Shaking Off the Rust

Gov. Jennifer Granholm and CIO Teresa Takai view technology as key to revitalizing Michigan's economy.

by / March 28, 2005
In 2004, Michigan set the standard among states for using technology to serve citizens and improve government operations, according to the Center for Digital Government's 2004 Digital States Survey. The annual survey rates state governments on electronic service delivery, IT architecture and infrastructure, collaboration and technology leadership.

Michigan's IT success starts at the top. Gov. Jennifer Granholm and CIO Teresa Takai spearhead an aggressive statewide effort to boost the use of technology -- and use it more effectively.

Granholm, who faced a staggering $3 billion budget deficit when she took office in 2002, views technology as key to cutting the cost of running government. She also made technology a cornerstone of her strategy to revitalize Michigan's rust-belt economy, which lost more than 170,000 manufacturing jobs since 2000.

One of Granholm's first steps was hiring Takai, a former technology executive at EDS and Ford Motor Co., to lead Michigan's IT operations. Takai worked quickly to implement a corporate IT model, completing a massive centralization initiative and closely tying technology spending to the administration's policy goals.

Ultimately IT operations from 19 executive branch agencies were transferred to Takai's Department of Information Technology, a move that has saved Michigan $97 million so far, Takai said.

The state also has tried to make itself a better business partner. For instance, Michigan re-engineered its permitting process, drastically reducing the amount of time companies wait for necessary approvals. Granholm used her 2005 State of the State address to back a $2 billion bond proposal for promoting alternative energy and biotechnology industries in Michigan.

In a recent interview with Government Technology, Granholm and Takai talked about their use of technology to optimize state government and stimulate economic growth.


Q: From your perspective, what are the keys to using technology successfully in state government?

Granholm:
When I got here, I knew I wanted a CIO from the private sector who could infuse state government with an enterprise view and look under every rock to find out how state government can be more effective. Teri has been critical in our strategic planning, which infuses technology in it as well. So those two roles are pivotal for our state's success in the use of technology.

In every aspect of citizen contact with state government, we want our state to be leveraging technology. When I asked Teri to take this position, I said, "We want to have a role inside of government, but also outside, because there's a policy aspect to this too." We want to bridge the digital divide and make sure Michigan leverages its ability to get broadband access. We have a goal of connecting every corner of the state by 2007.

So we are very focused on internal and external leveraging of technology as an economic driver, and also to make state services more accessible and rapid, and better for citizens.


Q: Work that builds the foundation for IT success -- setting standards, creating architectures, strengthening infrastructure, etc. -- often flies under the radar for citizens and even lawmakers. How do you make that important?

Granholm:
Our state is going through a budget crisis -- like many states have been -- and most lawmakers don't come from a technology perspective. Many don't come from the private sector. So there is an education process. The first place they go for budget cutting is IT.

We think results are the best form of defense for that. One example is our new permitting process, where we have a one-stop shop online now -- one door, one portal for all of our permitting.

We did this whole value stream mapping with the private sector to make our permitting process more rapid and streamlined. We are proclaiming ourselves fastest in the nation as a result of our IT efforts. When businesses in a legislator's district say it used to take 18 months to get a permit and now it takes just 22 days, that's the best kind of promotion we can offer them.

Every contact with state government can occur through our Web site -- whether it's buying licenses or this condensation of the permitting process. We're also going to offer our services to other states to borrow our processes in permitting and other kinds of streamlining efforts. So our efforts are government-to-business, government-to-citizen and government-to-government.

For example, local units of government can take part in large bulk purchases by lumping together through our Web site. It's called MiDEAL. So a small community that wants to buy a snowplow can join with communities around the state, through our Web site, to get a bulk purchase opportunity and lower their costs. Leveraging technology for anybody who interfaces with government is part of our strategic plan.


Q: Job creation and economic development are key goals for your administration. How are you using state technology investments to promote those objectives?

Granholm:
We have historically been viewed as an industrial state because of our automotive expertise, but really our automotive industry is a technology industry. Automobiles are the most technologically advanced mass-produced product in the world. So in my State of the State speech, I said that we want to diversify our economy into tech areas, enhancing the strengths we've got, but also growing in other areas.

California did a $3 million bond for stem cell research. We're going to do a $2 billion bond to diversify our economy in realms related to high technology, advanced manufacturing and life sciences. We want to attract the future here, and transform our image a bit.

So the fact that we're using technology to deliver services and pursuing technology aggressively as an economic development strategy are ways of transforming that smokestack economy image into a high-tech, forward-looking image.


Where will your technology efforts have the largest impact on citizens' everyday lives?

Granholm:
It's clear we have to continue to pursue putting a computer in every home, which is why we have a program called Freedom to Learn, which gets laptops into the hands of middle-schoolers. It's mostly for at-risk middle-schoolers who may not have that technology at home.

As we progress, we want to get a computer in every home. We want to have broadband access to every business and every home. We want to ensure that people have access to technology and communication in this state. And wireless is a great way of doing this.

There's a whole business model associated with wireless that we can take advantage of in a way that historically states have not done. We want to pursue that as well. We've got a whole series of wireless projects right now at our rest stops and campgrounds. We really want to push the envelope of technology in the state.

Takai: Another area where citizens perhaps don't realize they're seeing the benefit of technology is in the faster and more efficient delivery of government services. We're working on projects now in the health and human services area that will help caseworkers spend more time in the field by relieving some of the paperwork they process.

Arming caseworkers with tablet devices that are wireless and combining technology with the wireless concept in a cost-effective way gets those services out faster. Citizens don't necessarily realize there's a technology underpinning that. That's where we have to stay the course and get those things done because it means the kinds of delivery of services we need to have.

Granholm: In many remote areas of the state, that's why access to broadband is critical for economic development. The Michigan Broadband Development Authority, the wireless efforts and the incentives provided to get the last mile are critical for our economic development strategy and for citizens to feel connected.


How can technology drive cost out of government operations?

Granholm:
Clearly if you consolidate all of your IT functions in one department, then you have experts who know how to drive the costs down, and can bulk purchase and negotiate with vendors to reduce costs. We've saved significantly in contract consolidation alone.

I think states across the country should do this. Gov. Mark Warner did this in Virginia and was talking about the ability to generate savings as a result of consolidation. I would strongly recommend it to other states as well. Get an expert in there who knows how to deal with vendors and do strategic purchasing for the state. Consolidate e-mail systems and voicemail -- verbal communication consolidation is an opportunity for us.

There are so many functions that are common and that agencies don't need a specialized application for. So to the extent we can maximize that throughout the state and offer that as a service, is another way to drive down cost.

Takai: Many executive agencies have said we need to use technology to support our departments with the reductions we have to make as a result of the deficit. So we're looking at ways to take our IT dollars and focus them on keeping everything running so we're keeping the same level of service. It's not just the reductions I'm taking in my area to meet the deficit, but it's being able to support other departments so they can continue to run smoothly despite the fact that they're having to take cuts in various areas.

Granholm: Leveraging technology to increase productivity is huge. It's what the private sector's doing. In crisis, there's always opportunity. The opportunity for us is using technology to bridge the gap.


What's your position on using overseas labor to reduce the cost of technology?

Granholm:
I've been very clear about that. In Michigan, we've got great talent, and we must support our talent. I issued an executive order that stated, all other things being equal, if you've got a bid that's offshore or outside of Michigan and you've got a bid from a company in Michigan, you should take the company in Michigan. That's obviously supporting the home team, supporting our employees, and we want to foster that growth here.

Globalization is here to stay. We know that. But if there's a way to maximize our state's position in the global economy by developing the expertise and supporting our local IT companies, that's what we want to do.


Is Michigan using outsourcing arrangements with the private sector in general?

Granholm:
We do that, but very selectively. We do not have a strategy that looks at major parts of things we are doing as an outsource model. In fact, we have had occasions where it makes more sense to have state employees perform duties we had contractors doing.

We do think there are things we can do collaboratively with private-sector partners that do not involve outsourcing. Those are the types of partnerships we are most interested in.

Takai: For example, redesigning our permit process was a partnership with the auto industry saying, "What is it that you need? How can we provide a permit process that suits your needs?" We did the work inside, but we did it in partnership with the private sector. We have done private-sector partnerships with IT companies to get executive knowledge.

Granholm: We have also discovered that you can control costs better if the work is being done under our roof -- more so than off-site. There is going to be an added profit margin attached to outside work. Also, we want to develop the expertise inside, and we have great talent.


Moving IT operations from 19 executive branch agencies into a central state technology organization had to be a wrenching process. How did you push that along?

Granholm:
It really is a paradigm shift for the state government. Agencies were used to having their own IT staffs -- people who understand their own specific needs and changes. As time goes on, I think people need to accept that this is a different era. I would say that because of the budget crisis that has gone on over the past few years, they know you just can't do things the old way.

IT has a velocity of change, and [the changes] are dramatic. You need to have an expert who knows what is happening to make wise decisions about what application and what's the best use. You can't have the same folks sitting there the past 20 years doing the functions without having that continuous learning and expertise. So it has been a dramatic shift. There is no doubt about it. But I think it's been a positive shift in the right direction. It's what the big corporations have done. They've all created CIOs. They've consolidated and streamlined, and I think people understand when you use technology to improve productivity and make their lives easier as workers. They appreciate the fact that you're going to have these enhancements and upgrades.

Takai: The governor holds me accountable and the agencies hold me accountable, so we have to deliver on the promise of consolidation and centralization. That's No. 1. And No. 2, we've worked hard to create a model where the agencies continue to feel involved. So we're not imposing on them, but rather it's a collaborative effort where we can all gain.

Granholm: We have a strong accountability model. Our strategic plan is all about outcomes and goals, and we've got specific objectives under each one of the goals. Each department head is held accountable, and Teri of course has the whole IT piece. If something doesn't go right, she knows she's got to go in and fix it.


Governor, you're clearly engaged in the IT process. Describe how you work with your CIO.

Granholm:
I recognize I'm not an expert in technology, but I am somebody who demands results. For example, one of the first problems we encountered was the fact that schools were not getting their testing results. An outside vendor was doing it and was just not capable of handling it.

Teri is responsible for ensuring the vendor, the Department of Education and our IT team are completely focused on providing those results in a timely manner. We are not going to have this kind of garbage that occurred previously. So Teri drove the ship, and the next year she had timelines, people who were accountable, and we had a contract with the department and a contract with the vendor.

We met on a regular basis to say, "Where are we? Where's the list? Where are the deadlines?" But Teri drove it because it involved leveraging technology to get this project done. So on both substance and process, Teri's operation is critical for driving the results citizens demand. We were not going to allow that problem to fester. It was using technology and the expertise of the CIO that fixed the problem.

Like every other state, we have been ordered by the federal government to make sure our child support collections are on a universal system. This was a great trauma for all of the counties across the state to get on one system. It was Teri's job, and it has been a real paradigm shift. It was a huge rollout, which was done in phases across the state.

That was another project we inherited, but Teri got in, fixed it, used technology, involved people in the process. We used to be assessed millions of dollars in penalties by the federal government. Now we are completely converted, and all the fines were lifted.


Michigan began its IT consolidation and centralization work under the previous administration. How did you maintain some continuity in that effort?

Granholm:
I think it was the right vision to consolidate. So there was not a problem in absorbing that vision and saying that's exactly where we need to be. So we changed CIOs, but Teri has been very good about making sure the staff comes along.

We are really big on strategic planning here, so having a strategic plan that the departments and everyone inside the IT organization bought into is a critical piece of moving that same vision forward. Because Teri is driving the strategic plan, technology is infused in every goal and aspect of what the state is doing. We could not do anything without making sure some member of Teri's team is part of the strategic planning of major initiatives.

Takai: The governor has what we call the Cabinet Action Plan, which is on the Web site. My strategic plan for IT mirrors that plan. So we start out with the business objectives the governor has laid out with the Cabinet members. That, in turn, drives how we direct and spend IT monies for the state.


One of the biggest benefits of technology is improved information sharing. Yet one of the biggest hurdles in state government is the silos of information that exist within agencies. What are you doing to change the rules, regulations and culture that perpetuate information silos in government?

Takai:
One example the governor has moved on with our Family Independence Agency is a concept called the Family Resource Center, where we've placed caseworkers in schools so they are readily accessible. When we did that, we needed to pull together all the relevant information about a family. So we had to do some information sharing between the various agencies. Now when a caseworker deals with a student, they have that information available to them.

Granholm: Under the No Child Left Behind Act, we've got a lot of schools in a lot of states that have not made adequate yearly progress. Those schools are required to develop an action plan, and many times those schools are in struggling communities. If you've got a struggling school, you usually have struggling families that feed into that school.

Disproportionately, those families are served by our Department of Human Services. They may be on Medicaid. They may need foster care or food stamps. So having a Human Services worker inside the school is critical, but caseworkers would get on one system to pull up the child's file with the Education Department, and another one to pull up the child's medical file, which was with the Department of Community Health, and another one to pull up the Human Services file. We've consolidated all of that information using technology there in the school.

Technology is such an important driver for silo busting in all realms, and the information-sharing component that you identified is absolutely critical to have units of government deliver the best to assist taxpayers. If you cannot share data, then you are not delivering the biggest bang for your buck, whether it's for homeland security or education or technology or portability of medical records.

In fact, we are developing a pilot for our medical systems to do portability of medical records for the Medicaid population. All of that is [using] technology to better share information, communicate and serve citizens more readily.


How ready are cities and counties to work with the state on some of these centralized IT activities?

Granholm:
The budget crisis has forced that to occur. In fact, I see the budget situation as an opportunity for technology to emerge in a way that might not have occurred if people were allowed to just do as they always had done. So they are jumping on to share services now.

One of the first things we did was pull all of the university presidents into a room and say, "We want to work with you on a shared arrangement for purchasing equipment." They jumped on board and did an agreement with us. Now they are reducing their costs.

Takai: Part of my organization is called the Office of Technology Partnerships, which is doing outreach from an IT standpoint to local governments. The governor has a special adviser, Maxine Berman, who is doing a similar thing with businesses. So we bring together the technology folks with Maxine bringing together the business folks, and we've come up with a number of synergies.

Granholm: Regional cooperation and sharing of technology is an aspect of regional excellence. It's sort of like globalization on the local level. The financial situation is forcing the use of technology in ways that people who are not technology prone would never have thought about. That's a real silver lining in what has been a budget crisis.