State Government

Reboot
The state's IT systems are so old and outmoded
it needs a new culture as well as new computers

By Lawrence Bivins

During the 1990s most corporations made the Information Technology leap from lumbering mainframes to decentralized networks of desktop PCs. It wasn’t easy or cheap but the astounding gains in productivity helped ignite the economic boom of the last decade. Now it’s government’s turn.

Three separate agencies soon will tell the General Assembly that state government badly needs to improve the way it spends nearly $1 billion a year on IT expenses. The reports from the State Controller’s Office, State Information Office and State Budget Office will detail their assessments of the state’s inventory of computer systems, and all indications are the reports will not paint a pretty picture. There are security gaps, out-moded systems, excess costs, underperforming systems, minimal operator training and horribly fragmented management controls.

State government has tried to drag itself into the Information Age, but its attempts so far have been notable mainly for shedding light on the depth of the state’s technology management problems. NC WISE, a $50 million effort begun five years ago to link computers at public school systems statewide, may ultimately cost taxpayers more than $150 million. A project aimed at moving state government’s labyrinthine procurement system online has met with similar disappointment. Recently, several state PCs were sold as surplus with sensitive information still stored on their hard drives.

While buying new software and hardware certainly will be part of the solution, the needed improvements are as much a challenge of state government culture and organizational behavior as of servers and laptops.

“Everything we’re trying to improve on relies on culture,” says George Bakolia, North Carolina’s chief information officer. His organization, known as the Office of Information Technology Services (OITS), is involved in several initiatives aimed at getting the state’s massive IT program under control. State government centralized its computing two decades ago, Bakolia explains, by consolidating its mainframes under a single authority. But the environment changed rapidly during the 1990s as “distributed” computing — PCs for everyone and software applications tailored for every purpose — led individual agencies to develop more or less freestanding technology operations. “At that point, we began creating silos,” Bakolia says.

Last year, the General Assembly asked OITS to launch an assessment of the state’s IT assets, some of which are alarmingly old, and compile recommendations and cost estimates on modernizing those systems in the worst shape. The existence of these “legacy” systems are the most urgent challenge to administering crucial government service in a secure, reliable and cost-effective manner.

So disorganized are the state’s technology resources that it had no mechanism for inventorying all its assets, says Bakolia, who has been CIO since May 2002. That alone made it impossible for OITS to ensure network security, a basic responsibility of the organization. “In order to guarantee security, I have to know what we have,” Bakolia says.

The recently completed first phase of Bakolia’s assessment, which covers all state operations except universities and the Administrative Offices of the Courts, points out the magnitude of the state’s decaying technology infrastructure. Nearly half its 52,315 computers, for example, are no longer supported by their manufacturer due to their age. Another 25 percent have only limited vendor support. Users of antiquated hardware must often pay extra to obtain help when problems occur, or muddle through them on their own. Aging systems are also more vulnerable to virus attacks and other breaches because security patches are not readily available.

State government offices use more than 2,400 applications, the study found, ranging from web portals to programs that process retiree pension payments. About a third of those were deemed by OITS as “mission critical,” meaning their failure would significantly impair an agency’s ability to deliver key services. Among the state’s 824 mission critical applications, the assessment uncovered 99 that were more than 10 years old and based on obsolete technologies. State systems are also ripe for consolidation: there are, for example, some 40 different applications in use for tracking employee time and leave, the study found.

“Every agency senses that they have unique requirements, and they likely do,” says Bakolia. “But from an efficiency perspective, we’ve got a lot of duplication.” The incompatibility across diverse systems often means data must be re-entered manually in some instances. And by purchasing such a patchwork of hardware and software, the state fails to maximize its huge purchasing power.

It also never reaches a critical mass of skills necessary to operating many of these systems. Making matters worse, many agencies facing budget cuts in recent years chose to reduce IT training, Bakolia says. That’s false economy, he adds: “They wind up having to hire outside contractors when they find they can’t run their systems, and that turns out to be more expensive.” Indeed, the OITS survey found vendor personnel operated 25 percent of all state government applications.

Manpower skills are among the most troubling aspect of the state’s reliance on legacy systems. Older applications are likely to be run by employees nearing retirement. More recent hires are sure to be trained on the latest programs. In many cases, it is impossible to find training on antiquated applications. “My concern is that we’ll soon be left holding the bag unable to use these systems,” says State Controller Robert Powell, the government’s fiscal chief and a member of the Information Resources Management Commission (IRMC). IRMC, created in 1992, is a 23-member panel of top state officials that sets and oversees technology policy.

The Controller’s office is responsible for the business functions of state government, including its sizable accounting system. Thus, technology management is something more than a passing interest for Powell. In January, his office completed a two-part comprehensive review of state government’s business systems infrastructure, working with Bakolia, State Budget Officer David McCoy, Personnel Director Thom Wright and technologists from Deloitte Consulting.

The study, also conducted at the behest of the General Assembly, found dated and duplicative technology in wide use across government. It was emphatic in its assessment that the state is missing out on opportunities to improve efficiency and customer service due to the lack of strategic technology planning and management. The absence of strong “core systems” led most agencies to implement their own solutions, leading to the Tower of Babel-like assemblage of uncommunicative applications. “Unless the state steps forward and addresses the need for a new enterprise business solution from a statewide perspective,” the report says, “the efficiencies and costs savings that can be realized from a system enterprise approach will never be realized.”

The Deloitte study offered the state three options: The first, and least dramatic, calls for enhancing the capacity and reliability of existing systems, starting with the areas of highest risk. It would create an enterprise “data warehouse” to ease the gradual replacement of legacy systems and begin the process of designing a long-term strategy for introducing new financial, budgeting, and tax and revenue systems. The overall approach would require the least up-front investment, the report says. While addressing near-term risks of catastrophic failure, the option does little to ensure against system problems recurring in the future.

The second option phases in new “best of breed” solutions over a five-year period. Such an approach calls for a somewhat larger, though still manageable, initial investment. It would require the state to maintain several technical platforms, boosting the risk of communication breakdowns between new and legacy systems. The option is the “best compromise of business and technical approach,” the report suggests, “however, (it) may be too aggressive for the current political and economic environment.”

A third option calls for the aggressive implementation of a fully integrated solution for handling core business functions. Going that route would provide the greatest technical and business benefits, according to the report. The major drawback: its high initial cost. The option also would amount to a “major change management challenge.” The strategy also likely means the state would rely on a single vendor, elevating the stakes higher still.


Getting a Handle on Projects

For any option to succeed, the state would need to organize its project management resources wisely, establishing a governance structure charged with minimizing disruption and ensuring North Carolina gets the most out of its investment. “We need to put more emphasis on project management,” according to Powell. The state’s lack of strong in-house project management skills has been the source of some of the past disappointments, he says, although with every project important lessons are learned. The very nature of technology projects requires leaders to accept a new array of expectations about costs, timetables and objectives. “If you’re constructing a building, you can go to the site daily and see the progress occurring,” explains Powell. “But with an IT project you really don’t know what you’ve got until you test it.”

Yet a third General Assembly-authorized study of the problem is under way at the State Budget Office. Set for release in April, it will offer insight into how technology operations are financed and budgeted by the state. “It’s clear that everything we do with IT relates to the way we do budgeting for IT,” according to Bakolia. His organization, for example, offers services and support to state and local government agencies on a fee-for-service basis, relying on no recurring General Assembly appropriation. That means the more cash-strapped agencies might be unable to access the technology resources they need. On the other hand, better funded government operations are free to adopt whatever systems they desire, bypassing OITS and operating with little concern for what other agencies might be doing.

“It’s very disturbing to me that this is so fragmented,” says Sen. Linda Garrou (D-Forsyth), an Appropriations Committee co-chair. “We’re putting a huge amount of money in these programs and people are right to ask, are we getting our money’s worth?” She would like to boost the authority and capacity of the OITS, an entity that has, in various incarnations, drifted from department to department and now rests under the Office of the Governor. Garrou says it’s vital that the state utilize technology to improve service delivery. Some states, for example, offer driver’s license renewals over the Internet, while North Carolina motorists still wait in long lines at DMV offices.

“This reminds me very much of the kind of problems companies had to tackle about 20 years ago,” says Bill Coley, the retired Duke Power president now serving on the N.C. Business Council for Fiscal Reform. The council, working in conjunction with NCCBI, is examining ideas for achieving greater efficiencies in government operations. “ I think the State of North Carolina should attempt to benchmark itself against the private sector,” Coley says. Along with Duke Power, for which he led comparable technology management reorganizations, Bank of America and Wachovia Bank offer ideal examples of how sound technology planning and management strategies can enhance competitiveness, he says. “I know that government operates differently than the private sector, but we need to move closer to those models.”

While the state spends close to $1 billion on its various technologies, the issue has to do with more than money, Coley says. “Just investing in technology alone won’t get you there unless you also change the way you’re doing things.” How North Carolina delivers services to citizens and companies is a clear reflection of its attractiveness as a place to live, work and do business. “We want to be a destination for new jobs and investment by high-technology companies,” Coley explains. “The best way to achieve that is for our government to be seen as a model.”

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