North Carolina Considering IT Outsourcing

North Carolina the newest state to explore IT outsourcing for technology services and management.

by / July 28, 2010

The difficulties in Texas and Virginia haven't discouraged all states from considering IT outsourcing. In fact, as IBM and Texas worked in July to salvage their partnership, North Carolina set in motion a statewide IT assessment that could ultimately result in the state partnering with one or more vendors.

In a memorandum sent to her executive branch leadership, Gov. Bev Perdue said the need to improve North Carolina's technology infrastructure was one reason for studying how the state delivers IT. Saving money is another motivator, as legislators are making hard choices to close a $3.2 billion budget deficit. North Carolina spends more than $1 billion on IT annually, according to Perdue's office, so cutting costs is a priority whether or not the state decides to bring in a private partner.

The assessment, to be done by a third-party firm, will take an "in-depth look at areas across all executive branch agencies where consolidation and utilization of private-sector IT services would bring more value to the citizens of North Carolina," Perdue said. State CIO Jerry Fralick said in a statement that "any effort to gain efficiencies and improvements in IT must be based on hard, objective data from a third party." The consultant will not be allowed to bid on or be affiliated with RFPs that result from the study.

If North Carolina privatizes some or all of its IT operations, the model wouldn't necessarily look like the agreements in Texas or Virginia, where a single vendor was picked to be the sole technology provider. Some governments have instead chosen to "multisource" their outsourcing contracts so that different vendors are picked for specific functions or services -- a piece-by-piece approach.

One piece is already under way in North Carolina. Perdue stated in her memo that within months the state will pick a vendor to build a new state portal, which she said would reduce operation and maintenance costs. If successful, that privatization could embolden the state to pursue a similar solution for other services like cyber-security and hardware management.

The IT assessment was expected to begin in September. Fralick will likely play a key role in the transformation. Perdue is backing a recommendation made by her Budget Reform and Accountability Commission to give the state CIO more authority. The assessment will include a recommended governance structure for North Carolina's transformed IT organization.

It remains to be seen if a partnering vendor will become the central piece of that new structure.

"The goal is to move aggressively toward an improved IT infrastructure that will lower costs, reduce complexity and redundancy, improve the utilization of resources and increase security," Perdue wrote.


Matt Williams Associate Editor
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