coalesce technology efforts and streamline government. At the same time, they suggested that successful and potential service providers need to prove their value to governments.

IT is being more frequently being viewed as an operations tool for governments that can also increase the availability of citizen-centered government services and trim budgets. The goal, said Michael Moore, CIO of San Diego County, is to smooth the transition of services and establish "a unified and predictable IT environment."

One component of state spending is looming and expected to explode within the decade. Medicaid, which occupies 22 percent of states' revenue overall, is fast becoming an area of spending and administrative concern, and is expected to consume 75 percent of all new state revenue in 10 states by 2009.

With such growth, accompanying IT infrastructure is needed to meet the information and health care needs of citizens, and to upgrade legacy systems. Since inflation in healthcare spending is increasingly pressuring state budgets, technology that meets this growth must also be cost-effective.

Most agreed that availability of technology to harness such challenges is not a worry for governments. "Technology is the easy part -- it's all about people," noted P.K. Agarwal, director of the Department of Technology Services in the state of California. This sentiment was echoed throughout the conference, but for differing reasons. For example, "Technology is not the problem," said Matt Miszewski, CIO of the state of Wisconsin. "The problem is all political -- there are plenty of companies to provide technology."

Speakers highlighted CIO leadership as another condition of successful technology integration. "Leadership is essential and scarce," observed Richard Varn, senior fellow at the Center for Digital Government. "Although we are very centralized, we have many committees and projects for collaboration," said David Molchany, deputy county executive for Fairfax County, Va. "We work very hard to include everyone in the decision-making process to prevent over-centralization."

Another obstacle to IT interoperability is insularity, which sustained the silo mentality. Within government, "there are so many islands of technology, that we need to wean people off that idea" and move toward consolidation of networks, servers and storage, said Jerry Simonoff, director of Strategic Management Services in the Commonwealth of Virginia.

Public/private partnerships, such as the new 10-year contract between Northrop Grumman and the Virginia Information Technologies Agency (VITA), can help along the process of IT transformation. In one view, participants from the private sector can outsource the assumption of risk, since "government employees are generally risk-averse," said Moore. From another standpoint, "It's a true partnership. Both sides work to mitigate risk," said Simonoff.

Speaking of risk, the program also emphasized the strategic use of IT in emergency management situations, with presentations from Suzanne Peck, CTO of D.C. government and JoAnne Moreau, director of Homeland Security and Emergency Preparedness in Baton