When then Georgia governor Sonny Perdue ordered in 2007 that the state's central IT organization turn to the private sector to transform its aging IT infrastructure, it was one of a handful of large public sector outsourcing efforts attempted.
Virginia, Texas, the city of Minneapolis and the county of San Diego had inked high-profile IT services deals, with mixed results. In 2008, the Georgia Technology Authority (GTA) awarded the IT infrastructure business, worth $1.2 billion over eight years, to IBM Global Services and AT&T, with the promise of bringing the state into the 21st century and thus, cutting costs, reducing operational risk, and improving data security.
But, as late as 2011, the outsourcing plan was failing to deliver.
When new governor Nathan Deal took office and appointed Calvin Rhodes as CIO, the overhaul was just 10 percent complete. Georgia was running up against some of the same issues experienced in other public sector outsourcing deals: unrealistic expectations, nonexistent documentation, and complex infrastructure.
But rather than rail against the service providers or reverse course on the private sector deal, Rhodes and his IT leaders chose to take a year off to work with the vendors and get the relationship back on track.
"My marching orders were to come in and focus on this transformation and finish that work," says Rhodes. "In a very political environment like this, it's important not to change things every six months because someone new has decided there's a better way to do things."
IT Calls an Outsourcing Timeout
GTA and its providers had made its planned infrastructure changes to just three out of the state's 14 agencies, but "it had been a heavy lift just to get through those three," recalls Steve Nichols, CTO of Georgia. "We called a temporary halt to the work, and said there has to be a better way."
A major problem was the scale and diversity of the existing IT environment. In 2010 alone, Georgia spent $1.2 billion on IT. With a 2014 budget of $19.9 billion, the state would easily rank as a Fortune 500 company. But it acted more like a holding company with each agency running its own business. They "had firewalled themselves off," says GTA COO Dean Johnson. "It's a very complex infrastructure, and IBM and AT&T had both underestimated the size of the effort. We had to go back to the drawing board."
That IBM had run into trouble with some of its other public sector customers -- sparring in court with Indiana over a $1.6 billion contract and ceding its troubled Texas deal to Capgemini and Xerox -- was actually beneficial for GTA. "Timing was on our side," says Rhodes. "That gave our service provider the desire to try to work through the issues here."
Senior leadership from GTA, IBM, and AT&T all sat down together to discuss what was wasn't working and then spent the bulk of 2011 putting together a new plan to fix it.
The major issues weren't a result of "trips and falls," says Johnson, "so much as unknowns," namely systems and subsystems with no documentation or only one person in the organization who knew how they worked. To move the project forward, the team adopted an end- to-end transformation plan that accounted for those issues -- with 55,000 separate tasks. "We now have a comprehensive, fully developed plan that encompasses IBM and AT&T and all of their subcontractors," says Johnson. "It pulls together all the moving parts. It's not perfect by any stretch, but it works better than the previous approach."
"Prior to outsourcing, we had 20 or 30 years of history in IT, and we had to figure out how we had created those problems that we were trying to solve," says Rhodes. "It forced us to mature from the standpoint that we're going to over-engineer on the front end so we can make very informed decisions about pushing it across the enterprise." That approach takes longer, admits Rhodes. But he says, it helps to ensure "we're not just going to create more problems and go through three or four more CIOs who think they have a better way to do it."
To its credit, GTA had invested in its internal sourcing governance group--which now numbers about 65 including business management, customer relationship, and technology services--from the outset.
"One caution we got from the consultants was not to skimp [on that]," says Nichols. "They pointed to other public sector outsourcing deals not going well and noted that they had all understaffed their service management organizations." Instead, GTA modeled its governance group on those in private industry, "which was about 10 to 20 years down the maturity road than us," says Nichols.
Georgia Back on the Right Tech Track
GTA is on track to achieve the $181 million savings predicted over the life of the contracts, says Rhodes. It's taken longer than expected and longer than Rhodes, who spent 27 years at Fulton Paper Company, is accustomed to. "[In the private sector], decisions can be made much more quickly, and everyone goes along to support it whether or not its in their best interest personally," he says. "In state government, the org chart is much more spread out. You have to spend a lot of time selling and re-selling the agencies on the benefits."
But, looking at what's been delivered so far--improved business continuity and disaster recovery, server consolidation, the ability to mitigate or quickly respond to network attacks, state to respond to attacks in hours, 36-month laptop refreshes, replacing 21 help desks with one-- Rhodes says "we're accomplishing things here a few other states have accomplished."
But the work continues. Today, the initial transformation goals are about 70 percent complete, says Rhodes, and should be finished by September 2014.
Calvin Rhodes will be speaking at the upcoming Momentum 2013 conference on domestic sourcing.
Read more about outsourcing in CIO's Outsourcing Drilldown.
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