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Modernizing State and Local Technology with the American Rescue Plan

Agency leaders aiming to update IT architectures may get a boost from new funding streams

Young Male Engineer Programs Drone while Holding Laptop in His Hands. He Works in a Bright Modern High-Tech Laboratory.
State and local government (SLG) technology leaders pivoted quickly during the COVID-19 pandemic. Now they are poised to apply their pandemic lessons to modernizing obsolete data centers, architectures, and other IT systems.

How can they modernize at speed with the burdens of technical debt and institutional inertia? One possible framework emerges from the American Rescue Plan (ARP), a federal program providing $350 billion in COVID-related aid to state, local, territorial, and tribal governments in the U.S. The program also includes $10 billion for capital projects, including technology upgrades.

ARP has specific limits on spending the money (see “3 crucial factors for agencies seeking ARP funding,” below). Projects must be completed quickly with available talent and a plan for long-term sustainability. These requirements provide a practical framework for agency IT leaders to start modernization efforts. This paper from the Center for Digital Government taps the experience of veteran government IT leaders for insights on modernization in the post-pandemic era. We explore opportunities, challenges, and tips for moving ahead with modernization while pursuing ARP funding.

What’s keeping you from planning and implementing ARP-funded tech projects? See what your peers are saying in this survey.

Part 1: Modernization opportunities
“CIOs have to be leaders of innovation,” says Teri Takai, vice president of the Center for Digital Government. “They have to be thinking about applying new technologies toward getting government services out there more quickly,” adds Takai, who spent decades in government technology leadership roles, including CIO posts in Michigan, California, and the U.S. Defense Department.

Federal funding can give agencies opportunities to innovate in ways that dovetail with ARP requirements. Where should agency CIOs start tapping this potential? Constituent services, workplace development, and technology operations hold intriguing possibilities.

Updating constituent services
A logical starting point is automating government services that people use every day. “There’s a clamor for next-generation constituent services,” says Craig Orgeron, executive government advisor with Amazon Web Services (AWS). Orgeron spent more than two decades in technology leadership roles in the state of Mississippi before moving to AWS in 2020. State and local governments are warming to the potential of artificial intelligence and machine learning (AI/ML), he says, especially tools like chatbots and virtual digital assistants.

Voice technologies that use natural language processing (NLP) also can help state and local governments connect to generations of people who are less comfortable with chatbots.

“I think voice is a way to actually re-enfranchise citizens who may have been sort of disconnected,” Orgeron says.

AI/ML technologies are rapidly maturing and getting much easier to use, Takai says. Automation helps agencies quickly and accurately answer the public’s basic questions, which gives staff more time to deal with complex inquiries that require specialized attention.

Developing the IT workforce
The changes rippling through the world of state and local government IT include transitioning to modernized system architectures that transcend traditional three-tier data centers. Cloud-native technologies like containers and microservices require sophisticated system architectures. IT staff in government agencies must master these new tools.

“Workforce development is one of the premier issues of the day,” Orgeron says. “You’ve got the classic silver tsunami issue in the public sector, plus the paradigm shift toward leveraging the public cloud for mission-critical services.”

Workforce development is more than training your people to deliver next-generation services. “It’s also about role-mapping,” Orgeron says. “People may go from a systems administrator or a systems analyst to a cloud architect.”

Technologies are changing so rapidly, Orgeron says, that state and local governments will have to seek out partners to help them modernize their IT operations. “Without partners, you’re going to fall behind pretty dramatically in terms of developing the workforce for next-generation services,” Orgeron advises.

Updating technology and operations
Upgrading IT workers’ skills is just the start when dealing with the shift to cloud. “There needs to be a comfort level operationally of acknowledging that this is a different compute model,” Orgeron says. “The value of delivering those compute services has moved.” Some technologies and even whole platforms will go away organically in the drive to modernize, he predicts. “You’re not going to have the technology sitting in a data center.”

Streamlining and automating the user experience on government websites and mobile apps will be essential. “You hear this phrase, ‘the Amazon experience.’ When I go to a government agency’s website, I want it to feel and be as smart as these other types of sites,” Orgeron says.

Takai suggests centering the citizen’s perspective. People who come out of the corrections system who need human services should not have to figure out where to get their services — apps and technology should guide them toward these services intuitively. Outdoor enthusiasts who need a new hunting license should get an automated reminder before their favorite game is in season.

“These approaches do not just mean adding innovative technologies,” Takai says. “It also means looking at how we deliver services and using technology to actually get those services to citizens in a different way.”

3 crucial factors for agencies seeking ARP funding
State and local governments hoping to secure ARP funding to pay for IT modernization must keep three points in mind:
  1. Competition will be fierce. Other agencies also want a slice of the money, so IT leaders must make a compelling modernization case that will truly benefit the public.
  2. Staffing issues must be resolved. Agencies will need enough people with the proper training to implement and manage the initiative successfully.
  3. Timing will limit options. Agency IT leaders that win funding must complete their IT modernization initiative within the timeframe of the ARP legislation. Agencies will also need the resources to maintain these initiatives after ARP funding expires.

Part 2: Core modernization challenges
Agencies thinking about modernizing their IT systems face three principal hurdles beyond the ARP considerations: confronting complexity, strengthening security, and managing change. That’s never easy, given the persistent realities of public agencies.

“Government is not built like a business where we’re all working toward a common goal,” says Brenda Decker, a CDG senior fellow. “Everyone has their specific mission, and they really concentrate on that,” adds Decker, who spent three decades as an IT leader for the state of Nebraska.

Changes in IT systems often have a domino effect. “I can add an application to help my food stamp people, but it may have drastic implications on workforce development payments for unemployed people,” Decker notes.

Confronting complexity
State and local government IT departments often endure a combination of technical debt and application sprawl built up over decades. Modernizing often yields a migration bubble — paying to maintain legacy technology while migrating workloads to the cloud.

“In the short term, you could actually increase sprawl and complexity because you’re pivoting to yet another environment,” Orgeron of AWS says.

Meanwhile, every agency tries to serve its specific needs without coordinating efforts across the government. “Pretty soon, you’ve got four or five systems trying to do something that we’d be able to do with one system if we had looked at it holistically,” Decker says. “And, therefore, we have systems that literally fail when we have things like the pandemic, because they’re so independently managed and procured.”

These issues underscore the appeal of modernizing with public cloud technologies: IT leaders can unify services across multiple agencies with a common architecture.

Strengthening security
Threats like ransomware, data breaches, and benefits fraud will remain a part of the government IT landscape for years to come. “The key question to peel back on is what’s more or less secure,” Orgeron says. “Which has better security, the public cloud or on-premises data centers?”

In the public cloud, Orgeron says, customers and cloud providers have a shared-security model where each party must do its part to bolster security and data integrity while discouraging fraud. “The key here is to have a partner that’s going to help you make the right security choices,” he says.

Decker advises against treating security like an add-on or an option. Indeed, agency IT leaders need to make security a top priority from the earliest stages of a modernization. “If you don’t start at the beginning, you’ll get so far behind the curve that you can never fix it at the end,” she cautions.

Managing change
In the rush to bring new, modern services to clients and the public, there’s a strong tendency to take shortcuts that may cause long-range problems.

But effective modernization happens in stages. State and local government IT leaders must make the right choices in each stage. “You cannot afford to skip any of the steps,” Decker says. “A change management system has to be enterprise-wide, not just specific to one agency. We have to be dealing with the holistic picture.”

The culture of an IT organization can play a major role in its ability to modernize effectively and overcome resistance to change. IT departments that used a capital expenditure model for decades will need a pay-as-you-go, operational expenses perspective in the cloud. Addressing culture can streamline the transition.

“That Peter Drucker quote, ‘Culture eats strategy for breakfast,’ is so very, very true,” Orgeron says. “If you go after some of the cultural pieces, the change pieces will fall into place more quickly.”

Who in your organization is at the table making decisions regarding ARP-funded technology projects? See what your peers are saying in this survey.

Part 3: Moving ahead on modernization
SLG IT leaders should not get bogged down in the technical details of modernization. “This is all about people, collaboration, and communication,” Decker says. “The technology will work itself out. Let’s worry about what we’re actually trying to accomplish.”

This is especially true when pursuing ARP funding. Agencies need innovative proposals that improve human outcomes within the context of federal requirements. To make that happen, leaders should work on crafting the right narrative, working together to compete successfully, and applying lessons learned during the COVID-19 pandemic.

Crafting a change narrative
“You need to be ready with your elevator pitch at all times,” Orgeron advises. “One of the key skills of public sector CIOs is being able to craft and deliver a compelling change narrative that captures the attention of elected officials and stakeholders.”

Leaders must be able to translate issues like transforming legacy charge-back models in the cloud era, he adds. In Mississippi, Orgeron and his colleagues formed a Cloud Council to craft a change narrative that appealed to leaders across the state government, including universities and community colleges. “That was a way to build awareness and to get people in the canoe rowing in the same direction,” he says.

Crafting an effective change narrative is easier said than done. IT leaders love to talk about tools to replace or upgrade, but that’s not a compelling storyline for agency leaders who have different priorities.

“It’s important for technology leaders to develop justifications based not only on what they know about the technology, but around citizen impact,” says Takai. This requires nurturing strong relationships with agency leaders, lawmakers, and other stakeholders aiming to improve citizen services.

Collaborating to win funding
Scoring ARP funds for IT modernization requires a competitive proposal. After all, agencies across the hall and across the country are vying for a finite pool of money. “CIOs have to build a good business case that demonstrates why the money should be spent on technology that supports the state and benefits its citizens,” Takai says.

Don’t go it alone, she advises: “It’s best to partner with the government agency you’re developing this project for.” Partnership means talking to agency leaders directly and figuring out the best way to spend the money together. “This is also essential to being able to actually deliver,” Takai adds.

Look for solutions that help the agency meet its priorities. Leaders and lawmakers interested in transportation, health and human services, and unemployment benefits all serve unique audiences. “As opposed to thinking about the technology, you have to start with what the agencies are trying to accomplish,” Takai advises.

Decker warns that past conflicts may haunt new initiatives. After the 9/11 terrorist attacks, for instance, IT leaders often struggled to make the case for technology to support homeland security initiatives. Data center upgrades didn’t seem to have boots-on-the-ground results. “We have to quit rehashing those battles,” she says.

Internalizing the lessons of COVID-19
In the first quarter of 2020, IT departments in every government agency found out they could move fast and accomplish ambitious technology goals in a fraction of the time required only a few months earlier.

Indeed, IT has moved to the front burner after decades of back-row status, thanks to the abundance of rapid turnarounds in response to COVID-19. State and local governments used cloud technologies like virtual desktop infrastructure to enable remote work. Other cloud tools streamlined rapid expansion of unemployment benefits.

For decades, IT departments didn’t seem to have the killer app that drives cultural change. “Now, remote work is the killer app across all sorts of sectors,” Orgeron says.

The result: “COVID put IT leaders in a different sort of driver’s seat,” Orgeron says. “It took a once-in-a-century pandemic to move that ball further.” While they should guard against complacency that might erode their progress, IT leaders also should reflect on everything they’ve gained since the virus pushed everybody into high gear.

State and local government IT leaders have earned the standing to drive modernization efforts that improve citizen outcomes. Moreover, they have the skills and the incentives to join forces with other government leaders to seek out ARP modernization funds.

To find out how state and local governments can use ARP funding to modernize contact centers and leverage analytics to meet new demands around constituent services, visit our ARP microsite and read this guide.