IBM Wins Texas Data-Center Consolidation Contract

Yesterday -- in a conference call with Government Technology -- Texas CTO Larry Olson announced that an $863 million contract had been signed with IBM for statewide data center consolidation and services.

The consolidation plan was initiated in 2005 by the Legislature's passage of HB 1516, and further detailed in Texas Data Center Strategy: Status Report on Migration and Consolidation last summer.

Contract signing last week in Austin: (L to R) Renee Mauzy, DIR legal counsel; Larry A. Olson, Texas CTO; Robert Zapfel, general manager Americas, IBM Global Services.
Photo: Rob Aanstoos, DIR

The contract -- which runs for seven years with three one-year extensions -- will consolidate the state's 31 data centers into two. According to Olson, the consolidation made a lot of sense. "We had 31 independent data centers and the costs associated with the management of them, the continuing problem of finding capital to keep those improved, security concerns which we weren't able to keep up with; disaster recovery that we weren't consistent on. We needed to come up with a consistent way of doing that, and also consolidate those facilities.

"From the savings point of view," said Olson, "we are projecting within the seven-year term, $159 million in savings. In the next biennium ... we are projecting about $25 million in savings. We are projecting that in two to two-and-a-half years after the transformation is complete ... it will actually free up 210,000 square feet of current state office and data center space, that can be used by the state to reduce the amount of leased space we have in the Austin area."

In addition to savings, said Olson, "The state is getting enhanced security -- both cyber and on the facility side -- and enhanced disaster recovery across the board; predictable costs, based on a service basis rather than a bill-by-operate situation." Benefits also include "measured and continuously improving service levels as well as a standardized governance process."

On December 6, an estimated 340 affected state staff from 27 Texas state agencies will be offered employment with IBM, Unisys, Xerox or Pitney-Bowes. They will be offered a raise of at least five percent, and both salary and benefits were scrutinized as part of the evaluation criteria. Employees will not have to relocate, as the data center in San Angelo will be retained, and IBM and its partners will build a new data center in North Austin. "We have some people in the field, they will stay there," said Olson. "Huntsville -- where the Texas Criminal Justice Commission is -- they will stay there too."

On March 31, 2007, IBM will become responsible for data center operations and the service levels associated with them, said Olson. Employees transition then as well. The transformation from 31 data centers down to two is expected to take 24 months. There will be a transformation plan for each of the 27 agencies to sign off on.

Olson emphasized the scrutiny and care that went into the agreement and the hard work and commitment to the project from staff at all levels of government. He said the consolidation fits within the Texas governance model, and that agencies "should not [have to] worry about the utility infrastructure." Instead, they can concentrate on their core missions: "Servicing the citizens and businesses of Texas."
KW