Special Report: How Strategic Sourcing Helps Local Government Spend Smarter

Outsourcing and shared services help local governments in tough times.

by / August 31, 2012 0
San Diego. Photo by Flickr/VKPATEL Photo by Flickr/VKPATEL

This report is based on the activities of the Digital Communities program, a network of public- and private-sector IT professionals who are working to improve local governments’ delivery of public service through the use of digital technology. The program — a partnership between Government Technology and e.Republic’s Center for Digital Government — consists of task forces that meet online and in person to exchange information on important issues facing local government IT professionals.

More than 1,000 government and industry members participate in Digital Communities task forces focused on digital infrastructure, law enforcement and big city/county leadership. The Digital Communities program also conducts the annual Digital Cities and Digital Counties surveys, which track technology trends and identify and promote best practices in local government.

Digital Communities quarterly reports appear in
Government Technology magazine in March, June, September and December.

How does a CIO respond to a recession and continue to deliver IT services to a city or county and its residents? A spectrum of choices — ranging from staff cuts and service reductions to exploring new service delivery ideas — have been employed recently by CIOs under severe economic duress. Some IT directors were reluctantly forced by economics to change long-established procedures, while others eagerly seized the opportunity to explore new approaches. A few found that they could ride out the storm with minor adjustments. In any case, when economics closed one door, each faced a multiplicity of factors and each reached a decision point as to what to do, which new door to open.

Harold Tuck, for example, former CIO of San Diego County, could be said to be in the “ride it out with minor adjustments” category. The county enjoyed a successful IT outsourcing agreement that was, as Tuck said, “recession proof,” in that it was a contractual agreement. When the prime vendor decided to depart, a partner took over and things continued with a few tweaks, assisted by Tuck, the vendor, the county’s solid financial situation and its long-serving supervisors.

What decision points does he think are most critical in sourcing decisions? “Organizations need to be really honest about what their core competencies are,” Tuck said, “what they do well and what they don’t do well. Technology obviously changes rapidly, new applications come out, and if you lose a key developer to a company, do you have the bench to replace that person? Do you have the ability to pay market rates for the positions that you have? And if the answers to those questions are no, then you need to strongly consider outsourcing.”

CIOs across the nation are asking these same questions. One concept that has taken on new importance in this environment is strategic sourcing. Strategic sourcing is not a new concept, but it has surfaced again, endowed with new life and new possibilities by advancing technologies like cloud computing, shared services, virtualization and the introduction of mobile devices. Fundamentally strategic sourcing involves calculating the most effective and efficient way to obtain needed products and services — and it’s prompting local government leaders to push the boundaries of procurement and public service.

Ron Puccinelli, CIO of Concord, Calif., saw his IT organization decimated by the recession, looked at his depleted bench and saw the writing on the wall. “Trying to build every single thing is no longer physically possible,” he said. “Things are too complex and moving too fast.”

Joe Marcella, CIO of Las Vegas, added political considerations and flexibility as key factors in sourcing. “I need to hold dear anything that is strategic or core competency within my own organization,” he said, “because you have the political piece of it, the policymakers, and sometimes those things are specific to them. Also the delivery to citizens, if I need to control that, then it probably better be close at hand. And if it has to be flexible, we don’t want a contract around it that requires a change order. But if it’s a utility, if it’s nonstrategic, if it’s like ‘doors on Fords’ and I can do it for the same price, somebody else can manage that.”

Phil Bertolini, deputy county executive and CIO of Oakland County, Mich., is a good example of the “eager to explore new ideas” category, and is one of the innovators behind an initiative to bring counties together in shared services offerings over a government-to-government cloud. But when it comes to outsourcing IT, he said maturity is key. “The mature IT organization utilizes sourcing as a tool. So for example, we selectively source out our help desk. We bring contractual people in and they handle that for us. Why is that? It is a very ‘routinized’ function. You can get those kinds of assets — whether they be from a contract house or from someone who does service center or help desk work — they are easy to find and they are lower cost. We also outsource about 30 percent of our development needs, and we do that mostly through supplemental staffing. We bring in contractual staff that has certain skill sets, and then we try to do knowledge transfer to our existing resources.”

In making decisions spurred by a recession, it should come as no surprise that the cost of alternatives would be fundamental to any choice. Harris County, Texas, CIO Bruce High implemented the county’s Total Cost of Ownership (TCO) program about two years ago and applies it to all enterprise IT projects. “It was designed to make people more aware of what they are stepping off into,” said High. “You get a full picture of what it’s going to cost to maintain.

“It’s really just an Excel spreadsheet with a lot of tabs,” High said. “It asks the questions they wouldn’t have thought of when talking to the vendor, such as: ‘Do I need somebody to support this thing? Do I need 18 servers, and does that mean 18 licenses? Do they sell production and backup servers?’” Harris County has even turned down some available grants once the specifics were run through the TCO process. “It wasn’t worth it because the hit of 10 to 12 percent maintenance fees that will be coming out of your operational budget is not going to be sustained by grants,” said High. “It gives the decision-makers good information to make sound decisions.”

Rather than slowing down the procurement process, TCO actually expedites it, High said. The process is fairly simple, he added, and there have been few complaints from users, who appreciate getting some real data on actual costs, and all the questions are asked up front, so they don’t have to go back to the vendor for more information midway through the process. The county provides a template that has premade formulas for the calculations. And on items that aren’t covered by an algorithm, IT staff will help out as needed.

High’s advice is to try to think of everything before you commit. Like those maintenance fees and support agreements. “You may not be thinking, ‘OK, that’s 15 percent of $2 million, so I have $300,000 next year that’s going to come out of the operational budget.’ Well, forget it. I’m not going to lay off three people to do this.”

And finally, according to Accenture’s Jim Bard, decisions need to be made collaboratively from the start. “When analyzing cloud-based computing or solutions,” he said, “it’s important for the CIO and procurement group to collaborate early in the process, to define the requirements of the organization, and develop the right acquisition and procurement strategy that will bring the best value to the organization. Having procurement get involved early is key in these complex services that cloud computing represents.”


Build, Buy, Rent or Share?

Strategic sourcing is not cookie cutter — there are no simple recipes for success. Decisions evolve from an analysis of the goals and mandates of the jurisdiction, available resources, unavoidable restrictions, risks, insight and a knowledge of what will give and what won’t when give is all that’s left. Concord and Las Vegas have taken different directions, applied different strategies and found |different ways to keep the wheels turning during tough economic times. Two strategies they have in common, however, are greater use of outsourcing and shared services.

Concord, Calif.

Don’t tell Concord, Calif., CIO Ron Puccinelli that the recession is over. His options have been slashed along with his budget. In the past 36 months, he’s had a 42 percent reduction in staff and a tripling of demand. He can’t offer new hires a competitive salary. But as Puccinelli says, it’s not a problem because he can’t hire anyway. Squeezed between numerous rocks and hard places, he’s playing defense, supporting 500 to 900 city staff members with his own department of 12, and outsourcing everything he can.

Two years ago, Puccinelli started moving systems out of the city to other locations where he didn’t have to build, maintain and own the servers and applications. “We’re calling it the cloud,” he said, “and we have a half-dozen applications out there now. We started with non-mission-critical ones to see if this was going to work.”

The city went live in July with its first mission-critical cloud application, an Accela Automation land management and permitting system. “Accela provides software as a service in a class one facility,” Puccinelli said. “They provide disaster recovery and business continuity so I don’t have to back that data up. I don’t have to worry about hot site/cold site, they do security but I am responsible so I have to check and make sure they are actually doing it.”

The city also just finished the first year of a completely contracted help desk services support system. Puccinelli said that approach is more cost-effective than retaining staff members who have the skill set to handle break/fix issues.

He has more than 200 applications to support, but has no staff members dedicated to any specific application, and has only one dedicated server technician.

“As our systems come up for upgrades or replacement, we do a serious look at do we do it ourselves or put it out somewhere else? It comes down to what’s the risk and can I live with it, and what’s the value? Then we make that decision, and we put the controls in the contract — who owns the data, what’s our exit strategy, who owns the security responsibility, how do we check and verify? We try to cover all the bases. In some cases, you can ask for it, but they may or may not say yes.”

Puccinelli cannot match salaries with nearby Silicon Valley, even if he could hire. By using contract workers, he can bring in experts to work on specific systems like UNIX or Windows for only the time frame that they need to complete a project or solve an issue. “You pay a little bit more to do that, but you have the flexibility to get the skills you need when you need them.”

Puccinelli said that as the economy recovers, he won’t go back to the old ways of doing things. “Requirements change month to month,” he said, “and to have staff members sitting in classes learning new skills would not be a good use of their time.” With flexible staffing, he can pick and choose the most highly skilled contract support.

Concord also is increasing its shared services activities. “I provide radio and telephone service for the entire government agency of a neighboring city, and I do all the police technology support — the radios, the computers in the cars and on officers’ desks, network infrastructure, email, voicemail, all their applications, all their records systems, everything.” A two-county interoperable radio system is under way, the city’s first big shared system that is not city-owned.

Puccinelli’s concerns align with many other jurisdictions that are treading economic waters or simply looking for better ways to do things. “IT organizations have a choice to make: We can deliver the value to the organization and source it strategically so we have some influence and make sure it’s done correctly — with the right security, the right value, the right process and controls — or we get left out of the loop.”

Las Vegas

“At budget time every year, I’ll take a look at all of our systems,” said Las Vegas CIO Joe Marcella, “as well as every time we bring up a new system, I try to figure out whether I’m going to build it, buy it, rent it or share it.” For Marcella, the decision to share systems has been working.

Several jurisdictions — Las Vegas, North Las Vegas, Henderson and Clark County — built a government cloud for a multijurisdictional business licensing system and are looking at other potential applications. The collaborative agreement allows for additional participants and proportional payments for buy-in. “Sharing has become very very interesting,” said Marcella.

He added that shared systems are going to have to become more pervasive in government. If jurisdictions don’t start these projects and initiatives on their own, they are going to be mandated to do so — which was the case for these Nevada local governments.

The principal partners had to develop an agreement to build the system, and each had to maintain individual proprietary systems. “We all have separate business licensing systems, but they are all now coordinated and linked for data elements that are necessary for the multijurisdictional licenses. That means that if someone is a contractor and wants to go to the county and that’s their principal residence, they can still do business in North Las Vegas, Las Vegas and Henderson, simply by going to the county and signing up for it.”

Wireless Pooling Saves Texas County $95,000 per Year

Bexar County has moved from separate wireless accounts with individual plans to one main wireless pooled account. Pooling is the process of purchasing a monthly set of minutes per unit and sharing those minutes across county departments, resulting in a reduced net cost per minute. The county analyzed this option and discovered that it was less expensive to do than an employee allowance plan.

The pooled county account includes 404 cellphones with 100 pool minutes/100 free texts ($23.80 per month) and 334 smartphones with 300 pool minutes/unlimited data and text ($51.74 per month). Both have 5,000 night and weekend minutes and unlimited mobile-to-mobile minutes. By pooling the wireless minutes countywide, we leverage spending and reduce costs. The minutes are reviewed monthly to assure we are optimizing the amount of minutes, adjusting for additional savings.

The combining of the accounts — from AT&T, Verizon and Sprint — into pooling also standardized the wireless plans and monthly billing. Formerly there were separate plans for high-end users versus lower plans for others, causing confusion on auditing, budgeting and payment processing. It also improves the inventory of the phones and the processing of chargebacks and payments. We are currently incurring a savings of $85,000 for the year.

At this time we are working with our wireless vendor to set up the county’s two aircard accounts into one and pool them. Out of 684 individual aircard plans, 110 of those would be reduced from the higher-cost unlimited plan to the $37.99 per month plan, sharing 5 GB of data each. This is more than enough and would cover those high-end users and save on overages. We are projecting to have a savings of $10,000 for the year. Thus, through pooling we will save $85,000 for the cellphones plus another $10,000 for the aircards.

— Catherine Maras, CIO of Bexar County, Texas

There were three main benefits, said Marcella. “It causes us to all be collaborative, it facilitates a Nevada Revised Statute ... and it creates a government cloud, which allows anyone to sign on, sign off, be a part or be absent.”

Some of the groundwork for the business license application was laid several years ago. Las Vegas, the Metropolitan Police Department, Clark County and the state of Nevada all participated in a project called Nevada Shared Information Technology Services (NSITS). Then-Gov. Jim Gibbons said NSITS provided “a governance model for the operation of a collaborative, cross-jurisdictional information technology infrastructure.”

Marcella also hosts all of southern Nevada’s animal shelter system on the Las Vegas government cloud. “I own the software, I license use to the other jurisdictions, and everybody signs up to use it. I host it, and it’s a nonprofit that runs the center. So you can see all the components there, which is typically difficult to do contractually into an operating agreement, and also host it in a single site.”

He also hosts MyNevada, a Web portal for questions on obtaining services that provides aggregate data from multiple jurisdictions.

Two Takes on Outsourcing

Outsourcing all or part of a jurisdiction’s IT operations has been an option for some time now, and San Diego County has been doing it successfully since 1999. The outsourcing contract is credited by the county CIO as staving off recession-induced budget cuts to IT, as it is a contracted relationship that can’t be touched.

Minneapolis has a long outsourcing track record as well, but according to the city’s CIO, the contractual relationship there shifted budget cuts to a dwindling city IT organization, and more cuts are pending. Here’s a closer look at the impact of large-scale outsourcing in both jurisdictions.

San Diego County

San Diego County is the poster child for IT outsourcing. Since 1999, the county has successfully transitioned through three vendor regimes, picking up lessons learned along the way. In 1999, the county first contracted with CSC. In 2005, the county partnered with Northrop Grumman, and that transitioned to the third contract with Hewlett-Packard in May 2011.

Through all those transitions, said former CIO Harold Tuck, the county improved its contracting, its ability to write terms and conditions, and its stability. “Some aspects of the contract certainly didn’t work in the beginning,” Tuck said. “We had a fair number of contractual disputes when I walked in on April 1, 2008. We had millions of dollars in dispute. We were disputing service delivery, projects not being on time, being over budget, we had unmet service-level agreements and penalties imposed.” And there was some confusion among staff as to areas of responsibility. Now, there are only a few thousand dollars in dispute, and Tuck reorganized and created self-directed teams that raised morale and helped build a better working relationship with Northrop Grumman that carried over to the most recent arrangement with Hewlett-Packard.

The 90-day transition from Northrop Grumman to HP went smoothly, said Cathy Varner, the San Diego County program manager for HP Enterprise Services. A large portion of the Northrop staff was retained, and the company already had a major role in the contract. “We were a subcontractor and had what we believe are the core components. HP had the data centers, the help desk, we managed those portions of the contract, as well as on the application side, we managed Health and Human Services, which is the largest of the five business units.” W. Harold Tuck, CIO, San Diego County/Photo by Ken West

San Diego County’s IT crew consists of 16 staff members in the County Technology Office including the CIO, an enterprise architect, a county information security officer, a communications person, administrative assistant, assistant CIO, staff that do service management for infrastructure and applications, staff to manage the contract, and staff members that liaise with county government’s five business units. Under the county’s General Management System, five business group IT managers have a dotted-line reporting relationship to the CIO, which brings the total to 21. “And we have departmental IT coordinators who work for the larger county departments,” said Tuck. “They have a reporting relationship to their department head and to the group IT managers, and they represent approximately 40 people. So that’s about 61 people total.”

The outsourcing agreement doesn’t cover the sheriff’s or district attorney’s offices except for telephones, so about 60 internal people handle those functions for 13,500 county employees. “The rest of the IT delivery is done through Hewlett-Packard and AT&T, which has a subcontract with HP,” said Tuck, adding that the contract with HP is worth about $127 million per year.

Tuck credits some of the county’s success to stable personnel who have been involved with source selection and contract management since 1999. The San Diego County Board of Supervisors, for example, has retained the same members since the 1990s. A governance structure, called the General Management System, has been tweaked and improved over the years. Tuck also touts the IT Innovation Council that brings in Fortune 500 companies to meet with the county’s front-line employees. What began as a utility, said Tuck — simply managing a contract — evolved into what he calls a “transformative state” with HP.

Tuck said outsourcing has served the county well during the economic downturn, even though it was not done originally to save money, but instead to focus on the county’s strengths. “We invested over $100 million because we sold our landfill and invested that money in outsourcing and in our infrastructure. In 2007 and 2008, to the present time you have the horrific economic downturn, and organizations are asked to make budget cuts. I haven’t been asked to do that because we have a contractual obligation with Hewlett-Packard. None of my colleagues can make that claim.”

In contrast, the economic environment forced many local governments to delay replacing and upgrading software and it also left them, in many cases, more than one version behind vendors’ current operating systems. And in the worst-case scenarios, jurisdictions laid off employees as a cost-cutting measure.

“My colleagues are consolidating and virtualizing servers,” Tuck said, “they have fewer physical servers in their data centers, they have more real estate available yet they still have the utility costs, and other costs responsible for running a data center, so they will want to do shared services to fill up their space because smaller organizations have the same concerns. So now outsourcing comes into play, and you have to consider it.”

So why aren’t other jurisdictions doing San-Diego-style outsourcing? Tuck said the city of San Diego and Orange County, Calif., have RFPs out, and others are considering it, but he suggested that putting members of public-sector unions into the private sector requires strong political backing that may be beyond the abilities of many jurisdictions.

HP’s Varner said many jurisdictions lack a strong governance model, which she sees as essential to outsourcing success. She added that other municipalities sometimes allow departments to opt in or out, which defeats the enterprise view, scalability and ultimate success. “With the right governance model and commitment for success, county government can achieve the cost savings that San Diego County has achieved, and large or small, the formula can be replicated.”

HP provides help desk, workplace services (desktop, phones and network), and applications hosted in two U.S.-based remote data centers, as well as the development and maintenance of the applications.”We do storage” Varner said, “and right now we’re involved in a transformation project with the county, which is developing their cloud strategy, their mobility strategy and doing their applications rationalization.”

Varner said San Diego County wanted to know the total cost of ownership for some of the applications as well as an overall view of its portfolio of more than 520 apps, including who uses them and how old they are.

“It was interesting to see how many apps were over a million users, obviously those were the public safety ones, versus two or three apps that were highly specialized.

“We were able to show them that if you touch this app, it impacts this upstream or downstream and also where they should be putting some of their investment dollars because some of these applications are going to be retired, some need to be maintained, and some need to be replaced.”

In addition, she said, redundant functions like departmental case management systems were located and the county shown how consolidation could save money and create more of an enterprise view. The county’s agreement with Hewlett-Packard runs until January 2018.


When Minneapolis’ outsourcing contract with Unisys smacked into the recession, it did not allow needed flexibility, said CIO Otto Doll. Doll, formerly South Dakota’s CIO, said the contract was first inked in 2003 and runs until 2015. While cuts came to Doll’s in-house staff and operations, the outsourcing contract was untouchable and that has been a source of frustration.

“My salary, staff salary, money for new ventures, you keep eating away at that and you are left with fixed costs and they may come back and say you need to cut more. And then what do you do? I’m faced with that right now. We’ve been given direction to cut more for fiscal year 2013, so I’m looking at this. … I’m against cutting staff further, I do have a few outs in the Unisys contract, but it’s minimal.”

Doll said the cuts began before he started working for Minneapolis. In the years preceding his arrival, cut after cut was made not only in the IT department, but also across the city government. The outsourcing contract was renegotiated in 2008 and 2010 to help with the financial strain. “But ultimately it’s a difficult thing to open up the contract because then you invariably have to extend it,” he said.

And now, nearly a decade after the contract began, the city must make a strategic decision.

“In 10 years, what worked and what hasn’t, and can we structure this so that it will work better for the next number of years? I’d love to run everything under the cloud, but technically you can’t do that. Nobody has a solution that can support that, and even if they did, we start learning how they architect and implement these clouds, and guess what? It’s not something where I can just move something from one cloud to another — a piece of cake, very little cost to do that — because if it was, it would make the cloud a commodity, and that’s a much different game. I’m not saying it won’t ultimately move to that model, but right now there are things that lock you into a cloud and cost you some serious money to move from one area to another.”

The city’s agreement with Unisys is very comprehensive. “The PC that I use,” Doll said, “the servers that our applications run on, storage — you name it — it’s actually all leased by the city through Unisys. They do all of the operations, their guys support us from the desktop to the data center and they do a certain degree of networking.” Unisys also handles the service desk.

Doll’s staff handles telephones and some user-perspective administration of major systems like enterprise resource planning. Doll’s group does application development and maintains some older information systems built in house. “I have some architects, some contract specialists, system architects to data architects, we have our own project managers, I have my own security officer, interagency coordinator, a couple of networking guys but more at the architecture side.” Doll has 57 positions total for the whole IT organization. “We’re very close to having the entire IT shop outsourced.”

“If we’re going to do an RFP and be running come January 2016, we have to start it now,” Doll said.

New Methods Hit Old Restrictions

While strategic sourcing expands the spectrum of choices, some new options collide with restrictions based on old ways of doing things. Software as a service, for example, is obtained from the cloud by subscription. But while software purchase as a capital expenditure is a well traveled path, subscriptions are not. And governments attempting to share services that run on proprietary software encounter licensing restrictions. And since many governments perform similar functions, some are offering a government cloud approach to service delivery that public officials find more comfortable for critical applications or sensitive data. But government clouds encounter both subscription and licensing obstacles.

A year ago, Government Technology published an article about the need for more flexibility in software licenses, shared hosting, concurrent licensing, etc. Those discussions continue, with some signs of improvement. However, many CIOs we recently talked to continued to cite licensing issues as an impediment to options ranging from virtualization to shared services.

The issue resurfaced, for example, most recently at a meeting of CIOs in San Diego, hosted by Tuck. When asked if changes are needed in software licensing, Tuck said, “The answer is a resounding yes. In a shared service model, you would want to have an enterprise agreement for all the customers you are providing services to. In other words, a regional agreement. But how you get hardware and software vendors at the table willing to do that is the difficult question.”

In addition to the need for regional licensing agreements, there is confusion associated with sorting out the licensing legalese of this uncharted territory.

Oakland County, Mich., CIO Phil Bertolini, for example, is aggressively pushing the envelope and is afflicted with both licensing issues. Oakland County’s G2G Cloud Solutions could expand shared services beyond the county or even across the country. For applications developed in-house — such as the county’s online payments solution — county borders are not a problem, and subscribers can come from anywhere. But with anything that runs on proprietary software, he said, once outside county borders, the game changes, the rules are convoluted and the legal hurdles can bring things to a halt.

“Their licensing for governments today forces me into a box,” he said. “It says I can only provide the technologies for my county entities — my county departments and divisions. So if I’m providing certain things to my local governments, that could impact my licensing model. And a lot of us are doing that now.”

Understandably, vendors see governments providing services based on the vendors’ proprietary software as possible competitors. Bertolini said vendors categorize him as a service provider, and he understands their point of view, but he would like clarification on licensing agreements. A jurisdiction’s legal team can stop an initiative if the licensing agreement isn’t clearly spelled out. “It’s so convoluted on when you move from one license to another,” said Bertolini. “Is it an enterprise license? Is it a provider license? Then if I need one or the other, what do I have to do to procure that? And if I procure that, does it give me unlimited ability to provide? There are all these things that are up in the air.”

Microsoft’s Stuart McKee — a member of San Diego County’s Innovation Council — said that from Microsoft’s perspective, software licensing is a “very small portion of the overall costs,” compared to the infrastructure portion of providing a shared service. “If one entity has a piece of software and they spin up a cloud-enabled service, and the other entity is using it, I don’t think it necessarily requires the other entity to pay for it twice.” McKee said that if subscribers are using client software to access the application, there could be licensing costs.

McKee said that when he was CIO of Washington state many years ago, he did compete with the private sector in some respects, and confusion may come from government’s practice of budgeting for capital systems.

“Historically, with a Microsoft purchase, you buy bits and binaries and you got CDs and licenses and installed them on servers, and you used a capital budget to do that. In the cloud, you are buying a subscription. I’ve been in a lot of conversations where there’s a bunch of enthusiasm and ‘we’re going to the cloud, and this is exciting’ and then they get down to ‘how do we buy this?’  They’ve never bought subscriptions before and so how do you categorize that? How do you deal with that; what are the terms and conditions?

“We’ve done a lot of stuff around things like license mobility,” McKee said. “Customers that currently have agreements with us … it allows them license mobility. They’ll take their licenses from on-premises into the cloud and back. We don’t believe it’s all or nothing.”

Former Montgomery County, Md., CIO Steve Emanuel — now CIO of New Jersey — said the computing paradigm has changed in the past three years from per seat, server or CPU to software as a service or infrastructure as a service, and those models move away from physical boundaries. He likens the state providing services to a county or city in the same way that he’d offer vacant office space with some fees for heat and light. “We have to figure out how we can demonstrate that they don’t need to build the same house or the same building right next to us when they’ve got space in ours. It’s that whole sharing concept.”

Neither Bertolini nor Emanuel said they have a solution to licensing, just that they need to partner with vendors so they can hash out the issue.

But there are signs of positive change. Las Vegas’ Marcella said the city uses Chameleon software for the animal shelter system, which it hosts for other jurisdictions. “Chameleon allows for either a government-hosted site, or they will host the application, so they are used to having multiple jurisdictions and having their system being able to partition and manage it.” In addition, he said, the city has a memorandum of understanding for its Esri GIS with multiple layers managed by numerous jurisdictions, which is a vendor-recommended model.

Emanuel said the shared environment took some vendors by surprise. “We’ve seen it with Oracle. We definitely saw it with Microsoft, because Microsoft’s license mobility is a response to that.” And the changes go beyond just premises and cloud. “It could be someone else’s premises, and it could be multiple clouds. If we’re going to build in total flexibility as the Internet and the cloud are supposed to provide, who cares where they get their service and data as long as it’s the current data and good service?” He said vendors must deal with not only open source software but also with cloud email providers. Emanuel added that it’s refreshing to see Microsoft’s licensing mobility option.

“We’ve been doing network-enabled services for quite a long time,” McKee said. “And that’s all the cloud is — it is just our ability to connect. But the difference with some of these cloud offerings is that we’re moving from products to services.” McKee said cloud is being promoted as a commodity or utility by vendors and experts. “But you’re not just buying software, you’re buying a service. So the quality of the service is what matters.”

McKee said the bigger question, which he doesn’t have any answer for, is about projects on a national scale. “Generally speaking, within a state, there’s a lot of jurisdictional law in place that addresses that.” One successful national example, he said, is the Washington State Digital Archives, which for years has provided infrastructure to other governments around the country.

“Sharing services is not just about technology — it’s sharing a police force, library systems, networks,” Emanuel said. “That’s the only way government can make some significant reductions in infrastructure without cutting services. And they’re looking to technology to do that. The licensing model is just one small piece of it.”

Doll said he encountered licensing issues with virtualization. “We share resources with Unisys. Our storage is not on dedicated boxes, our data can be right next to some other client’s data, so when you share the processors, you will run into the same challenge as when you went to the virtualized arena.”

Due to the pricing structure, Doll said Minneapolis had to cut back on virtualization because it led to an increase in licensing. However, he added that licensing isn’t the only challenge — security, availability and accessibility to information, as well as having the facilities to handle required audits are all concerns.

 But the news isn’t all bad. Local governments are stepping up to the plate and handling the tough economic times as best as they can.

“I think we in government are hitting it out of the ballpark, with the innovative thinking about how we deliver services, and really putting us ahead of the private-sector organizations that don’t yet have to think this way,” Emanuel said.

This story could be one of IT organizations hammered into defeat by relentless budget cuts and insurmountable obstacles, but it’s not. At a time when cities have actually gone bankrupt, and federal, state and local governments have suffered cut after cut to keep afloat in a sea of deep red ink, we found few pleased about the situation, but none defeated.

Local government CIOs and IT staff have — in spite of all opportunity to do otherwise — managed to keep the lights on and servers humming, providing information and services to the enterprise and public. The depth of their resilience, their ability to innovate, source strategically and quickly grasp and employ the latest technical advancements speak well of them and of America’s cities and counties. The future, with many obstacles kicked aside by a recovering economy, looks very bright. 

Wayne Hanson

Wayne E. Hanson served as a writer and editor with e.Republic from 1989 to 2013, having worked for several business units including Government Technology magazine, the Center for Digital Government, Governing, and Digital Communities. Hanson was a juror from 1999 to 2004 with the Stockholm Challenge and Global Junior Challenge competitions in information technology and education.