Mixing IT Up

Virginia's tech czar blends economic policies with IT reform.

by / February 2, 2004
On an unusually cold December morning in Richmond, Va., Secretary of Technology George Newstrom sat in a wood-paneled room at the renowned Capital Club to meet with executives from two of the largest technology firms in the country. Newstrom -- the state's highest ranking IT executive -- wasn't there to hear a sales pitch or discuss a contract. He wanted to know these technology titans' thoughts on the state's IT reform efforts -- what did they think was working? What suggestions did they have for improving the situation?

During the meeting, Newstrom said he just returned from a trip to Asia -- which included stops in Vietnam and India -- where he met with IT business leaders to promote Virginia as base for their overseas operations. Also at the meeting was Deputy Secretary of Technology Eugene Huang; Peter Jobse, president of the Center for Innovative Technology (CIT), which is the state's incubator for technology-based businesses and research; and several other high-ranking state officials.

The meeting was standard operating procedure for Newstrom. He reached out to the private sector for valuable input while delivering a message that seamlessly blended the governor's IT-reform goal with boosting the state's economic development. One minute Newstrom spoke about his ongoing plans to consolidate and centralize the state's IT infrastructure and work force; the next minute he touched on strengthening economic opportunities for young technology companies in southern Virginia's less developed jurisdictions.

The challenge of juggling two seemingly different agendas in one job seems to come easy to Newstrom, who prior to his current position with the state, spent 28 years working for EDS, the global IT services company. His long career also includes stints in the U.S. Marines, health care, and numerous advisory and leaderships roles with various academic and business associations.

That mix of public and private, and academic and business skills appeals to his boss, Gov. Mark Warner, who was a leader in both technology and business prior to becoming the chief executive for the commonwealth. But both men have some heavy lifting to do. Virginia's anachronistic constitution gives the governor just one four-year term to serve the people. Not surprisingly, Newstrom's agenda is ambitious, though he likes to keep things simple.

"The governor asked me to do three things," said Newstrom. "Figure out what we are spending on IT in the state, promote economic development and be sure to serve the entire state." His third point refers to Virginia's lopsided economy -- high-tech businesses have clustered in the fast-growing north, while traditional industries struggle to survive in the south.

The governor expects Newstrom to change the way Virginia invests and uses IT while Warner changes the way government itself operates and leverages those very investments to help the IT economy grow. That means determining how much the state spends on IT and its return on investment, consolidating the state's highly decentralized IT resources, pushing federal research and development funding, statewide broadband deployment and growing Virginia's tech-based economy. This is not an easy task under any circumstances, let alone with less than 18 months left to make an impact. But Newstrom remains undaunted by the challenge and seems to revel in his combined role, which is garnering attention around the country.

"I think this is the boldest plan I've seen around when it comes to top to bottom fundamental reorganization of a state's IT apparatus," said Robert Atkinson, vice president and director of technology and new economy projects at the Progressive Policy Institute, a Washington-based think tank. As for combining CIO responsibilities with those of an economic development director, Atkinson not only supports it, but has advocated for creation of a similar position at the federal level. "Putting those two functions together, particularly at the state level, makes sense because they can be dealing with similar issues. It also makes it more likely that the person who takes the job has a broader vision than just IT."

Partners, Partners, Partners
If Warner and Newstrom succeed, the secretary's multifaceted role of technology and economy chief could become a model for the public sector. For that to happen, however, it helps to understand how Newstrom directs Virginia's government and economic IT interests.

Newstrom's overarching strategy is to rely heavily on partnerships with the private sector, the state's academic institutions, local government and Virginia's congressmen to help get the job done. As Atkinson points out, Newstrom also understands driving technology at the state level is more about leadership than having a grounding in technology issues. "Being a CIO is really a leadership position," said Atkinson. "By combining CIO with economic development, the state of Virginia has enhanced the position."

Newstrom's alchemy of private-sector partners and public-sector leadership is most apparent with Virginia's IT reform initiative, which began with Warner asking two simple questions: How much money does the state spend on IT, and how many IT professionals does Virginia employ?

After several months of poking around and pouring over information, the secretary's office verified that the state -- including colleges and universities -- spends $902 million annually on IT and its 2,580 IT professionals.

With that information, the governor unleashed IT reform, pushing through legislation that ended state silos for IT funding, resources and infrastructure. This replaced the old bureaucracy with a new, corporate style operation run under the auspices of the Virginia Information Technologies Agency (VITA), which is governed by the IT Investment Board directors.

"This is a true board of directors of a billion dollar enterprise," explained Newstrom. "They manage the enterprise of technology in the commonwealth, and are tasked with everything from architecture to policy to the prioritization and investment of IT spending."

Eight of the 11 board positions are held by private-sector individuals. One of the board members appointed by Warner is John C. Lee IV, president and CEO of Faifax County, Va.-based systems integrator Lee Technologies Group. The board's corporate style of governance and thinking, Lee said, is invaluable in consolidating the state's individual operating units into one business with a single vision and purpose. "As a business owner and CEO for the past 20 years, I can offer some good, sound advice for the whole consolidation effort."

Newstrom relies on the board's corporate skills and knowledge to help guide VITA -- an independent agency though it reports to the secretary -- as it overhauls service delivery; plans, budgets and tracks IT expenditures; manages IT procurement; consolidates IT infrastructure; and provides centralized services to the agencies.

Recently the board hired a Lemuel C. Stewart Jr. to oversee VITA's operations and serve as the agency's first CIO. Stewart received a five-year contract, which overlaps the governor's term, and reports to the board. As a result, the CIO position enjoys both independence and continuity. "That gives the position teeth," said Newstrom. "It's very strong."

If all goes well, a newly consolidated and centralized IT infrastructure will help Warner streamline government while cutting costs. But what does this have to do with economic development? The answer lies in CIT headquarters in Herndon, Va.

The nonprofit organization nurtures Virginia's technology-based economy by providing grants and technical assistance to fledgling companies in the commonwealth, which is already home to some of the largest technology and telecommunications firms in the country.

Newstrom sits on the board for CIT, which as Jobse points out, is anchored to the secretary, and the secretary has set some strict, bottom-line objectives the agency must meet. That said, Jobse -- who also worked at EDS for many years before joining CIT -- said the secretary's internal IT reform efforts present budding technology firms with one clear message: The state has its own IT house in order, and is the right place for a young company to start, grow and put down roots.

Follow the Funding
CIT plays a key role in two other initiatives that make up Warner's strategic plan for technology in Virginia. First, it helps drive broadband expansion into the less developed regions of the state. CIT's obvious choice is to work with industry to lay fiber and bring broadband to businesses and homes. But CIT also works with the state's congressional representative staff to help bring federal funding that will support broadband growth. One source of federal funding is the U.S. Department of Agriculture, which CIT recently tapped for more than $600,000 to bring broadband services to the police and community centers of Shenandoah, Va.

Rep. Rick Boucher, D-Va., who represents rural southwest Virginia on Capitol Hill, has been active in drumming up support for broadband deployment on national and regional levels. Newstrom invited Boucher to speak about his efforts at the Commonwealth of Virginia's Information Technology Symposium in Roanoke, Va., in September 2003. Better known as COVITS, the event showcased Newstrom's broad range of partners and alliances in driving the state's tech-based economy.

In addition to building alliances with Capitol Hill through CIT, Newstrom keeps current with federal government research and development spending through an organization called the Virginia Research and Technology Advisory Commission (VRTAC), which consists of business executives, academic leaders and elected officials. This group's workings also tie into the other initiative CIT undertakes to expand IT development: increasing federal research and development dollars.

Newstrom, who is a member of VRTAC, said the group helps coordinate how the state can increase its share of federal funding, rather than have the various business groups and academic institutions pursue the money piecemeal. "We're competing against California, Michigan, Texas and other states for those research dollars," he said.

A key reason Newstrom is pushing for a more collaborative approach to chasing federal funding is that Warner wants to increase what the state currently receives -- $300 million -- to $1 billion by the end of the decade. That's a tall order, given Virginia's historically weak national ranking in terms of research and development expenditures. Virginia Tech, the state's largest publicly funded research university, ranked 49th out of 601 universities based on research expenditures in 2001, according to the National Science Foundation Division of Science Resources Statistics.

Providing muscle to Newstrom's efforts, however, is that CIT's chairman of the board is Dr. Charles Steger, president of Virginia Tech.

Steger calls the relationship between CIT and the commonwealth's public colleges and universities symbiotic. "We have a unit on campus that receives funding from CIT that is responsible for responding to technical inquiries it gets from mostly small businesses," he said. Federal funding was also tapped to create Virginia's Institute for Defense and Homeland Security. Acting as an umbrella organization, the institute coordinates the application for and disbursement of federal research, and development funding for domestic security and defense solutions.

Newstrom admits his ties with the academic sector are less concrete and less formal than his ties with the business community -- and he wants it that way, at least for now. "We have a $902.5 million IT budget, and $360 million of that belongs to the academic community, and it's excluded from VITA's consolidation effort. The reason I left them out was I knew I already had to deal with 91 executive branch agencies. I couldn't deal with reforming all those agencies and the colleges at the same time."

But by having Steger as chairman of CIT, and with a major organization such as VRTAC helping coordinate at the business end, Newstrom stays in constant communication about federal funding with all key players. Coordination and collaboration is less of a challenge as well, thanks to all the interlocking relationships he has through CIT, the academic sector and the business community.

In addition, Newstrom keeps close ties with the various business stakeholders in the state through his connections with the Northern Virginia Technology Council and the Virginia Technology Alliance. "These are people who I get to all the time," he said. "When we were working on the [IT reform] legislation, they were key. They testified on behalf of and against components of the legislation, which was fair."

Merging Economics with IT
When the recession hit following the dot-com collapse, Virginia's tech-based economy took a body blow from the impact. "Northern Virginia was hit extremely hard. We lost a huge number of jobs," Newstrom said. In fact, the state lost 84,305 jobs in 2002, of which nearly 40 percent were in IT, according to Chmura Economics & Analytics, a Virginia-based consulting firm.

But already, the state, like the rest of the country, is beginning to rebound. It's hard to tell how much of that can be attributed to the alliances, relationships and partnerships formed among the state, business community, academic sector and federal government. But there's growing evidence that government economic development strategies benefit when IT resources are aligned to support them.

"CIOs must establish proactive processes for realignment of IT resources to support economic policy changes on a proactive basis, ensuring that elected officials' most critical agenda becomes reality," said Carol Kelly, vice president of government strategies at Meta Group. Globally she forecasts that during 2003 and 2004, leading governments will integrate economic planning with IT objectives, and widespread adoption of economic/IT planning processes will occur by 2006 or 2007.

With few practitioners in the market, however, CIOs will have to study how people like Newstrom blend IT initiatives with economic development policies. While having a good understanding of what a tech-based business needs to grow is an asset, so too are leadership skills that can build alliances and good relations with government agencies, academic institutions, politicians in Washington and the business community.

Newstrom knows those partnerships mean nothing if there's little to show for it at the end of the day. "I hope we have positively impacted how Virginia does business, and the service we provide to our customers," he said when asked about his legacy in public office. "I think we are well on our way to doing that."
Tod Newcombe Senior Editor

With more than 20 years of experience covering state and local government, Tod previously was the editor of Public CIO, e.Republic’s award-winning publication for information technology executives in the public sector. He is now a senior editor for Government Technology.