If necessity is the mother of invention, it's little wonder states are interested in IT consolidation. Pressure to rethink business practices has intensified in the last few years, and IT is just one of many government functions being scrutinized for a radical overhaul.

Acute state budget shortfalls coupled with an influx of hard-charging corporate executives into senior state government positions are igniting IT consolidation efforts. This convergence of factors is driving states to act quickly, creating the sudden emergence of political will to make consolidation -- once considered nearly untouchable -- a practical reality in state government.

Pressure Points

States may vary in their approaches to consolidation, but their motivations are largely similar, said Ken Mitchell, managing partner of Accenture Government's East client group. States across the nation are responding to cost and staffing pressures brought on by historic budget woes. Agencies, including IT departments, have reacted to shrinking budgets by viewing staff costs as the quickest place to pare spending.

Early retirement programs and outright job reductions have saved money, Mitchell said. But staff loss, coupled with changing skill requirements for e-government applications and other technology programs, have made IT consolidation attractive.

"You think of it first as a cost play, 'Our budget is being reduced, I've got to do something about it,'" he said. "When you start looking under the covers a little bit, you see these other factors coming in."

In the past, the executive branch and legislators avoided painful decisions that would alter their state's IT landscape. Nobody had to make those decisions because the money continued coming in. So it was business as usual for most jurisdictions, which often meant siloed systems, duplicative applications and fractured procurement methods.

The picture was much different in private industry.

"If you move your focus away from state government and look at private companies, most of the Fortune 100 companies have pursued IT consolidation over the last 10 years," said Robert Anderson, CIO of New Hampshire, where significant IT consolidation is under way.

They had to consolidate, he said, because they were held accountable by stockholders. They must be profitable quarter after quarter, year after year.

"As times got tough, [companies] looked within to optimize and tighten how they did what they did in the area of using and deploying technology," he said. "We've never had the same set of criteria in state and federal government -- where we were held accountable to some level of metrics. Now we are because the budget can't continue to grow. Taxes can't continue to go up."

Political Fortunes

Part of the new willingness to tackle consolidation stems from policy-makers realizing technology's importance to a state's progress -- especially if it dovetails with a particular agenda, Mitchell said.

"Senior government officials are becoming more technology savvy, and they see the impact IT can have in helping them achieve their goals, mission and vision for their administration," he said. "They're also looking at this as a way to get the resources deployed in the right areas that are in line with their mission and vision for their state. By centralizing, they have better control over where these resources are going, what's going to happen with those resources and how they deploy them."

It's not that governments haven't cut costs before -- they've used strategic outsourcing for that purpose for years -- but the drive to cut costs by consolidation resulted from the changing nature of those who hold senior positions, Mitchell said.

"You're seeing more private-sector folks coming into these positions -- governor, CIO, legislators and agency heads," he said. "I think you're going to start to see more acceptance of these concepts, whether it's consolidation or ultimately outsourcing."

Shane Peterson  |  Associate Editor