November 8, 2005 By Tod Newcombe
Over the four years that the Commonwealth of Virginia's Information Technology Symposium (COVITS) has taken place, it has attracted a venerable who's who of CEOs and senior executives from major IT companies including IBM, Sun Microsystems, Microsoft, Northrop Grumman, Accenture, CGI-AMS, MCI, EDS and countless other mature and budding high-tech firms. They come out for several reasons, but one of the most important has to do with the man speaking at the podium.
Many state governments hold fairs, conferences and events for technology, but few attract the kind of IT top brass who attend COVITS, perhaps because few governors are as comfortable speaking about technology to the titans who run the country's IT industry as Warner. With the exception of New York City Mayor Michael Bloomberg, Warner is perhaps the only other politician/CEO who not only gets IT, but does IT as well.
Unlike Bloomberg -- who used his tech-savvy background to launch a multi-billion dollar financial news service enterprise -- Warner's pre-government business experience, while quite lucrative, always had a softer side. As a businessman, Warner helped found the Virginia Health Care Foundation, which provides health care to more than 476,000 poor Virginians in rural and urban areas. In 1997, he developed the Virginia High-Tech Partnership, which helps students from the state's five historically black colleges and universities pursue technology careers.
Warner was elected governor of Virginia on a reform platform, but was immediately stymied by a multi-billion dollar deficit -- much larger than was expected, based on what his predecessor had said. Where other politicians saw serious problems, Warner saw opportunity. Yes, he had to make deep cuts in spending, including the elimination of nearly 3,000 jobs, but Warner also made significant changes in government operations.
In 2004, Warner received the Public Official of the Year award from Governing magazine for launching two critical initiatives. The one that made the most headlines was his landmark overhaul of the state's tax code, the largest in nearly four decades. This was especially significant because Warner, a Democrat, pushed through a package of income tax increases on the wealthy -- along with some sales tax reductions -- with the support of a Republican-led state assembly.
Warner's second bold move was putting Virginia government operations on a more business-like path. He used his business acumen to inject modern management reform into the state's bureaucratic operations.
Warner's most significant action occurred within IT, where he unleashed change by pushing through legislation that ended state silos for technology funding, resources and infrastructure. Warner replaced them with a new agency -- the Virginia Information Technologies Agency (VITA) -- and a new IT governance structure called the IT Investment Board.
Starting slowly, VITA began moving individual IT personnel and operations agencies under its control, eventually taking over 90 executive agencies. Like any good business executive, Warner is very familiar with exactly what occurred.
"We now have a single e-mail system, a common [computing] platform and nearly $69 million in savings," he said. "We no longer have different agencies buying different systems with different platforms without thinking about compatibility. Any company of the size of Virginia would do exactly what we're doing."
Despite some bumps along the way, the transition has succeeded, and Warner points out how IT staff members have also benefited. "As an IT person working for a small agency, your chances of advancement are pretty slim," he said. "But when you work for an IT agency [like VITA] with thousands of positions, you have a better career path and more chances for professional development."
What's remarkable about this achievement, as well as the other IT successes within the state, is that they took place right after the dot-com implosion of 2001, which had a chilling effect on digital government for many public-sector leaders. "When the governor was doing all his IT reforms, he was going against the flow," said Robert Atkinson, vice president of the Progressive Policy Institute (PPI). "IT was no longer the cool thing to do in government at that time."
Unlike those governors who downgraded IT's role as short-term benefits seemed to evaporate, Warner saw the long-term value that technology could deliver in terms of services and economic development. Warner even borrowed a page from the PPI's national policy platform calling for dual IT positions in federal government: one to lead technology at the policy and programmatic level; and one to manage the inside, operational view.
Warner created a secretary of technology position -- held first by George Newstrom and now by Eugene Huang -- to act as the policy person for IT in government, economic development and research. Warner then established the position of CIO both for operational purposes, and to overcome what he calls Virginia's "stupid rule" of limiting the governorship to one term. "The CIO is independent, with a five-year tenure that overlaps the governor's administration and has the buy-in of both the legislature and the governor," he explained. "By having this type of arrangement, we have more chances for success with the kinds of changes we are bringing to the table."
Huang, who has known Warner for 10 years, described his relationship with the governor as "very collaborative." He describes Warner in the same way New York City CIO Gino Menchini describes Mayor Bloomberg -- as a CEO who really understands the strategic significance of IT within government. That kind of insight is beneficial for Huang, in terms of having bold plans to work with, and a challenge, because the governor's expectations are rather high.
Different Kind of Pragmatist
Despite the challenges faced when IT operations of dozens of agencies are centralized into one unit, Warner tasked Huang and CIO Lemuel Stewart with moving state IT to the next phase of restructuring. The move, according to Warner, "will help us transform how we use IT in Virginia."
While all governors are pragmatists, Atkinson believes that Warner is from a different mold. "Mark is progressive -- he wants government to work and solve problems, but he's not tied to the old ways. He's willing to reach out to form partnerships that others might shy away from."
Under a new state law, the Public-Private Education Facilities and Infrastructure Act of 2002, private-sector firms are encouraged to team with the state to rebuild IT infrastructure and applications by sharing both the financial risk and the reward from such projects. The federal government calls these partnerships share-in-savings agreements (see Fall 2005 Public CIO article Share & Save Alike).
"We're trying to take out the legacy systems," said Warner, referring to the state's outdated, inadequate and incompatible computers and software. Rather than try to raise the large sums of money through the legislature -- where Warner said chances of doing so are slim to none -- VITA plans to outsource the state's IT infrastructure. Northrop Grumman and IBM are bidding to rebuild the state's desktop computers, servers, networks and data centers in a project that could be worth billions of dollars, and require an investment of $200 million to $250 million, according to the Richmond Times-Dispatch.
Virginia also plans to outsource its enterprise applications. This deal would overhaul the state's business systems for administration, accounting, budgeting, human resources and procurement. CGI-AMS and IBM are bidding on this deal, and said they can save the state $125 million and $500 million respectively, according to the Times-Dispatch.
"We're taking the hardware and software side of IT in government and looking for a private partner or consortium of partners to help us upgrade in a better way, in the way that a Fortune 50 company would do it," said Warner. "By doing it this way, we can get rid of our legacy systems and completely upgrade our IT in one fell swoop."
Because VITA's Investment Board was negotiating with the companies, details about the deal have been under wraps, including the financial specifics. Warner, however, persuaded the board to publicly disclose most of the relevant information. He also pointed out that while no jobs will be lost through such a partnership, it's possible that some of them will move out to rural parts of the state.
High-Tech Helping Hand
As both a businessman and a politician, Warner understands the necessity of an environment conducive to launching businesses and putting people to work. He also understands that technology is the lever that, when pulled, can light up both business and people. Warner refers to broadband as an infrastructure as critical as water and sewer lines.
Having a high-speed grid attracts new businesses, especially those that drive the knowledge economy.
When IBM decided to add 1,500 high-paying consulting jobs to its IT services sector, it chose to locate them in northern Virginia. The rural areas of the state, however, need broadband services the most -- and that's where Warner has focused most of his energy.
For example, he started a $12 million fund to create a regional broadband backbone stretching 700 miles through some of the most economically distressed areas of Virginia. As a result, 13 jurisdictions in that region have seen their unemployment rate reduced from double-digit numbers to the single digits, according to the governor. Warner has also worked with the state's Department of Transportation to bury dark fiber alongside every new road and highway it paves. By the end of the year, 700,000 residents and 19,000 businesses will have broadband where they recently had none.
Meanwhile, the IT reform efforts under way in Richmond are having a ripple effect in the private sector. Peter Jobse, president of the Center for Innovative Technology -- a nonprofit organization that nurtures Virginia's tech-based economy -- has pointed out that what's good for government is good for business. "IT reform presents budding technology firms with a clear message," he told Public CIO in 2004. "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."
Testing the Waters?
The same day Warner addressed attendees at COVITS, three other politicians showed up to speak. They were the gubernatorial nominees hoping to succeed Warner, and their presence spoke volumes about how important IT has become to Virginia's political landscape -- both as a driver for economic development and as a critical component of government itself.
At the same time, their presence was a reminder that Warner's one term as governor is almost over, leaving questions in the air about what the 51-year-old Virginian will do next. There has been some speculation that he may run for Virginia Sen. George Allen's seat in 2006, but it appears more likely he will test the presidential waters in 2008.
Warner has already established a federal political-action committee to help with his prospects, and a grass-roots organization called Draft Mark Warner has been posting news articles and opinion pieces about him on its Web site. Warner's popularity ratings are high, and Intrade.com -- an online trading exchange for political and current events -- gives Warner some of the best odds among Democrats to be the next president.
Whether Warner becomes the nation's next chief executive who gets IT remains to be seen. What is known is that Warner has shown how government can reform IT when leadership takes an active role in promoting its capabilities, and carries out the vision.
When asked what role IT should play in government, Warner indicates that the public sector has a long way to go. "IT still has transformative power, but government has not fully implemented it and used it to its best advantage," he said. "For example, the country is 11th in the world as far as broadband deployment. We can do better."
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