Pennsylvania has long recognized the importance of using IT innovation to improve service delivery to its citizens. Every day almost 12.5 million citizens rely on our government to educate their children, protect their communities, build and maintain roadways and transportation systems, steward natural resources and much more. More than 80,000 public-sector employees in more than 45 agencies, boards and commissions across the state are responsible for delivering these services. To support these employees in their various duties, Pennsylvania invests approximately $1 billion annually in IT.

The Office for Information Technology (OIT), part of the Governor's Office of Administration (OA), leads Pennsylvania's technology initiatives. Focused on both vision and execution, the OA/OIT is committed to ensuring that every dollar spent and every personnel hour invested in technology for state government returns the greatest possible benefit. To this end, consolidation and centralization of IT resources has been part of our strategy, delivering operational cost savings of approximately $317 million to date and significantly improving productivity and service levels.

More recently, we expanded our focus on consolidation to encompass an extensive shared services initiative designed to drive further savings and ensure the high performance of the IT infrastructure that's required to serve residents and support economic growth.

1997: Outsourcing Begins

Our journey toward consolidation and shared services began in 1997, when the OA embarked on an initiative to study the management of government operations and other states' experiences in an effort to reduce costs, increase accountability and improve service to citizens. The state considered IT an important component of the study. At the time, Pennsylvania lacked a centralized data infrastructure environment: More than 20 agency mainframe-based data centers used redundant equipment and staff to deliver similar services. Ultimately such redundancies reduced employee productivity and prevented the state from achieving economies of scale to ensure the best investment of resources.

The Pennsylvania Data PowerHouse (DPH) emerged from the operations study. Established in 1999, the DPH provides a consolidated data center environment that replaced the legacy data centers. It delivers highly secure, 24/7 support for mission-critical computing, and reliable and cost-effective IT services. The center also drove down operational costs by reducing redundancies, saving the state more than $317 million.

These savings were achieved through staff consolidation, including natural attrition, consolidation and virtualization by some agencies into the state's technology center, and an extension of the first DPH contract in 2002.

Outsourcing was an important consideration from the inception of the DPH initiative. The state understood that its tech-savvy residents would continue to demand greater access to 24/7 online services that facilitate interaction with government. This type of environment would require 24/7 support, and the cost of hardening the IT infrastructure to achieve this goal was estimated at upward of $100 million. Outsourcing -- and the efficiencies it affords -- was highly appealing.

After completing an extensive and competitive evaluation process, in 1999 the state selected Unisys to manage the DPH under a contract worth approximately $525 million over eight years, including extensions. The OA/OIT based its decision on several factors, such as the contractor's outsourcing expertise, its knowledge of Pennsylvania's infrastructure and its partners' expertise.

Unisys had partnered with IBM, and Pennsylvania's infrastructure ran primarily on technology provided by both companies. Unisys manages the state's mainframe, midrange and an array of server operations; monitors the wide area network; and provides service desk, technical support and disaster recovery services for many of the state's mission-critical applications -- like systems for taxation, child support, child welfare, vehicle registration, unemployment compensation and voter registration.

With the DPH initiative, Pennsylvania was among the first states to successfully consolidate and outsource most of its mission-critical data center operations. Through this initiative, the state