Ask CIO Aldona Valicenti why Kentucky is overhauling its approach to information technology, and her answer reflects broad experience as a private-sector IT executive: "States are going to be challenged very similarly to how companies have been challenged. I think were going to have to be a lot more savvy. Were going to have to figure out some of the same best practices that have occurred in industry throughout the years."
Like private industry, states must adapt to the fast-moving Internet economy or pay a steep price for lagging behind, said Valicenti, who spent 21 years with Amoco Chemical Co. before becoming Kentuckys first cabinet-level chief information officer in 1997.
"Were not going to go out of business, but there are only so many ways of generating revenue," she said. "Either you become a very attractive state to do business in or you raise taxes -- and you know thats not going to happen."
Therefore, Kentucky finds itself among a handful of southern states that are aggressively courting New Economy companies and investors through technology-oriented economic programs and broad initiatives to Web-enable state government services and transactions.
Valicenti spearheads a comprehensive effort to restructure the way Kentucky government uses and manages information technology. And the commonwealth also took the unusual step last year of creating a commissioner of the New Economy position. The post was filled in December by Gov. Paul Pattons appointment of William Brundage, who will direct initiatives to lure high-tech industry to the state.
Like the CIO, Brundage views advanced IT capabilities as key to Kentuckys future prosperity.
"I feel that any state or region that does not build the infrastructure for this information-based economy is not going to have much of an economy within 10 years," said Brundage, a veteran of economic development programs in Florida and Kansas.
Building a Foundation
Kentucky recently passed the halfway point in a massive IT transition effort intended to pull the operation of essential functions such as network services, Internet access, e-mail and desktop PC support under the umbrella of Valicentis organization, the Governors Office for Technology (GOT).
The transition officially began in 1998, but its seeds were planted several years earlier with the release of Pattons Empower Kentucky initiative, which proposed upgrading the technology used by state agencies and moving a range of services and information to the Internet. So far, the project has resulted in fairer tax collections; simplified permitting for Kentucky businesses; Internet connections in every public library; and online access to thousands of health, employment and assistance services, according to a progress report released last year. It has also triggered fundamental IT management changes that continue to ripple through the state.
"In order to support this redesigned state government, we needed to approach information technology in a different way," Valicenti said. "We are trying to take a look at how to do things on a statewide basis."
That approach manifests itself in a new breed of shared services hosted by GOT, including telecommunications, wide area network connectivity and e-mail. In all, the commonwealth has identified 15 IT functions -- including mainframe computing, desktop PC support and virtual private network services -- that benefit from central operation.
Much like an application service provider, the technology office runs the services and delivers them to agencies throughout the state. Those agencies pay a fee to GOT based on how much they use the applications.
Valicenti said the centralized approach yields savings through economies of scale and by eliminating duplicate IT systems operated by individual agencies. It also takes mundane IT support issues off the plates of agency managers.
"You cant really focus on higher-level issues of how IT can support the business [of your organization] if you dont get away from the traditional questions of, How do I support the hardware and the network? If you keep worrying about that, its going to bog you down," she said. "What were trying to figure out is how do we get some of those hardware/infrastructure issues resolved so that we can spend more time collectively thinking about the advantages from an application perspective."
However, GOT avoids centralizing IT applications simply for the sake of centralization. The office is carefully weighing which functions benefit from consolidation and which do not.
"We no longer look at just the organizational issue. Were looking at the model from an enterprise and financial position," Valicenti said. "Can we do something cheaper collectively? If we cant, well leave it alone. Or if there is a service that is specific to a cabinet agency, then that agency ought to do it."
Customer Is King
As GOT becomes Kentuckys key source for vital technology capabilities, the organization is learning to act much like a commercial service provider. For instance, the office is implementing service-level agreements for many of its offerings that guarantee overall system availability, response times for fixing problems and other performance aspects. Furthermore, GOT recently created a team of "relationship managers" charged with learning and responding to the technology needs of its state agency clients.
The office must hone its customer skills because it increasingly competes for business against private firms and agencies own internal IT staffs, said Doug Robinson, executive director of GOTs Office of Policy and Customer Relations.
"In many cases, [state agencies and other customers] do have other options," he said. "So its really a business decision, and its a question of trust and loyalty. If we dont garner customers trust through proactive activities, theyre not going to trust us to manage an application server that has to be up 24/7."
According to Robinson, GOTs relationship managers are similar to account representatives assigned to major clients by private-sector firms. Although they do not represent a particular product line, the relationship managers regularly meet with GOTs customers to understand their requirements, solve problems and generally ensure that clients are satisfied with services they buy from the agency.
"Our responsibility is to be an advocate for the customers. The key is how do we anticipate our customers needs and make sure that we are working with them," said Robinson. "For example, I have a person working with the justice cabinet. His role is to know not only the agencys information technology needs, but also the environment in which that agency operates."
Formal relationship managers are one aspect of a comprehensive effort to instill a customer-centric attitude throughout GOT. The office also conducts internal training sessions to improve how its employees deal with customers, and it has made customer-relationship skills a criteria for hiring and employee evaluation.
Whats more, GOT has purchased Web-based survey software to more accurately measure customer satisfaction, and it may be in the market for a customer relationship management (CRM) software suite in the future.
Clearly, customer satisfaction is a bottom-line issue for GOT, which is funded entirely by revenue it generates from selling services. Robinson said the emerging customer-centered approach not only wins new business, it also helps retain existing clients. "If were providing value-added services and [current customers] feel like we respect their wishes and trust us to do what is best for them, we believe they will be less sensitive to small price increases," he said.
Built for Speed
Desire to improve Kentucky governments use of technology has touched off other structural changes as well. For instance, the state created CIO positions in all of its cabinet agencies and enacted major reforms designed to speed the pace of technology purchases.
Agency-level CIOs, who report to both their agency director and Valicenti, act as a management liaison between individual agencies and GOT. Valicenti expects the arrangement to smooth major IT implementations such as Kentuckys eventual adoption of Microsofts Office 2000 as its standard desktop PC operating system.
"Moving to Office 2000 across almost 30,000 workstations is a multimillion-dollar investment. Whats happened [in the past] is these projects have been addressed from a technical level and not from a management level," Valicenti said. "This is an investment that we need to talk about as a management team: When will we do it? How will we phase it in? Will all of our applications work with it?"
At the same time, Kentucky revamped its procurement mechanisms to shave months from the process of acquiring major IT systems. The commonwealth formed strategic alliances with five full-service technology vendors and 10 other firms specializing in various IT niches. The arrangement allows agencies to avoid the cumbersome request for proposal (RFP) process.
Under the new method, known as the Strategic Alliance for Services (SAS), agencies issue 30- to 40-page business statements to suppliers instead of RFPs that can stretch for hundreds of pages for major projects, Valicenti said. "We have been doing this for about 18 months now, and we have issued about 18 SAS requests. We could never have done that many RFPs."
Examples of SAS projects include complex initiatives to build a data warehouse and master tax index within Kentuckys Revenue Cabinet. Valicenti views the streamlined process as vital to the states drive to implement current technology.
"You need to remember that information technology products and services turn over at the rate of between six to nine months. So if youre going to do a traditional RFP, youre no longer going to get the latest state of the art," she said. "In fact, its going to take nine months to a year to evaluate a very long RFP. By then, the technology has changed."
A Better Way
Keeping pace with technology is a theme that runs throughout Kentuckys broad IT transition initiative because the state literally cannot afford to fall behind, said Valicenti. She contends that governments traditional approach to IT systems -- building multiple, single-agency applications that often perform similar functions -- is too slow and too expensive to survive in an age dominated by the Internet.
"I dont think the Legislature is ever going to give us enough money to support that, which means [the technology] will either be supported badly or it will be abandoned. So there needs to be a different way," she said. "In other words, for us to truly support the business of the state, were going to have to move faster. And the only way to move faster is to be more efficient at what we do."
For more information, e-mail Aldona Valicenti.