Michigan -- A Reputation For Change

John Kost, who recently left public service, discusses his experience as Michigan's CIO.

by / October 31, 1996
When John Kost was appointed Michigan's first chief information officer in 1992, information technology management was scattered across the state government. "We had 15 data centers, and basically every agency did its own thing," said Kost in a recent interview. "The data center managers dictated policy for their respective departments because the departments didn't understand the technologies."

Once Kost became the CIO, this situation began to change. But that position fell to him almost by accident.

As a member of Gov. John Engler's senior staff, Kost wrote a management plan to deal with the decentralized information technology management. In the report, Kost said the state needed a strong CIO to set standards, reform purchasing and handle other information technology issues. The governor agreed with the recommendations so much that he told Kost to implement them. "I didn't expect that," he said. "I didn't have any technology background."

Kost, who has a Master's of Public Administration from the University of Michigan, said he learned about technology management by attending Harvard University seminars on technology and other educational programs.

"I'm not capable of doing hard programming, but I understand the high-level mechanics of how these things fit together and what they accomplish," he said. "And that's not too terribly difficult."

Kost said his key asset was an intimate knowledge of Michigan's government. "I had been working there long enough that I knew what agencies were there, who was doing what, and who was supposed to do what," he said. "I understood the business of government really well."

For a CIO, this knowledge provides an advantage over a manager with mainly technical knowledge. "For someone to come up through the technical ranks and have to learn that stuff is far more difficult than coming from the business side and having to learn the technical," he said. "You need people who understand how government works, then have them understand the technology."

The Michigan CIO answers to the governor, which Kost said was an important organizational element to his success. "The message [to departments] is a little different depending on where you are in the pecking order," he said. "If the CIO is close to the governor and close to the policy makers, [he'll] have a lot more influence, as well as being effective in explaining [to policy makers and the governor] why these technology issues are important."

Kost said the accomplishment that he is most proud of is purchasing reform, both across state government and specifically with information technology. When he took the CIO position, Kost said he told Engler that a real issue was not necessarily determining what technologies would solve their problems, but resolving issues at the front end of the purchasing process. "I told him that if you can't buy the right technology, then you don't have a prayer of accomplishing anything. So he called my bluff and gave me charge of reforming our purchasing system."

Kost characterized his reform program as eliminating regimentation and inserting common sense into what was a process-oriented task. One change was to use sole-source contracting more frequently because it usually accelerates procurement, partly because the long, often futile, protest period is generally sidestepped. Also, best-value, rather than low-price, procurement was emphasized. With low-bid procurement, Kost said, "you get the impression of getting the best price. But that's an illusion because the real issue is the cost," not the price.

Michigan's procurement reform was intended to give buyers the ability to make decisions on how and what they would buy. Managers can choose, within some limits, from a variety of methods including low-bid, best-value and sole-source contracts.

"By going to a very flexible procurement system, you try to ask 'how do I procure what I need at the best possible value,'" Kost said. "We basically put every conceivable option that the private sector uses right there on the table."

When asked what he considered to be his least successful reform, Kost said changing the personnel and classification rules was never really completed. "Personnel issues were our toughest nut to crack, and we were largely unsuccessful," he said.

Kost and his staff tried to reduce the number of classifications in technology from 28 to three because the job definitions were more specialized than the administration thought appropriate. "When you have very narrow classifications, you lock people into specific tasks with little flexibility to do training in new things," he said.

He used the example of the Department of Motor Vehicles, which migrated from a mainframe to client/server a few years ago. DMV employees had mainframe classifications, and couldn't simply begin working on the new system because it was in a different classification. Kost said that the workers had to be laid off, then hired back in a client/server classification. "So the process to move technologically was very expensive for the agency, but even more so for the people" who had to go through the stressful period of layoff and rehiring, Kost said.

Kost did have success in the continuing process of consolidating the state's 15 data centers and their organizations. Since last year, nearly all the centers have been consolidated into one organization, and the last three were scheduled to be folded in by the end of this year.

The original goal was to outsource all of them, Kost said, but there were not enough vendors who could or would support the older mainframes. Later, a state delegation went to a private vendor's data center which had been consolidated from a previous 52 data centers. After some persuasion, the state got the team to accept a sole-source contract to consolidate Michigan's data centers.

But doing all of this was not easy, and there were political and organizational issues to work through. Kost said that he was constantly working with Engler to explain why the consolidation would save money and improve service.

"There were varying degrees of political difficulty," Kost said. "For some people, it couldn't come fast enough to suit them, but others, who would lose control, were reluctant to do it." The governor had to address two of the departments, and "persuaded them" to go along with the consolidation, Kost said.

"Something of this magnitude affects virtually all state government," he said. "It's extremely difficult to try it without the support of the top leadership."

Momentum is another big issue in consolidation, Kost said. "You have to keep them moving. Once one is done, go to the next." If there is time between individual center consolidations, people who do the work will go on to other projects along with their experience. So a CIO would have to pick a date for consolidating a center with another, staff accordingly, throw a pizza party, then go on to the next one. If you do one, then say 'let's plan the next,' you get stuck," Kost said.

Kost left public service this summer and is now working for Federal Sources Inc. in Washington, D.C., as a consultant to state and local government. He said he went private because the "job opportunity was hard to pass up.

"Where I was [in Michigan], we had such a reputation for change that I was getting calls from across the country asking for help on this stuff," he said. "I was largely limited by the amount of time I could spend on the phone at any given time."

The lifestyle change is also interesting. Lansing, where Kost lived before relocating, is "radically different" from Washington, he said. "I think one of the biggest adjustments is the traffic. In Lansing, we had 'rush minute.' Here, 'rush hour' goes on for hours."