Texas agencies are drastically changing IT development and forcing vendors to change business strategies by implementing service-oriented architecture.
A quiet revolution is happening in Texas government, forcing vendors to approach agencies differently. Service-oriented architecture (SOA) is a fast emerging IT methodology that organizes functions in a loosely tied application, allowing technicians to change sections of code without disrupting other parts of the application. It also enables a function to appear once in an IT infrastructure for all of its applications to share, minimizing code and making functions consistent across agencies. That format reduces programming time spent on function additions or experiments with existing ones. The time and labor saved slashes costs and frees up resources for more application developments.
The communal design of SOA is allowing organizations, such as the state Health and Human Services Commission (HHSC) and Austin Energy, to consolidate IT functions and change the dynamics of vendor relationships.
Breaking the Silos
Gary Gumbert took over as CIO of the HHSC in 2004 with the goal of consolidating 12 agencies into five and developing a new integrated eligibility solution for the state's Medicaid program.
"That was a significant challenge for us," Gumbert recalled. "We had six months to complete that operation."
The Texas Legislature had recently passed a bill mandating reduced state costs by consolidating redundant functions across the departments. As Gumbert's team merged the departments, they noticed several different silos for the same type of information. Gumbert saw the occasion as an opportunity to migrate all systems off the department's 30-year-old mainframe, which relied on an old COBOL program the department is still in the process of exiting.
"It's getting harder and harder for us to hire people who have COBOL knowledge," Gumbert said. "It's getting harder to find parts for the system when it fails. It's just time to go ahead and migrate to a new solution."
He said the old mainframe was costly, and left eligibility determination highly subjective for caseworkers, which led to inconsistent eligibility standards statewide.
Gumbert's team decided an SOA with more objective criteria would make Medicaid eligibility completely consistent - creating one fine-tuned piece of eligibility coding for all departments to use.
Mohammed Farooq, chief technology officer of the HHSC, arrived at the agency in 2004 from the private sector where he had already worked with variations of SOA.
Farooq set to work changing business requirements.
"With a $300 million investment, we created a service-oriented architecture as a paradigm and then transformed that application piece by piece. To consolidate our 800 applications, we had to have a common shared IT platform," Farooq said. "We invested heavily in creating a shared IT platform - not only from a software perspective, but a hardware perspective."
He said he couldn't find a vendor who produced the full SOA picture he wanted, so the team spent three years integrating work from both IBM and Oracle with open source software.
"We then created global information models and service models," Farooq said.
Gumbert said as his team began the migration from the old mainframe, they noticed numerous applications developed throughout the years that could have used the same coding for common functions and saved time and money. He said he knew a complete migration would be expensive, but it would eliminate future redundant programming.
"We had more than 69 major codes - system designators that we had to get off the mainframe - huge programs - been there for years - millions of lines of COBOL code," Gumbert said. "To migrate that off is extremely expensive, but by reusing the code over and over, now we're starting to see efficiencies."
A Changing World for Vendors
Gumbert said SOA eliminates a government's need to buy an expensive package of services from a major vendor whenever it wants to make IT changes.
"Health and Human Services pays a premium price when I hire my system integrators - the Deloittes and Accentures of the world," Gumbert said. "They come in with specific knowledge of our system, and by going to a service-oriented architecture, I don't have to pay premium pricing. I can actually hire folks to come in and deliver a specific piece of programming that I can hang on to and use multiple times."
Roughly six years ago, before sufficient SOA-supporting technology existed, altering a traditional application or system was expensive and time consuming, Farooq said.
In traditional IT infrastructures, embedded business rules and processes tie applications closely together. Everything is hard-coded with application programming language; changing the programming in one section means programmers must change all other sections so the system functions.
Using a vendor for simply one project under traditional IT practices requires paying the vendor for a package of corresponding services, like imaging solutions, Web-based services, call center solutions, peer solution maintenance and hardware management.
Due to the component format of SOA, a vendor can simply handle one of those pieces without disrupting the entire puzzle.
For example, Gumbert said if his agency opened a call center and hired a vendor to run it, he wouldn't need the vendor to also create software. "I'd already have that software. I don't have to pay a vendor to come in and provide that software because I will already have it paid."
Farooq said Texas' spot at the forefront of government SOA is now driving many vendors' marketing road maps - something he said states couldn't do in the past. SOA's natural consolidating effect drives state agencies to combine purchasing power by sharing sections of code, instead of buying separately, making them a leading force in the IT industry. Since SOA enables government to hire out narrow sections of IT work, opportunities are emerging for smaller providers to compete for government business, Gumbert said. Small businesses are pitching him solutions they say would streamline administrative work by letting Texas hospital personnel instantly access the HHSC's Medicaid eligibility database. The inexpensive adjustability of SOA is making that a possibility, Gumbert said. Dennis Harrison, software integration representative for IBM, said SOA also enables programmers to use inexpensive off-the-shelf applications instead of pricey customized software from integrators.
"The real keys to SOA are flexibility and the ability to control your own destiny versus relying on vendors or historical applications that define how you do your job," Harrison said. He said governments could overlay their specific business processes or government requirements on top of the noncustomized applications.
An SOA reduces the cost of making programming changes, Gumbert said. "We're building the system to drive down the cost of change. We receive multiple change requests every day. Those changes are very costly, depending upon how you design your system. It's the testing of the change that is so costly," he explained, adding that those costs mean once a government completes a traditional mainframe, it's stuck with it as is for a long time.
"With a mainframe, I'm locked into it. With SOA I can share it and open it up. If I need to hang something else on it, I can hang something else on it. I can put more memory on it. I can get all the benefits of going back to a consolidated model, but I'm still open, where I can grow individually. It's almost a federated model for hardware. It's going to prove very good for us as we move into the data center consolidation," Gumbert said.
Farooq said vendors thrive on the extra revenue from change requests. He said a few months ago, a vendor quoted him $13 million for a reporting services change request, but Gumbert's team will be able to use its new repository
of coding to complete the changes without the vendor's help.
"We will be able to crank that out in less than $1 million, internally and on our schedule," Farooq said.
Traditional IT materials from vendors are typically proprietary, adding further licensing costs.
"As I start doing this I'm also collecting the intellectual property," Gumbert said, adding that the HHSC could then offer the code for free to other Texas departments.
"If the Department of Transportation wants to open up a call center some day, " he said, "I can give them our code and they don't have to pay for it."
In the future, Gumbert said he wants to share code with state agencies all over the United States.
"We can give it to the feds or we can give it to other states," Farooq agreed. "The intellectual property is owned by Texas, which is a big business model change for the vendors,"
He said for 30 years, vendors typically created a system in one state and then built similar ones in other states.
"This is changing vendor relationships and business models. We are putting this in our RFP requirements in the technical and performance sections," Farooq said.
For example, the agency's recent SOA RFP, an $800 million project, surprised vendors when it announced the government would not spend an extra $250 million to rebuild the application. The RFP demanded they reuse existing application assets to complete the project in the new SOA framework - no re-creation.
"We were successful in negotiating that," Farooq said. "The vendor community was going crazy for years because it wasn't prepared for this whole business."
Next in the Hopper
The HHSC's latest project is a business and IT governance solution.
"We are putting together a data warehousing strategy, which combines with our management portal, basically bringing all the IT governance functions under one umbrella," Farooq said.
The solution, he added, will let the HHSC manage IT using one governance platform, including project portfolio management, project scoping, standards and performance monitoring.
The new solution will allow agency IT leaders to evaluate the performance, reusability and sharing occurring in projects statewide.
"You can measure how they are performing based on business metrics and business strategies," Farooq said.
Gumbert said the project is still in development and would probably take another year to fully implement.
Austin Energy went live last May with an SOA-generated desktop application for call center representatives, integrating the billing system with the outage management system.
By allowing a function to appear once but be usable for any application needing it, the SOA eliminated extra steps in call processing, said Andres Carvallo, CIO of Austin Energy.
"For example, checking a customer validation gets done within the outage management system. It gets done within the billing system. It gets done within the work management system. It gets done within the financial system," Carvallo said. "In the old days of architectures every application had to have all these services wrapped within the application. In a service-oriented world, you create one customer verification service, and that service is exposed or available to any application that needs the service."
Under the outage management system, a customer calls to report a power outage. The application verifies the customer's location, and extracts the customer's status from a database. As soon as the call center agent transfers the information to a work order, the information travels to the outage management system, which dispatches a service truck.
"All of that used to take about four and a half to five minutes. In the old days all those things were in multiple systems," Carvallo said. "The internal employee
needed to look up different things and check here and check there. Then eventually push the button to go to the next step. Now that phone call takes on average one and a half minutes."
Before SOA, the application could only handle 4,000 calls per hour before producing a long waiting list. Now it handles as many as 50,000 calls per hour, said Carvallo.
Traditional applications required programmers to separately install many of the same functions for each process in an application, but using an SOA shrinks the amount of code used, standardizing functionality and minimizing mistakes because all employees use the same data sets, Carvallo said.
Five major energy divisions make up Austin Energy: energy generation, transmission, distribution, wholesale and retail. The many common needs those divisions share mean technicians can write code once for those functions and make them available to any division.
IBM assisted Austin Energy's SOA transition with a combination of hardware, software and services, and according to IBM's Harrison, business processes are going to change drastically at the utility.
"Now they have the knowledge to change their infrastructure to support the business," he said. "They don't have to go and ask the vendor,