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Dire States

Dire States

State budgets in the US are being hit harder than ever before, and state CIOs are having to slash and burn while maintaining high service levels. How do they do it?

When the private sector's engines of growth began to sputter in 2000, and the traders, speculators, investors and entrepreneurs began downshifting their spending, the public sector never skipped a beat. States, which cycle behind the private sector when it comes to sensing economic changes, continued to shovel tax revenue into their coffers and reap the benefits of the boom years for a good year and a half after the markets tanked.

But all that has changed. In the US, states are now doing the same budget cuts, hiring freezes and lay-offs that the private sector initiated nearly three years ago. In the aftermath of September 11, in the wake of war with Iraq, and with the prospect of the Bush administration’s tax proposals producing a $US1.8 trillion federal deficit during the next five years (according to the Congressional Budget Office), states are confronting their worst fiscal crisis in half a century. Indeed, the National Conference of State Legislatures reports that states are facing at a minimum a $US68.5 billion budget shortfall for FY04.

James Kane, president and CEO of Federal Sources, a public-sector IT market research company in the US, tracks the impact of these shortfalls on IT. When his company researched 42 state budgets last year, only six showed a deficit greater than 10 per cent. This year, of the 37 state budgets his company analysed, nearly half (18) showed deficits greater than 10 per cent. Of the 520 state technology projects that Federal Sources is tracking, two-thirds are now on hold awaiting funding. If the cash doesn’t come through, they could be cancelled, says Kane.

“In an economic downturn, the demand for state services actually goes up,” says Kentucky CIO Aldona Valicenti, identifying a troubling paradox. “More people file for unemployment. More people file for benefits, which means that our systems experience growth. Keeping the infrastructure running becomes critical.” But a lack of funding for maintaining basic IT infrastructure or for scaling systems to meet demand could lead to lower service levels for citizens and agencies. Valicenti’s IT budget is taking a 2.6 per cent hit this year.

“We’re starting to realise more and more how dependent governmental operations have become on information technology,” says Gerry Wethington, Missouri’s CIO and president of the National Association of State CIOs. “Now you have to begin to really rationalise: What’s this particular cut or cost-containment measure going to mean to my infrastructure, and more importantly, to my ability to deliver services to citizens?” For example, he says, if budget cuts result in a CIO having to scale back data centre operations from 24x7 to business hours, that means citizens can’t access services at their convenience. Wethington adds it could also put their personal safety in jeopardy if a law enforcement officer can’t process an inquiry for a wanted person in a timely manner.

Given those cold calculations, prioritising IT initiatives has become a critical exercise. State CIOs are under great duress to identify places to cut without sacrificing services to citizens, while ensuring their states have a solid IT foundation to support economic stimulus plans and future growth. Most state CIOs have processes for navigating through these difficult decisions about which IT projects and services should be cut and which should receive funding. They’re finding ways to separate the luxuries from the necessities, using interagency advisory councils to help identify the most important projects, and they’re milking their vendors for better deals. These methodologies help state CIOs pinpoint the critical issues (security and disaster recovery, consolidation and e-government) and thus help prevent the deterioration of critical services on which citizens depend. (To see Iowa’s model program for evaluating IT investments, see “ROIowa”, page 61.)

In this story, the CIOs of Texas, Florida, California, Michigan, Kentucky, New York and Iowa offer a candid look at their strategic decision-making processes during these difficult times. They share their best practices for making tough budgetary choices, for getting the most out of their vendors, and for bringing together disparate and often competing units of their government organisations.

Texas

  • CIO: Carolyn Purcell (8 years on the job)
  • Budget Deficit: $US9.9 billion shortfall.
  • What That Means for IT Budget: 7 per cent cut for 2003; projected 12.5 per cent cut for 2004. The state spends $US2 billion total on IT. The Department of Information Resources has an $US80 million budget.
  • Priorities: Texas Online portal (www.texasonline.com), cooperative contracts program, project management office, security, architecture and telecommunications.
  • Cuts: Administrative expenses such as travel and vacant positions.
  • Methodology: Managing her project portfolio according to the value each project provides to the state.
  • The Problem: In his state of the state address last January, Texas Governor Rick Perry unveiled a spending plan that starts at zero dollars for every agency. “In tough budgetary times, every dollar spent by government must be scrutinised to determine whether it justifies consideration as a priority. We must reject the notion that government must continue to do things just because that’s the way we have always done it,” Perry said.
  • The Process: Even though her budget did not go to zero, Purcell, executive director of Texas’s Department of Information Resources, still faces substantial reductions. She says deciding what to cut is a matter of zeroing in on the services that her department provides that make “the biggest contribution to the efficiency and effectiveness of state government”. Key to her department’s mission: providing the state’s telecom infrastructure; running the state portal, Texas Online; setting IT standards; and negotiating contracts with vendors.

Improving contract administration is one of Purcell’s top priorities. Her department is also concentrating on negotiating contracts to reduce IT costs, and Purcell says: “Sometimes, we just don’t do a good job of writing and administering contracts.” Likewise, her project management office will continue to receive support because its function is to ensure that projects are completed on time and on budget.

While she doesn’t expect the state to make any new investments in IT, initiatives that offer an immediate payback or that can be done at no cost to the budget may move forward. Texas Online is one such example; it pays for itself through the revenue from convenience fees charged to citizens who use it to renew their car registrations or hunting and fishing licences.

Once Purcell has identified the initiatives that offer the state the most value, she then cuts items and projects that don’t contribute as much. For instance, she’s cut travel because there just isn’t money in the budget for conferences, training sessions or meetings with vendors. In addition, she has cut vacant positions and is considering lay-offs.

She is also working with vendors that are willing to assume the risk she takes when she invests in a new product. She doesn’t pay the vendor until the hardware or software shows a payback. When it does, she pays the vendor out of her savings. For example, in the development of Texas Online, BearingPoint assumed the portal’s up-front capital investment. When the state began generating revenue from convenience fees, Purcell paid BearingPoint for its services with that revenue. She says the comptroller’s office partnered with a company that provides software to detect Medicaid fraud a few years ago and later paid the provider out of money the state collected on fraud cases the software discovered.

Purcell says this model of vendor partnerships could work in the private sector. “The private sector is even better at partnering than we are,” she says. She believes this model is valuable not just because it saves the seller from taking on risk during difficult economic times but also because it focuses the buyer and the vendor on the same goals, which helps make projects run more successfully.

As challenging as these times are, Purcell believes the steps she’s taking to make state IT operations work more efficiently will better position them for the future. “It’s an opportunity for us to say: ‘It’s time to consolidate. Let’s make investments and get stronger.’ After we recover some, and if we play our cards right and do our jobs right now, we’ll have a more entrenched position at the executive table,” she says.

An Expert’s View: Improving contract management for IT projects is a key area for attention in Texas, says Sherri Greenberg. Greenberg is a former lawmaker who served on the Texas House Appropriations Committee and studied information systems issues and now lectures at the University of Texas’s Lyndon B. Johnson School of Public Affairs. She says poorly managed contracts can cause state agencies to “haemorrhage money”, especially when contracts for new information systems fail to include the cost of staff training. The agency ends up either paying extra to the contract vendor for training services or hires another company to provide the training. “When I was on the Appropriations Committee in the Texas legislature, I personally saw where the failure to write and administer contracts well has cost the state and state agencies a lot of unnecessary money,” she says.

Florida

  • CIO: Kimberly Bahrami (2 years on the job)
  • Budget Deficit: No deficit this year.
  • What That Means for IT Budget: $US1.2 billion for IT spending.
  • Priorities: “Keeping the lights on,” consolidation, security, state portal (www.myflorida.com), enterprise technology services desk portal.
  • Cuts: Case management system; document management system; voice and data infrastructure enhancements and replacements, including new PCs, networks, servers.
  • Methodology: Technology Advisory Team.
  • The Problem: With critical tourism revenue in decline, Bahrami is working with Governor Jeb Bush, agency heads and 38 agency CIOs to cut each agency’s spending by 10 per cent without impairing its operations. Bahrami says her goal is to free up as many IT dollars as possible for critical services, such as domestic security, child welfare, family safety and education. If she can do that without “disrupting any state agency operations”, she will count the process a success.
  • The Process: Agencies submit their requests for IT projects; last northern autumn, 267 such requests were submitted for 2003-2004. The agency CIOs meet, and during the course of one week, review their budget requests and group them into one of three different categories: projects that keep systems humming (highest priority), projects that contribute to enterprise integration, and “luxuries” or enhancements. The CIOs then present their groupings to Bahrami and members of her IT staff.

Bahrami and the agency CIOs know they have to focus on category-one issues. Within that category, they put a higher emphasis on projects that affect multiple agencies, align with state policy goals (such as improving student achievement, reducing violent crime and shrinking the government’s size), and have previously received funding (such as Myflorida.com, the information security office and the enterprise technology services desk portal). Last year, they pared the 267 requests down to 38.

Agency CIOs whose budget requests survive that initial review then make their case in a public hearing in front of Bahrami’s Technology Advisory Team (which includes Bahrami, the governor’s top budget official and chief of staff, and the heads of state revenue, health-care administration, the lottery and law enforcement). The committee then votes on which issues should head to the governor. (Of 38 requests, 26 made it into Bush’s budget for 2003-2004.)

Using this process, Bahrami was able to avoid $US76 million in costs in 2002. If the budget recommendations win approval this year, it will trim more than $US100 million off the budget for 2003-2004. Bahrami says this process allows the state to cut costs without seriously affecting its ability to deliver services.

An Expert’s View: Jane Fountain, director of the National Centre for Digital Government at Harvard’s Kennedy School of Government, says Bahrami’s approach, though sound, “represents a continuation of a traditional strategy that fails to take advantage of significant savings that might come about through the use of IT-enabled process redesign across programs, agencies and departments”.

The typical budget review process, in which each agency justifies its budget before a board, Fountain adds, “simply reinforces an agency-by-agency approach to using IT in government. Single-agency approaches to technologies whose power lies largely in integration cannot achieve powerful results. The major efficiency gains from IT for government lie in the potential to integrate operations and data across agencies, not simply within them.”

California

  • CIO: J Clark Kelso (1 year on the job)
  • Budget Deficit: $US34.6 billion shortfall (January 2003 through June 2004).
  • What That Means for IT Budget: California has no IT budget that’s set aside from other state spending after the state dissolved its IT department when a no-bid contract scandal led to former CIO Elias Cortez’s ouster in 2002. The state CIO serves as special adviser on IT to Governor Gray Davis and focuses exclusively on large, statewide IT issues, such as IT security, data centres and the state’s online portal. Each state agency procures IT on its own, but no budget line items are specifically devoted to IT costs.
  • Priorities: Projects that save money, data centre consolidation, e-government via state portal, collaboration of IT efforts with other state agencies.
  • Cuts: Consultants working on the state’s portal (www.ca.gov).
  • Methodology: Top-to-bottom review.
  • The Problem: Kelso, who also serves as California’s interim director of General Services, is in the unenviable position of having to justify IT spending at a time when the state is facing its most dramatic loss of tax revenue since World War II. Kelso’s assuming the job after a scandal only made things worse.

One of Kelso’s first orders of business upon taking over the CIO post in June 2002 was to decide, in light of funding problems and intense public scrutiny, whether to replace the state’s award-winning portal with a more static Web site or to keep the portal alive until legislators could vote on what they wanted to do with it. Legislators had begun to question whether the state portal was truly beneficial to citizens and state civil servants, and whether it was worth the more than $US25 million it was purportedly going to cost to develop and maintain. (Kelso says procurements for the portal done under the previous CIO were so poorly recorded that the state doesn’t have a single budget number for the project.)

Kelso decided the controversial project required a complete review — a thoroughness of approach he’s applied to IT governance and the project management frameworks he’s established for the state as well as the procurement reforms he initiated.

The Process: Instead of pulling the plug on the baggage-laden portal, Kelso initiated a top-to-bottom review of the project in six weeks. When he looked at the portal, he saw a system with a variety of functions that appealed to a wide swath of constituents. The Department of Motor Vehicles system was on the portal. The state bar of California had its licensing system on the portal. Citizens could apply for hunting and fishing licences, real estate licences, and state park campsite reservations, among other things.

Studying the portal’s technical components, he saw that many of its pieces, such as its content management and e-mail alert systems, were readily scalable to allow more agencies to add services. Finally, Kelso looked into the portal’s spiralling cost. For this task, he sought perspectives from the departments of Finance and General Services as well as the Business, Transportation and Housing Agency.

When he found a way to substantially reduce ongoing maintenance and operational costs by 40 per cent by renegotiating contracts and by setting a path to bring the portal’s operations in-house, he became convinced that sustaining the portal — at least until legislators could vote on it — was the right thing to do.

For several months, Kelso discussed scaling back the portal’s features with the Davis administration and state IT officials. They found that the portal’s design made it difficult to remove some features without disrupting the whole system. Kelso says of the portal: “It represents in the long term a very good investment opportunity for the state, and it would be a shame to lose what I think is in everybody’s agreement a very robust, scalable technology that we know has provided benefits to tens of millions of Californians.”

An Expert’s View: “Kelso’s comments that the procurements [for the portal] were poorly done points to one of the endemic problems with contracting and contract inventory [in state government],” says Carol Kelly, a government strategies analyst for Meta Group. “The public sector has to do a much better job of understanding its true costs, be it the cost of a systems integrator, a contractor or the staff involved from the state CIO’s office. Frequently those aren’t established up front, or when they are, the process [of doing so] becomes so onerous that everybody will avoid it.”

Michigan

  • CIO: Teri Takai (4 months on the job)
  • Budget Deficit: $US1.7 billion for 2004.
  • What That Means for IT Budget: $US10 million reduction in 2003; $US25 million cut in 2004. IT budget for 2003 is $US424 million.
  • Priorities: Consolidation, e-government.
  • Cuts:The state avoided eliminating critical IT projects by consolidating systems and requiring contractors to reduce their compensation rates.
  • Methodology: High touch — Takai works one-on-one with agency heads to identify where reductions can be made.
  • The Problem: In 2002, Michigan began centralising IT services to get an enterprisewide view of technology initiatives throughout the state and to save money by coordinating IT efforts across agencies. To facilitate this centralisation, then-Governor John Engler created a department of information technology whose mission was to provide the executive office agencies with all their IT needs including hardware, software, telecommunications, application development, maintenance and support. (Up until that point, each agency had its own IT group and picked which IT projects to fund.) So in addition to dealing with the budget crunch, Michigan’s newly appointed CIO also has to overcome agencies’ anxiety about losing control of IT purchasing power.
  • The Process: Because many agency employees remain resistant to the idea of centralised IT operations, Takai sits down with either the deputy director, chief of staff or COO of each agency. Together, they prioritise IT projects by first evaluating the agency’s different sources of funding. For example, if the Michigan Transportation Department was requesting money for a project from the state’s general fund (revenue from sales and income taxes), examining funding sources could unveil that the agency was due to receive federal money for the project, freeing up state funds for other uses.

After reviewing funding, Takai and the agency deputy director allocate money for maintenance costs. They also look at the projects the agency already has in its pipeline with the view to finishing those projects that have already been started — but only if it makes economic sense. For example, a project spiralling out of control would be shuttered.

With the remaining funds, they look at the agencies’ wish lists and prioritise projects based on their ROI and their alignment with Governor Jennifer Granholm’s policy goals.

Takai says the process of figuring out which projects to fund and which to leave on the table “was pretty traumatic” this year because it was a new process and because she still had to confront push-back from agencies that didn’t like the idea of IT controlling the purse strings. The process is made more difficult by virtue of the fact that Takai has to work backward when establishing her budget. She gets an idea of how much money she has to cut, then she has to estimate the costs of various projects and prioritise from there.

“It’s not a smooth process by any stretch,” says Takai. “It’s a lot of to-ing and fro-ing. Obviously, when you’re trying to do it in a short time frame, that makes it even tougher.”

An Expert’s View: Stuart Bretschneider, professor of public administration and director of the Centre for Technology and Information Policy at Syracuse University, says new state CIOs such as Takai should recognise that with greater centralisation comes the chance for greater efficiency. Michigan officials “have opportunities to think about coordination and standard setting that can also result in cost savings and efficiency gains”, Bretschneider says. “I don’t necessarily mean technical standard setting, though that can be a part of it, but what is the appropriate role of private-sector contractors in providing service so that individual agencies aren’t making contravening decisions?”

Another mechanism for program coordination and cost savings is to create an advisory board chaired by a CIO that pulls representatives from various agencies to help in that coordination and cost sharing, he adds.

Kentucky

  • CIO: Aldona Valicenti
  • Budget Deficit: $US500 million deficit on $US14.2 billion budget
  • What That Means for IT: 2.6 per cent cut for fiscal 2004, which comes on top of 5 per cent cut on fiscal year 2002. The 2003 IT budget is $US91 million.
  • Priorities: Maintaining the state’s IT infrastructure; a new HR system; microwave towers for public safety radio systems; security.
  • Cuts: A server upgrade, an enterprise time reporting system, a new HR system, a disaster recovery plan, infrastructure security.
  • Methodology: Keeping the must-fund list short by staying attuned to political winds.
  • The Problem: By last December, Kentucky’s fiscal crisis had grown so dire that Governor Paul Patton authorised the release of criminals from prisons before their sentences were complete. The reason? The state couldn’t afford to house them. As if that wasn’t bad enough, last January the head of Kentucky’s Public Advocacy department told the Courier Journal of Louisville that if his office’s budget is cut again, he’s going to have to tell his lawyers to refuse poor people’s cases — never mind the fact that Kentucky is required by its own Constitution to provide criminal defence attorneys to all suspects who can’t afford them. Against this dire backdrop, state CIO Aldona Valicenti struggles to obtain funding for her most urgent initiatives.
  • The Process: Valicenti possesses an unblemished picture of what her priorities are: maintaining the state’s IT infrastructure, public safety and information security. Notably, the soft-spoken past president of NASCIO says that the anaemic economic climate and the war in Iraq elucidates her IT priorities. “With the actuality of war and the economic threat, prioritisation becomes easier. You’ve got less money and you know the one or two places where you have to spend it,” says Valicenti.

      What becomes difficult is when her priorities compete for funding, and they often do in a budget situation as desperate as Kentucky’s. The inevitable result of that competition is that many of Valicenti’s priorities will be postponed until the economy rebounds.

      That’s been the case for the past two years with the state’s decrepit HR system. Valicenti says Kentucky has “very urgently” needed a new HR system for several years. She says the existing system has been “patched and repatched”, and only two programmers know how to run it. She’s put this project before the legislature in previous years and now she has to present it again this year. And while the new HR system is a key infrastructure project, Valicenti believes that given the state’s deep financial woes, she won’t win funding for it from the governor and legislature this year, either. She has, however, been able to get funding for another one of her public safety priorities — making sure the state’s microwave towers, which provide the communications infrastructure for firefighters and other public safety personnel, are operational.

      In times like this, all Valicenti can do is make a compelling case for her recommendations and requests for funding. Then it’s up to the governor and legislature to decide where the money will go. To keep her priorities clear, Valicenti depends on public sentiment and the governor’s policy goals to guide her decision-making. “What affects the health, welfare and safety of our citizens are the things I’m looking to invest in first,” she says.

      New York

      Coming Up Short

      New York State sees e-government as a means to do more with less.

      When a very prominent product of the public education system decides as state governor to cut funding for schools, you know your local economy is in dire straits. That’s the case in New York, where Governor George E Pataki has made the highly unpopular decision to cut funding to the state’s public education system in an effort to balance an $US11.5 billion dollar shortfall over two years on its $US93 billion budget.

      Every agency head in New York state government, including James Dillon, the state CIO and head of its Office for Technology, is stretching department funding as thin as a piece of Silly Putty. For his part, Dillon has to figure out how he’s going to allocate what little money he has for the state’s e-government initiative. The state has no choice but to move from mainframe-based legacy systems to Web-based systems, says Dillon, because vendors are discontinuing their support of legacy systems and because the vast majority of the state’s 6000 IT workers who know how to support those legacy systems are closing in on retirement. (Many of Dillon’s middle-aged and older workers have already taken early retirement packages in lieu of a lay-off.) “You combine the move toward e-government with the lack of support from vendors, the loss of institutional knowledge through retirement and the budget crisis, and you’ve got a difficult formula to deal with,” says Dillon.

      Because he knows that he has to move the state off of its legacy systems, Dillon has made e-government one of his top priorities. “We have to look at which legacy systems are in the most dire need of an upgrade, and where there is the biggest potential for growth in terms of revenue generation,” he says. “You can provide any services you want through e-government, but it’s a matter of prioritising them during a difficult budget time to ensure that you’re maximising the bang for the buck.”

      That bang, says Dillon, will likely come from such applications as the state’s online driver’s licence and car registration renewal system, and an online service for filing taxes, especially when you can couple online automated tax filing with tax amnesty.

      Prioritising the state’s myriad IT projects helps him determine where and how he’s going to allocate the Office for Technology’s $US300 million budget. (The state’s total IT spending, which is decentralised and controlled by the agencies, is estimated to be more than $US1 billion per year.) To identify which projects should get funding and which can be tabled, Dillon considers several criteria, including demographic realities like the fact that many of his legacy programmers are ready to retire, guidelines established by the Governor (for example, the “Government Without Walls” e-government program he instituted in 1998), and a project’s ROI. Projects that have a fast ROI are more likely to be bumped up on the list of things to do. These days, says Dillon, for a project to get a green light it often has to show an ROI that will recoup the up-front cost within the current budget year. And all potential IT projects must adhere to strict architectural guidelines before Dillon will even consider them as part of his investment portfolio.

      Another project that touches on some of Dillon’s criteria is the upgrade of the state’s radio communications infrastructure. The state is currently accepting RFPs from vendors for a wireless communications network for police and public safety personnel, even though the infrastructure alone for this new network will cost half a billion dollars. “The statewide wireless network is a security priority,” says Dillon. “It’s a criminal justice priority. It goes not only to law enforcement agencies but to [all] first responders. Given the age of the existing systems and the needs of the law enforcement agencies and the first responders, that [investment] was an easy call.”

      Dillon is also focusing on standardising the state’s desktop suites, email and operating systems to reduce costs. The state has already been through a huge data centre consolidation before Dillon was appointed CIO in January 2002. Up until 1999, every agency had its own data centre, and a total of 630 state employees were working in them. Now there’s just one data centre with 320 people handling the load from 550 servers. “The costs have gone down every year since the data centres have been centralised and we have not seen a loss of service,” says Dillon. “The old adage of doing more with less — we’re getting very good at it. We’re getting better all the time.”

      Iowa

      Bitter Harvest

      In Iowa, budget cuts wiped out nearly half the state IT budget, then they wiped out the CIO

      Few public sector CIOs have had it worse during this economic downturn than Richard Varn has. The hard times cost Varn his job as CIO for the state of Iowa.

      In 1998, Governor-elect Tom Vilsack offered Varn, then a technology administrator and professor at the University of Northern Iowa, a position in his administration as the director of data processing. The two men had become acquainted while serving as state senators.

      “You don’t need a director of data processing,” Varn recalls telling Vilsack. “You need a CIO.” Varn told Vilsack that he would consider serving as CIO if Vilsack gave him the authority and the resources that he needed to be successful. The deal was sealed, and on April 1 1999, Varn moved into his new office.

      Varn made progress in his role as CIO while the economy was still churning and while Governor Vilsack made IT one of his priorities. He and his staff created a pool to fund technology projects requested by various agencies, and they developed a methodology for prioritising projects. (For more on this methodology, read “ROIowa” on page 61.)

      Then the economy began to sour. The state was blindsided by a precipitous drop in revenue from corporate and capital gains taxes. “The only revenue that came in was from borrowing from one-time funds, tobacco settlements, health-care funds, rainy day and economic emergency funds,” says Varn, whose IT budget was cut by 45 per cent.

      To deal with the cut, Varn offered members of his department early retirement. But that wasn’t enough. Eventually, he had to lay off staff.

      “Our shop went from 220 people to 140 people,” he says. “We lost 80 bodies in about three months.” But cutting 36 per cent of his IT workers was only the beginning. “We terminated contracts,” recalls Varn. “We renegotiated contracts on software and hardware licences, changed maintenance packages, dropped little-used or not-used software, dropped software we couldn’t afford, became a shared services shop and consolidated servers and e-mail systems and Web hosting and storage and data warehousing.”

      Varn says every one of his efforts to consolidate systems and services was met with ire. “I had to have huge arguments over the cost-effectiveness of moving to a shared services model for which I got no support from the administration,” he says. “Any CIO manager in state government would claim that they could run IT more efficiently on their own. They wanted to do things on their own. They kept saying they wanted their own servers. Gartner, Meta . . . they’ve proved a shared service model is cheaper over and over again.”

      Varn says Vilsack never did fight for IT. He also blames the legislature for putting the squeeze on IT and for mishandling the difficult economic times facing the state. “There are different ways to deal with a budget crisis,” says Varn. “One way is to make what we do more efficient, more cost-effective.” Instead, he says, technology was cut so there was no funding to crack down on inefficiencies. “They just didn’t care [about IT],” he adds of the legislature. “They just wanted to cut government. They wanted tax cuts.”

      Last November, after the layoffs and the cuts to his IT budget, Varn was hit with the coup de grâce. Vilsack, who had just been re-elected and was facing a $US400 million budget shortfall, took Varn aside and, as Varn remembers, told him that he wouldn’t be able to keep the promises he’d made to fund his IT organisation for the next four years. Vilsack then fired Varn and five other agency heads.

      Varn says he misses life in the public sector, even with its battles. These days, he’s keeping connected to local government by consulting for the state’s small business administration. He’s helping the agency with an e-government project, and he is a senior fellow with the Centre for Digital Government, a research institute based in Folsom, California.

      5 Tips for Tough Times

      The state CIOs interviewed for this story use the following methods to evaluate whether an IT initiative should receive funding. Some of them are tried-and-true, others are more novel. You too can add these criteria to your decision-making toolkit for when it comes time to make the tough call.

      1 Establish a cross-functional team of representatives from different departments, business units or agencies in your organisation to help you prioritise.

      2 Evaluate and consider the value of the project to end users or customers.

      3 Determine whether you can leverage your investment in a technology that you’re deliberating funding by scaling it to a larger group of users.

      4 Figure out if there are ways you can further reduce the maintenance and support costs for a technology that might otherwise get the axe.

      5 Identify which of your most important IT projects and initiatives align or diverge with your CEO’s strategic plans or governor’s policy goals. Keep the ones that are in alignment. Sideline the ones that aren’t.

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