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Michigan Shows Why CIOs Need a Friend in the Budget Office (Opinion)

In too many instances, they aren’t on the same page — or even speaking the same language.

In my home state of California, a proposal to consolidate the state’s technology department into a central administrative agency is raising eyebrows in the IT industry, which is worried that the move signals diminished attention on the strategic use of technology. Other recession-era moves around the country to reposition IT agencies within state budget offices have triggered similar alarms.

But Michigan is proving that agency consolidation — on its own — may not spell trouble for IT. A few years back, the state combined its technology office with its management and budget agency to create the Department of Technology, Management and Budget. Now Michigan is poised to approve an ongoing $50 million commitment to new technology. It’s also beefing up a program that offers seed money for innovative initiatives regarding shared services.

Without discounting too much the role that organizational structure plays in IT success, this clearly is an area where relationships matter. The secret, in Michigan’s case, is the bond between Budget Director John Nixon and state CIO David Behen. It also doesn’t hurt that Michigan Gov. Rick Snyder — former chairman of Gateway Inc. — gets it, which creates powerful momentum for updating state computer systems.

“I truly believe that to keep up with the increased demands on state government, you need to have a strong backbone in IT — and you have to understand that our governor is an IT geek,” says Nixon. “David has about as much support as you can ever get from a CIO perspective.”

The governor’s proposed 2013 spending plan builds $50 million for technology into the state’s base budget for the next five years. Those dollars aren’t attached to specific projects, says Nixon. Instead, the money should provide more stable funding for IT upgrades and modernization. “We tried to be creative and said that we wanted to start a few of these projects together and cash flow them over the next couple of years.”

In addition, the state will offer $25 million in grants to local governments for innovative shared-services partnerships. Funding for the program — launched in 2012 with $5 million — will grow dramatically in fiscal 2013. In its first year, state officials were swamped with applications. The initial round of grants already have helped launch 28 local initiatives, including multijurisdiction tax processing and emergency dispatch projects.

All of this couldn’t be hitting at a better time for Michigan, which finally seems to be recovering from one of the nation’s longest economic slumps and is now playing catch-up on deferred technology upgrades. “When the budget declines, infrastructure is the first thing to go — so you use Band-Aids and duct tape,” says Nixon. “That’s what happened here, and it’s happening in a lot of other states.”

He admits that the Michigan model may not be for everybody — most CIOs won’t have the luxury of working for a budget director who’s passionate about IT and a governor from the technology industry. Nixon is also careful to note that state CIO Behen remains a member of the governor’s cabinet even though Behen reports to the budget director. It’s important, says Nixon, for the CIO to participate in cabinet-level discussions with other agency directors.

But regardless of where IT sits on the state organizational chart, it’s crucial to build strong relationships between the budget director and the CIO. In too many instances, they aren’t on the same page — or even speaking the same language. Michigan offers an example of how to do it right.

“The IT world doesn’t do a really good job translating, and I’m not going to blame it all on IT because the finance people don’t do a good job either,” Nixon says. “There’s often a disconnect, and there needs to be a really strong link."

This column originally appeared in the June issue of GOVERNING magazine.