IT Spending Keeps Flowing Through Consolidation, Big State CIOs Say

"We've made far more progress than we thought we would” in consolidating 100 IT agency groups and budgets into eight “secretariats” and all infrastructure into one organization, said Anne Margulies, Massachusetts’ CIO. She credited the recession for spurring the state, which spends $500 million a year on IT, to consolidate. Officials will break ground next month on a data center in western Massachusetts that’s scheduled to go online in January 2012 and will be 70 percent more efficient than a data center near Boston, she said. The two centers will handle what had previously been done by 183. The state is working on a shared high-speed backbone to support state business, public safety organizations and economic development work, Margulies said. Its IT capital plan calls for $450 million to be spent on system modernization.

Health IT “is where the big money is going to be” for vendors in Massachusetts, Margulies said. Nearly 98 percent of residents have health insurance due to its mandatory-coverage law. Formerly in charge of the pioneering open-courseware project at MIT, Margulies said the state is taking “baby steps” toward making its wealth of data available to the public online. Officials held a developers competition to make uses of transportation and construction data and “dozens” of applications were designed, mostly for the iPhone, she said. “We haven’t really figured out exactly how to” use all the data but others may have ideas. The state is having more difficulty increasing civic involvement through social media, Margulies said.

Texas is trying to keep “riding a horse at full speed” in its IT budget, said Karen Robinson, the state’s interim chief technology officer. It has 750 purchasing contracts and 2,800 customers in government. About a quarter are in state agencies, required by law to purchase through her department, and the rest are local governments and universities that do so voluntarily. Through collective purchasing the state saved $1.3 billion last year, Robinson said. It’s releasing requests for offers in the fall to upgrade the state’s communications and data network, TEX-AN, the largest in the country, and to build a new security operations center.

California is spending $4.5 billion to $4.7 billion on IT, said CIO Teri Takai, who also spoke at the conference last year (WID March 10/09 p1). With 130 departmental CIOs, 10,000 IT staff, 9,500 servers and 180,000 e-mail accounts, the state needed another layer of oversight, she said. So Takai’s office has 14 Cabinet-level CIOs to oversee departments, and all IT employees must report to their CIO, a “revolutionary” change, she said. “That does impact who you market to, who you sell to,” Takai told vendors. Once considered “watchdogs” over CIOs, agencies’ information security officers now report to them as the state integrates security more closely with infrastructure and products, Takai said. All projects must be reported to the governor’s office or officials’ spending authority will be yanked, “the next best thing to being able to fire them,” she joked.

The state’s consolidation doesn’t mean every department will standardize on the same products, but “I don’t want to do things 130 different ways,” Takai said. Seven consolidation teams are working on a transition plan for the next administration, since Republican Gov. Arnold Schwarzenegger is up against a term limit. Under an executive order, the state is reducing data-center space to encourage virtualization and save money and energy use, and it’s moving all crucial activities and those involving the public to what’s known as tier 3 data centers, the second-most resilient form, Takai said. It will start switching agencies’ network services to the California Government Network by July, and they will share an e-mail security and encryption platform. Improved Web 2.0 efforts are in the works, including enterprise-wide websites such as “school finders” and Recovery.ca.gov, which tracks stimulus spending in the state, she said.

Cities and Towns: Fend for Yourselves

The recession has officials on alert but not panicky. Margulies said Massachusetts received $32 million in federal recovery funding for IT and has submitted an application for a second round grant. A 30 percent budget cut was partly offset by savings from consolidation, she said. Texas’ Robinson said departments are expected to cut 5 percent of spending, but she’s arguing that consolidation activities will be hurt if IT staff is let go. California’s top 25 projects total more than $6 billion, so vendors shouldn’t worry about opportunities having dried up, Takai said. Consolidation is projected to save $1.5 billion over five years while improving security, energy efficiency and reliability, which perks up ears in the governor’s office, she said. It’s especially important to upgrade systems so they have “vibrant front ends” -- slick Web interfaces -- because higher officials often judge IT efforts by how the public sees them, Takai said.

Asked whether local governments would be part of state efforts, officials demurred. Her office is trying to help Massachusetts municipalities “regionalize” and form consortiums to improve their purchasing power and reduce costs, Margulies said. Local communities can join in the state’s Web portal, soon to be renamed Texas.gov, Robinson said. Takai flatly said her California peers were out of luck. “Some of our counties are as big as states, and it can really be a diversion” from getting state-level officials on board.