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Navigating the Road to Consolidation

The search for a more efficient IT structure may lead a government on one of several different paths.

Many state and local governments have a common goal these days — to gain efficiencies by consolidating IT operations. One thing they don’t all have in common is the strategy for reaching those goals: The paths they take may vary significantly. 

Some governments opt for complete centralization, replacing agency-level IT organizations and data centers with a single IT department, shared facilities and shared services, often in the cloud. Other governments take a federated approach, perhaps consolidating data centers and other infrastructure within a central IT organization, but also retaining technology staff and leadership in each agency or department. Still others create a model of their own to meet the government’s technology needs.

A look at IT consolidation in six state and local governments provides a sense of this varied terrain and the different tactics CIOs use to navigate it successfully.

The Centralizers

New York

New York state, for example, is heading toward complete centralization. Toward that end, it has moved approximately 50 departmental IT organizations — each with its own staff, budget and collection of data centers — into the central Office of Information Technology Services (ITS).


New York CIO Maggie Miller. Photo by Jane Shauck.

“We’ve consolidated all the contracts and budgets, and we are gradually consolidating everybody into one state-of-the-art data center,” said state CIO Maggie Miller. New York also is merging its technology infrastructure, like email and voice over IP systems.

The state now takes an enterprise approach to issues such as security, budget management and governance, Miller added. “And we’re looking at providing the best possible service to our citizens by consolidating applications.” The goal is to give the public a seamless, consistent experience as residents transact business with different state agencies.

While pulling strongly toward the center, New York provides for the needs of individual lines of business by locating some IT personnel on site with agencies and encouraging them to build close relationships. “Regardless of what it says on their pay slips or ID badges, they typically feel a very strong association to the mission of their agencies, as well as to ITS,” Miller said. 

While dedicating themselves to specific organizations, those ITS employees also can spot opportunities for agencies with similar needs to work together, said Miller. “Rather than build from scratch, we can make sure that investments in one part of the state are leveraged in another part of the state.”

The effort isn’t complete, but consolidation already has delivered significant savings in New York. For example, now that it has moved about half of its data centers into a new, central facility, the state is saving about $1 million a year on utility costs, Miller said.


Denver’s consolidation journey dates back to 2005, when an executive order created the Technology Services department, charged with providing IT and telecommunications services to the city and county of Denver. But when Frank Daidone became Denver’s CIO in 2013, that centralization effort was not complete.

“The first version of consolidation was a co-location of like-minded, like-skilled individuals,” Daidone said. Those employees were organized in “centers of excellence” to serve specific business functions within the government. “We had to break down those silos,” he said.

Since then, Technology Services has evolved into a true enterprise operation, financed through a single budget. It supports the organization’s IT needs through two primary data centers, with their servers 85 to 90 percent virtualized, Daidone said. Although some departments still employ staff to maintain specialized legacy applications, Technology Services manages most of the city’s IT infrastructure and applications.

Part of the focus now is on standardizing business applications and moving into the cloud. For example, different government departments used to run different versions of Microsoft Exchange. “Only within the last year did we finally consolidate that down to an Exchange 2010 environment, as we prepare to move into the cloud with Office 365,” said Daidone.

To make sure the central organization delivers what its customers need, Denver Technology Services created two cadres of business analysts. One group focuses on understanding individual business units and processes; the other concentrates on needs that cross the entire enterprise.

When Technology Services creates a new application for a business group, the analysts help ensure that everyone understands and agrees on the requirements. “Then we run an agile environment,” Daidone said. “We’ll take an iterative approach with our customers, sitting them down two weeks into the project and saying, ‘Is this what you’re talking about?’” If the answer is no, developers make adjustments.
“And we have stand-up meetings daily,” Daidone added. “We try to run this like a startup. That’s really helped.”

Marietta, Ga.

Consolidation is nothing new in Marietta. Even in 1999, when IT director Ronald Barrett took his first position with the city, a single organization supported technology throughout the enterprise.

In recent years, as more systems have come to rely on digital technology, the city has moved even more functions from departments — including city-owned Marietta Power and Water — into the IT organization.

“We pulled a position from the electrical department into IT last year because they jumped in with ‘Smart Grid,’ or distribution automation,” Barrett said. The person assigned to that function knew a lot about electrical operations but needed help from people who understand Internet protocol. “So the decision was made that that person would work for us.”

The IT Department now also supports the city’s radio systems, and in 2016 it will probably add a position to support the traffic signal network, Barrett said.

Departments generally choose their own business applications and decide when it’s time to upgrade that software. But the IT Department takes charge of software decisions with citywide ramifications, such as the need to replace Windows XP and Windows 2003 servers when Microsoft stopped supporting those operating systems.

One of the challenges the centralized model creates is that internal customers sometimes become overly dependent on the IT department, Barrett said. “In some departments or divisions, there is no real technology owner and they want you to fix all their problems.” But IT staff members don’t know all the ins and outs of software purchased for individual departments.

To address this, the IT Department is trying to get each internal customer to assign a primary stakeholder to each of its technology projects, Barrett said. “We’ll do the work. But they’ve got to run it and own it.”

Federated Model

Los Angeles County

Los Angeles County provides a strong example of the federated approach. Most of its 37 departments have their own IT organizations, each with a departmental CIO. There’s also a Chief Information Office, led by CIO Richard Sanchez, which focuses on enterprise projects such as coordinating the purchase of personal computers and video-conferencing equipment, and contracting for managed print services.
“We’re also involved in setting strategic direction — identifying products or services that we strongly encourage, if not require, departments to use,” Sanchez said.


Los Angeles County CIO Richard Sanchez. Photo by Jessica Mulholland.

In recent years, those strategic directives have involved a greater move toward the center. For example, departments have gradually migrated from their own email servers to a central infrastructure. Now they’re moving to the cloud as part of a countywide migration to Microsoft Office 365.

Virtualization also has spurred further consolidation. “We mandated that all county departments start doing server virtualization,” Sanchez said. “And we provided a central agency that could host their servers.” That effort eliminated about 6,000 servers and produced savings of about $21 million, he said.

Some larger departments virtualized within their own data centers. But many others moved into the central facility.

Now, Los Angeles County plans to consolidate even further. In fall 2014, the County Board of Supervisors voted to replace its aging central data center and move most of its 64 other data centers into the new facility. The county is developing a governance process, with departmental representation to ensure that the new data center meets its customers’ needs, Sanchez said.

Despite the data center consolidation, the county’s departmental IT organizations are not going away. As the CIO takes over more responsibility for enterprise operations and infrastructure, department staff will be able to focus on tasks such as application development and data analytics, said Sanchez. 


Ohio also has taken the federated path. Under an ongoing consolidation initiative, the Office of Information Technology (OIT) is gradually assuming responsibility for all of the state government’s IT infrastructure.

Ohio CIO Stu Davis

Ohio CIO Stu Davis. Photo by David Kidd.

“We’re taking all the infrastructure from the agencies so we can do a better job of managing security, best practices and procedures, and so we’re managing all the infrastructure in the same way,” said state CIO Stu Davis. That leaves IT organizations in the state’s 26 cabinet agencies — each with its own CIO — to concentrate on business-specific applications.

As part of the initiative, Ohio is moving the agencies’ servers into a single facility, the State of Ohio Computer Center (SOCC). OIT runs the SOCC in conjunction with IBM, under a co-management arrangement.

So far, OIT has moved nearly 5,000 agency servers, both physical and virtual, into the SOCC.

fficiencies gained through consolidation saved the state $53 million in fiscal 2014 and are expected to save another $75 million in fiscal 2015, Davis said. “We’re purchasing infrastructure to support servers, storage, the network — to support the enterprise — rather than each individual agency buying its own servers and putting them into their own data centers.”

To make sure OIT responds to agency needs, and to gain further economies of scale, Ohio organized the 26 cabinet agencies into five lines of business. One CIO from each group acts as line of business lead, and those five leads serve on a technology board.

The board meets weekly to discuss upcoming enterprise initiatives, such as the current Microsoft Office 365 deployment. Line of business leads also report on IT infrastructure concerns within the agencies.

This arrangement offers opportunities for collaboration. For example, one agency in a line of business might lend another an IT staff member for a special project. In addition, agencies use the forum to share ideas on software tools that might benefit all agencies. “It’s been extremely beneficial for us to get everybody to realize the importance of that enterprise perspective and of spending the taxpayers’ dollars once, not 26 different times,” Davis said. 

Mixing It Up

Riverside County, Calif.

Riverside County has been working for several years on a consolidation plan that, among other things, called for moving IT operations from most departments into a central organization and merging many data centers into one facility.

Los Angeles Chief Information Officer Steve Reneker

Riverside County, Calif., CIO Steve Reneker. Photo by Jessica Mulholland.

But ultimately the county might take a hybrid approach, said CIO Steve Reneker. Departments led by elected officials — the assessor/county clerk/recorder, auditor/controller, sheriff and treasurer/tax collector — are not obliged to move their IT operations into Riverside County IT (RCIT). And each county department should probably retain staff in-house to manage specialized applications — for hospital management or child welfare, for example, Reneker said. “You need experts for those.”

Launched in 2012 under then-CIO Kevin Crawford, Riverside County’s consolidation initiative has taken longer than originally planned. Crawford left an excellent portfolio of projects, now 70 percent complete, said Reneker, who became CIO in May 2015. But consolidation hit some snags when the allocated funding didn’t match the ambitious scope of the vision, he said.

Reneker headed Riverside County’s IT organization from 1997 to 2003 and later served as CIO of the city of Riverside and Los Angeles. Back in Riverside County, he is leading the work to finish what Crawford began.

That effort will turn RCIT into a fully integrated organization. Today, individuals within RCIT still serve specific county departments. “We’ll be moving to a shared services model, pooling all our PC techs, pooling our help desk staff, pooling systems administrators,” Reneker said.

RCIT is renegotiating contracts with hardware and software vendors and replacing department-specific deals with master agreements. It’s also completing the move to the centralized data center.

One special strategy Reneker brings to the initiative from previous jobs is the use of a project portfolio system. That tool will help Riverside County identify its IT priorities and then focus all its resources on the top 25.

“We come up with realistic time frames for those projects,” Reneker said. “If there is inadequate funding, we don’t put them in the top 25. We wait until we can afford to do it before we start those efforts.” This incremental approach, he said, should help build stakeholders’ trust in the consolidation effort.
Whichever path they choose, the movement toward consolidation is helping many state and local governments tighten their IT operations and achieve significant savings.