They say necessity is the mother of invention, but in truth, desperation can play an even greater role in spurring innovation.

The unsettling prospect of failing to meet a federal deadline to redesign electronic Medicaid transactions led Bill Crowell, former CIO of the Oregon Department of Human Services (DHS), down the path from curiosity about open source software to experiencing success with an application to becoming something of an open source evangelist.

"My view is that open source software is to the applications arena what the Internet was to networks and communications 10 years ago," said Crowell, who served as DHS CIO for three years. "In other words, it will become dominant in the next 10 years and overtake proprietary business models."

Backs Against the Wall

Based in Salem, the DHS is the largest agency in Oregon's state government with approximately 9,500 employees and an operating budget of more than $10 billion for 2005-2007. The department includes the Office of Medical Assistance Programs (OMAP), which handles Medicaid payments to health providers. In June 2005, OMAP was struggling to make its electronic data interchange transactions with 30,000 providers compliant with new Health Insurance Portability and Accountability Act (HIPAA) regulations and code sets.

"[HIPAA] forced us to modify our systems involving how we make payments and how providers submit bills," Crowell said. OMAP had no IT system to track which providers had successfully tested for HIPAA compliance. "They were using Post-It notes and handwritten memos to each other about whom they had spoken with," he recalled.

The concern was that if Oregon didn't have existing providers approved for HIPAA transactions by January 2006, the providers would have to revert to paper submissions. That would translate into 60,000 additional paper claims a month, which in turn would lead to substantial additional staffing, delays in payments to vendors and likely more errors.

"It was a nightmare scenario thinking of dealing with all that additional paper," said Crowell, who joined the DHS in April 2004 after 30 years of leading IT organizations in the private sector. He also served for two years as deputy assistant secretary of financial systems at the U.S. Department of the Treasury.

After interviewing the 12-person OMAP staff, Crowell said it was clear to him that they needed some type of customer relationship management (CRM) solution.

"What was important was that all the people working on HIPAA compliance be able to share information, so that if Sally called and talked to a provider in the morning, John wouldn't call that provider and have the same conversation in the afternoon," he said. "It was critical for them to keep their message consistent."

Crowell knew of several good CRM products on the market from companies like Siebel and Salesforce.com, but they are expensive and he estimated it would take a year to go through the procurement process, including publishing an RFP. "Delivering something to them in more than a year," he said, "with this deadline looming six months away, wouldn't have been very helpful."

The same day Crowell and other IT staffers met with OMAP staff, senior systems architect Kurtis Danka searched Google for the terms "open source" and "CRM." He came across software from open source software company SugarCRM and downloaded it.

When Crowell came in the next morning, Danka told him he'd already loaded Sugar on one of their servers.

They looked it over and showed it to the OMAP staff the following day.

Modest Experience

The DHS had some experience with open source development tools and Linux, but had never implemented an application. "We were a little concerned about it," Crowell admitted. "But we found that with the source code and documentation, any small changes could be handled by our group." They were able to make changes to the screen so it would be more meaningful from a human services perspective. For instance, they altered terminology about sales prospects to partners or providers.

After extracting and loading contact information for more than 30,000 providers from mainframe systems into Sugar, they embarked on a three-month pilot.

Crowell said OMAP staffers were "tickled pink" with the software, so the DHS ordered two "SugarCubes" from Cupertino, Calif.-based SugarCRM. These are turnkey servers for the CRM application, with SugarCRM providing software, support and upgrades to maintain the system. The total cost was approximately $25,000.

"We had to do a sole-source procurement in order to justify it," Crowell noted, "but a commercial solution would have easily cost us in the hundreds of thousands, and it would have been a much longer process. This was an emergency situation."

The bottom line is that the open source application helped OMAP meet its deadline and achieve its goal of coordinating with multiple providers statewide, with all their comments documented and issues tracked. "In a situation where we might have had to deal with an additional 60,000 paper documents, we dealt with only 67," Crowell said. "We could handle 67."

Early open source projects were created by developers who were scratching their own itch -- solving problems they wanted to solve. But now the field has progressed to the point where venture capital firms are backing companies to create advanced business applications such as CRM and database systems.

And though Oregon sought an open source solution to solve a specific problem, some government agencies are moving to open source to address strategic, long-term goals, according to Dave Gynn, director of enterprise tools and frameworks for Optaros Inc., a Boston consulting and systems integration firm. "They tend to be looking to regain control of their systems and to avoid being tied to one vendor," he said. These agencies are seeing the benefits of creating an ecosystem where they can develop applications themselves or work with multiple vendors.

The department has started evaluating open source enterprise resource planning, content management and portal software. First on the agenda is expanding the use of Sugar within the DHS, including tracking its staff contacts with the state Legislature. "There are a number of legislators and staff [the DHS] communicates with regularly during a session," Crowell explained. "Getting a handle on all that communication would be very helpful. If [the] director calls a legislator on a topic, it would be nice if they could call up a file and see the department's communications with that legislator previously to get a sense of where we are on a topic. Right now there isn't a good way to track that."

The IT department also put SugarCRM on the department intranet to give other divisions an idea of what it is. "Ninety percent of what our organization does involves managing relationships with providers, associations and county governments," Crowell said. "Software like CRM and wikis can be wonderful collaborative technology."

David Raths  |  contributing writer