November 29, 2009 By Hilton Collins
Sharing or outsourcing IT resources can be a tough job -- no matter how sensible or cost-effective the concepts may seem. These tasks often involve reorganizing staff members or perhaps eliminating some altogether; phasing out and developing new work processes, which everyone must adjust to; figuring out how shared operations and resources will be managed; and last, but certainly not least, discerning how much of a role private contractors will play in day-to-day operations. And of course, all this comes after you do a comprehensive assessment of your organization's current processes.
But with the nation mired in a recession, some governments are taking another look at shared services and outsourcing arrangements, despite the potential organizational hurdles. Officials in states like Pennsylvania, which has outsourced state government IT infrastructure since the late 1990s, say these strategies can cut operational costs and free up funds for public-policy priorities.
"You don't want to be spending millions of dollars on running payroll when you really need to be educating kids and helping people get jobs," said Naomi Wyatt, Pennsylvania's senior deputy chief of staff and former secretary of administration. "That's really the underlying impetus for all of this, which is getting things in a more cost-effective and efficient place so you can spend your money on the things the government should be spending money on."
For governments mulling about adopting shared or managed services, there's no better place to look for insight about potential challenges and rewards than from government IT executives who've already walked down that road. Those with firsthand experience shared their steps to success with Government Technology.
Governments should take a good look at their current situation before deciding what to share or outsource, Wyatt said. Though it happened before her tenure, Pennsylvania likely did that examination before officials decided in 1999 to consolidate and share the state's IT resources. Since then, Pennsylvania has saved about $317 million as a result. A shared data center was outsourced to Unisys during the consolidation, and the state's Shared Services Initiative ultimately centralized governance, procurement and management of IT hosting services.
"One of the biggest challenges in jumping into shared services is understanding the scope of what you want to share. Sometimes that's really hard because everything's spread out," Wyatt said. "It's in different places and under different people's authority, and spending time to really understand what it is you want to pull together -- the volume of it, the scope, the complexity -- is really, really important."
Pennsylvania is just one of many large governments that have grappled with what to share and outsource. Lynn Willenbring, CIO of Minneapolis, renegotiated the city's existing outsourcing contract with Unisys to manage municipal IT infrastructure during the first six months of her appointment. The city has saved more than $18 million and has also expanded service delivery to citizens since its public-private partnership with Unisys began in 2003, according to the vendor.
Based on that experience, Willenbring advises organizations to first examine their internal infrastructure. If it's insufficient, then look for alternative structuring and management options.
"Do you think you're doing it really well in-house today? Do you think you have industry best practices across all aspects of your IT organization? If you can't answer 'absolutely yes,' then you need to consider [management alternatives]." One option a CIO might choose is seeking outside help.
An IT leader should also ponder the agency's work force and staffing levels. Is the organization having trouble gaining or retaining qualified personnel because of a bad location or inadequate salaries? If so, maybe qualified workers only can be provided by a corporate partner. "Some organizations have a real challenge getting the talent that
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