IT infrastructure that delivers on-demand services to citizens.

"The fund can be allocated for priority enterprise initiatives as well as for enterprise support services and pilot projects," Khanna said. "Measurable savings can include direct dollar savings through negotiated enterprise contracts for goods and services, as well as cost-avoidance savings resulting from the development of shared services and applications."

When such measurable savings are identified, he said, the OET will draft agreements with those agencies to share a proportion of the savings -- proposed to be 50/50, with leeway for exceptions. The realized savings will sometimes be ongoing, but sometimes they will result from one-time opportunities.

The fund is not intended as a vehicle for the ongoing operations support of the programs it spawns, he said, noting that the account will be administered by the CIO in consultation with the Commissioners Technology Advisory Board and the commissioner of finance.

Governance will include a regular review by the Commissioners Technology Advisory Board of agency agreements, fund deposits and usage. The process for measuring and tracking savings is being developed.

Financing Technology

Kiscaden, who is also the chairwoman of the State Government Budget Division of the Senate's Finance Committee, said legislators understand the difficulty of funding IT systems for state government, which set the stage for the technology account's creation.

"I think because we've had some experience -- and some frustration -- with how fast technology investments become obsolete and how frequently you have to bring upgrades and improvements in, when the OET came forward and said, 'We need a way to finance this so we aren't coming to you constantly asking for capital bonding or special appropriations,' the legislators have been through enough of this in the last few years that they understood it," she explained.

Kiscaden said her fellow legislators viewed the proposal as a better way to fund IT purchases.

"When you have to choose between funding a health-care service and funding an information system, you will choose to short the information system and fund the health-care service, and yet you know in the long run you're jeopardizing the integrity of your systems," she said. "We get that we need to make the investment in technology, but we're always hampered in having the funds available to do it, and it's always competing with other things."

Khanna said the savings account solves critical problems that charge-back fees create for state government.

"The traditional pay-for-service model for centralized IT services that funds most of OET today works only for established services whose capital investments have already been made and paid for, and whose customer base is already solid," he explained. "It doesn't work for investments in major new or refurbished systems that require a lot of up-front capital."

Charge-back fees also don't pay for the kind of innovative planning and enterprisewide activity that benefits state government, Khanna said, something the newly created savings account will foster.

"This account allows us to initiate a voluntary program in which agencies that realize savings through the innovative enterprisewide work we're doing can share some of those savings to help the next innovation that comes along," he said. "It's a way to generate seed money, or capital, to invest in ideas and innovative projects for the good of the enterprise. However, I need to stress that this account is not a silver bullet. It's part of a multipronged strategy to better manage and leverage the state's IT investments."

Like many states, Kiscaden said, Minnesota wants to improve how all government agencies and departments offer services electronically to citizens -- and that means making investments in technology systems.

"We have to have greater reliability of our systems, and we've had some problems in the last few years," she said. "We need to get to the place where we're able to automatically account for or budget for a continuous, ongoing investment. We need to have mechanisms so that it becomes an integral part of our budgeting process, and not subject to political whim."

The creation of an account dedicated to technology funding puts IT on par with the state's physical plant -- buildings, furniture, vehicle fleets -- which means a far smoother spending process.

"You have to have a certain amount of contingency funds, ordinary repairs and betterments funding just to maintain the physical plant," she said. "This is infrastructure investment. We just have to do it, and we have to keep current with it."

Shane Peterson  |  Associate Editor