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The big reboot

Published (3/11/2011)
By Nick Busse
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The state has roughly 37,000 computers, 5,000 servers and 1,800 information technology workers. Rep. Keith Downey sponsors a bill to consolidate the state’s IT infrastructure under the Office of Enterprise Technology. (Photo by Tom Olmscheid)Anyone who has ever experienced a dropped cell phone call or had to restart a crashed computer knows that technology can be a double-edged sword: when it works, it’s indispensable; when it doesn’t, it’s a nightmare.

But if you think your laptop or smartphone can give you headaches, imagine trying to manage more than $361 million worth of complex information technology systems and staff that Minnesotans depend on for vital state services.

That challenge falls on the State of Minnesota every biennium. With roughly 37,000 computers, 5,000 servers and 1,800 IT workers, Minnesota’s IT infrastructure comprises a complicated web of programs and personnel spread out over dozens of agencies. With a $5 billion budget deficit looming, two lawmakers are betting they can build a better, cheaper system.

Rep. Keith Downey (R-Edina) and Rep. Phyllis Kahn (DFL-Mpls) have introduced a plan to consolidate all of the state’s IT systems under one agency: the Office of Enterprise Technology. Created in 2005, OET was designed expressly for this purpose — improving and centralizing IT.

But the process has been gradual. A study commissioned by the Legislature in 2009 found that fully consolidating IT functions could save taxpayers tens of millions of dollars annually, as well as improve the security and stability of the state’s systems. Downey and Kahn think it’s time for OET to move beyond its current approach and take on a broader, more aggressive mandate.

“Some of what we’re describing in this bill is already occurring on a smaller scale,” Downey said at a March 8 hearing. “These are not new skills, necessarily. It’s just an expansion of what they’re already doing.”

Sponsored by Downey, HF191 would give OET control of virtually all state IT procurement, management and operations. Back-office functions like maintaining servers, administering databases and providing technical support would move out of individual agencies and into one centralized office.

Kahn, who sponsors a similar bill, signed on as a co-sponsor to Downey’s version. She has spent several years pushing the issue, and believes the change is long overdue.

“Several states have done this — Michigan, California, Utah,” Kahn said. “It’s not only a good idea, but this is the right time to do it.”

Opportunities for efficiency

Centralizing the state’s IT infrastructure could save taxpayers anywhere from $25 million to $41 million each year, according to a study commissioned by OET.

Two years ago, at the direction of the Legislature, the state contracted with Excipio Consulting to find out whether the state could manage its IT better. According to Excipio Senior Partner Jeff Gilmer, the answer is unequivocally “yes.”

Gilmer said the state has about 5,000 more desktop computers than it needs, and about 45 percent more storage space. And that’s just the beginning.

By centralizing IT functions, the state could save money on procurement, maintenance and software licensing. The state’s 38-40 data centers could be consolidated to just two or three. IT help desks could be combined for cost savings and improved service. And the state’s 1,812 full-time equivalent IT staff could be whittled down to 1,586.

A study commissioned by the state found that Minnesota could save between $25 million and $41 million each year by consolidating its information technology infrastructure. (Photo by Tom Olmscheid) There is one catch, however: there won’t be any savings for the first few years, because centralizing all these functions will have an initial price tag of at least $65 million and potentially upwards of $175 million, depending on how it’s done.

“This is not a short-term strategy; this is a long-term strategy. A minimum commitment of seven years is what we recommend for this type of consolidation,” Gilmer said.

In addition to saving money through efficiency, putting all the state’s IT operations under one roof may help prevent expensive projects from spiraling out of control.

Supporters cite the Department of Human Services’ ill-fated HealthMatch system as an example of why OET needs more control. The department spent six years and more than

$30 million developing HealthMatch, a health care eligibility system, before scrapping it in 2008. Kahn said those kinds of cost overruns can occur when agencies whose primary expertise is not in IT are put in charge of major upgrades.

“Some of the disastrous failures that we’ve had … occurred because the people making the decisions weren’t the ones who understood information systems,” Kahn said.

Outsourcing concerns

Many DFLers oppose a provision, inserted by Downey as an amendment to the bill, which would allow OET to contract with private IT firms even when state employees are available to do the work. State procurement laws currently allow outsourcing only if no state employees can do the job and if certain other conditions are met.

Downey said outsourcing some IT functions to private companies could save the state money by putting costly and complicated functions in the hands of skilled, specialized firms. He originally planned to include even stronger language on outsourcing, but decided a more incremental approach might be better, at least initially.

“I want language in this bill that doesn’t lock us into keeping all of that in-house when it could very easily be done outside the complex of state government,” Downey said.

Not everyone is comfortable with the idea of outsourcing. Opponents argue it would put the state at the mercy of private vendors more concerned with profits than accountability. Rep. Ryan Winkler (DFL-Golden Valley) called Downey’s outsourcing language a “sleeping dog strategy” that looks benign, but will lead to outsourcing of critical functions in the future.

“I just think that your bill tries to do too much, and it’s too sweeping in its authority,” Winkler said.

Kahn said the language on outsourcing is “something we’re going to work further on.” She said the exemption from state procurement laws isn’t necessary, and cites as evidence the fact that the state recently used a private contractor to build its new e-mail system.

“The major things we want to accomplish in this bill is the reorganization and the alignment,” she said.

The House State Government Finance Committee laid the bill over for possible omnibus bill inclusion March 8. Sen. Mike Parry (R-Waseca) sponsors the companion, SF130, which awaits action by the Senate State Government Innovation and Veterans Committee.

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