Living Dangerously

The worst fiscal crisis since World War II has put state IT policies in sharp relief, leaving CIOs with little room to maneuver.

by / January 29, 2003
When Iowa Gov. Tom Vilsack was re-elected in November 2002, he said his second term would focus on economic development, education and health care. Technology was not on his list of priorities. As if to confirm that shift in priorities, he promptly fired CIO Richard Varn and five other top administrators.

Iowa and 37 other states face significant budget shortfalls. In fact, the fiscal situation went from bad to worse during the latter stages of 2002, forcing the National Governors Association (NGA) to announce that states face their most dire budget problems since World War II, just as 23 new governors get ready to take office.

The combination of a fiscal freefall for state budgets and the arrival of new administrations with new agendas has thrown the IT policies of some states into sharp relief. Around the country, technology's value and return on investment are questioned. In other states, attempts to centralize and consolidate systems have run into problems as agencies dig in their heels and resist efforts to give up control.

"It's very difficult to promote change in any circumstance in government," said John Kelly, Intel's manager of public affairs for Arizona and former director of the state's Government Information Technology Agency (GITA). "It's particularly hard when your hands are tied on the fiscal side."


Public Schizophrenia
At first glance, politics and elections appear to have had little impact on state IT policies. Few election battles during the fall 2002 campaigns made IT or e-government an issue. That's partly because the public didn't see technology as a campaign concern, so candidates steered away from the subject, said Jerry Mechling, a lecturer on public policy at the John F. Kennedy School of Government at Harvard University.

"There's not a sense that the public is demanding they [politicians] pay attention, and will reward them if they do a great job or punish them if they don't," he said.

But politics is never quite that simple.

"There's a certain schizophrenia going on here," Mechling added. Though the public might not be stating explicitly they want more technology, they demand the kind of convenience, efficiency and protection from a turbulent world that political leaders must address with technology.

"Almost any of the issues people are talking about -- jobs, economic development -- can't be delivered without an e-government agenda," Mechling said.

In a few instances, IT did become a lightning rod. The gubernatorial battle in Arkansas was fierce; challenger Jimmie Lou Fisher charged that incumbent Gov. Mike Huckabee sacrificed the quality of state education in favor of an ERP system that cost $56 million to build. Despite the challenger's attack on the governor's IT agenda, Huckabee prevailed, winning the election.

The outcome was different in Wisconsin, where conservative challenger Jim Doyle upset incumbent Scott McCallum for the state's top job. Doyle challenged McCallum's record on a number of fronts, including his creation of a new agency, the Department of E-Government, which he called a colossal mistake.

"Doyle took issue with the creation of a new agency at a time when the state was suffering from large budget deficits," said Thad Nation, a spokesman for the governor-elect. Specifically, Doyle questioned McCallum's claim of cost savings from e-government when much of the savings could be attributed to work done prior to the department's formation.

The end result is the political and strategic demotion of e-government and IT in Wisconsin; in fact, Nation said he expects the new governor to eliminate the position of CIO and fold the e-government agency into the Department of Administration.

The experience of Wisconsin, and to a lesser degree Arkansas, appears to be an exception. Thom Rubel, NGA's program director for state information technology, said IT never really became a political issue during the gubernatorial campaigns. He noted that governors are more interested than ever in using IT to solve problems in today's tough fiscal environment.

Another expert on state IT matters also believes e-government had little influence on the political landscape this time. Gregory Benson Jr., executive director of the New York State Forum for Information Resource Management, said he believes some states may become more passionate about e-government than others, or may take IT more seriously in certain programs.

"But that's a content issue as opposed to a political motive," he said.


Consolidation Conundrum
If electoral politics didn't raise the stress level in state IT departments -- and the CIOs who run them -- then the current fiscal crisis surely has. What happens to IT policies and practices in state government during coming months depends on a number of factors, experts say.

One of the biggest trends in recent years has been centralization and consolidation of IT systems and data centers. Hoping to reduce costs and drive greater efficiencies, CIOs around the country began pulling together the disparate systems within state government. In some states, such as North Carolina, Michigan and Pennsylvania, efforts have been aggressive, backed by executive orders.

Mechling sees IT centralization and consolidation as the course of events for states as they push for greater use of e-government.

"We really are at a tipping point on the curve that involves e-government," he said. Accessibility is now 24/7, portals have been erected, and a sort of virtual integration has occurred. "What hasn't happened is the fundamental integration of legacy systems, back-office systems, all the stuff under the hood," he said.

The key ingredient to IT integration within the very marrow of government services is leadership, according to Mechling.

"It won't happen through consensus," he said. "People will have to come together and say on behalf of the community and citizenry, 'We will have to do this, and strong leadership is required.'"

That's almost exactly what Benson sees happening in New York, which works closely with his organization on IT matters. The current fiscal situation is forcing the state's CIO to demand from agency CIOs greater standardization of applications, such as fleet and financial management.

"There's clear evidence of the need for migrating to a far more centralized, standardized and efficient operation of IT in New York," he said.

Evidence of what New York may look like in terms of centralization can be found in Michigan, where a similar effort has been underway since 2001. While still a work in progress, the reorganization is reaping some rewards. An executive order has placed the IT services of 19 state agencies under one management structure.

The framework calls for Michigan's Department of Information Technology, under leadership of CIO Jacque Passino, to bring the agencies closer together in terms of cross-agency applications, managing contractual arrangements together and administering infrastructure services, such as desktop services, data center operations, telecommunications and network management.

In terms of consolidation, the department has made the most progress with centralizing infrastructure services, Passino said. Half of the state's 55,000 desktops are under one help desk and one management node, with the rest to follow in coming months. Harder to control are the enormous number of distributed servers in the state.

"When I arrived, we had 700 servers around the state," he said. "Now we have more than 2,400."

With Gov.-elect Jennifer Granholm expressing a strong interest in developing the state's IT infrastructure, both for government and economic development, Passino hopes the consolidation plan stays on track.

"It's going to take persistence because every attempt to consolidate is immediately followed by an attempt to decentralize," he said.


Political Half-Life
The desire to remain independent -- even in the face of fiscal problems -- remains strong in state government. The existing tension makes the transition to centralized IT much harder to achieve. Some agencies have systems in place, thanks to steady funding from the federal government. Trying to force them to consolidate their data centers, systems and applications can be risky for state CIOs, while showing little reward for the effort.

According to Intel's Kelly, bureaucrats and agency heads also know there's a half-life to getting things done, and the longer you resist something like consolidation, the greater the chances it won't happen.

"There's a limit to what you can do before legislators and governors turn over," he said.

It's also hard to change a system once it's up and running and its maintenance becomes part of the agency's base budget. Those budget items are rarely touched, Kelly noted.

So how do CIOs bring change, such as consolidation and centralization, into the IT arena?

"IT directors have always had the responsibility of clarifying, in business terms, the value of IT," Kelly explained. "Those successful at doing that have been able to build new systems. Those that haven't end up maintaining existing systems."

Government leaders, whether governors, mayors or county commissioners, are hungry for new ideas.

"That doesn't change no matter what the fiscal situation," said Kelly. "Any CIO worth his salt needs to be in the idea business."
Tod Newcombe Features Editor