Who's Who in State and Local Systems Integrators

By William WelshElectronic Data Systems Corp. is a force to be reckoned with when it comes to providing health-care systems. Coming off big awards for health-care systems in Colorado and Oklahoma last year, the company also is pushing a Web-based unemployment compensation program that it installed earlier in Pennsylvania."In recent years we've done well in family services and also unemployment compensation," said Albert Edmonds, president of EDS' Government Global Industry Group, who added that the company's successful track record with health-care systems has enhanced its credibility in the state and local market.With the federal government expected to push more of these social services programs out to the states, EDS of Plano, Texas, will be ready. "This is where the bigger programs are going to be," said Edmonds.Edmonds said that many state and local governments are using these large social services contracts to help them upgrade their infrastructures. This provides contractors with additional opportunities."If you provide good service, then you have a chance to add on to an existing contract," he said.EDS is one of the top two systems integrators in the state and local government market, pulling down about $1 billion a year. The company expects to grow this business 10 percent to 15 percent in the next year, said Edmonds.Last year, EDS had several more wins for Medicaid management information systems, and the company now provides Medicaid support services in 18 states. In Oklahoma, the company won a seven-year, $102 million MMIS contract; in Colorado, it won an eight-year, $92 million MMIS contract; and in Delaware, it won a six-year, $79 million MMIS contract.These programs are almost entirely dependent on federal funds. In Delaware, for example, the federal government will pay 90 percent of the development costs and 75 percent of the operational costs, according to EDS officials.EDS also won an 11-year, $321 million contract to provide an array of social services to a consortium of 18 California counties.Whether the projects are large or small, EDS wants to grow its business around federally mandated programs that the states are required to implement.Several years ago, EDS installed for $1 million an automated statewide system for the Pennsylvania Department of Labor that helps state employees determine who is eligible for unemployment compensation."We are showing this program to other states and are trying to get the U.S. Department of Labor to sponsor it," Edmonds said.More recently, EDS won a contract to assist with the delivery of employment services to job seekers and employers in Hennepin County, Minn.Although Medicaid and social services contracts form most of EDS' state and local business, the company also has contracts in other areas, such as law enforcement and transportation, said Edmonds.Edmonds said local governments are as interested as states in upgrading infrastructure and outsourcing technology services."The cities and counties are realizing that they have to have these programs, too," he said. "This shows where the industry is headed in the next two or three years."Edmonds said that dot-coms have misled state and local governments into thinking they are going to get free information technology services. "[These governments] may get free access, but they [won't] get free infrastructure upgrades," he said.Edmonds said the market is in turmoil because of this false promise, and will need to settle down before any of the players involved can make sense of it.EDS is considering several scenarios, ranging from purchase of dot-coms to strengthening existing alliances with dot-coms, such as EzGov Inc. of Atlanta and GovConnect Inc. of Cincinnati, he said.EDS also is looking into electronic government or electronic procurement opportunities in states such as Michigan, Minnesota and Mississippi, Edmonds said.XXXSPLITXXX-By William WelshIf the state and local government market was a law firm, IBM Corp. of Armonk, N.Y., would be a senior partner in the practice."State and local has been part of the fabric of IBM for a long time," said Marianne Cooper, vice president of sales for state and local government. Having had ample experience helping private-sector companies with e-business, IBM has taken that expertise and transferred it to e-government. IBM officials have noticed an increase in e-government activity among state and local governments during the past 12 to 18 months, Cooper said.In response to this growth, IBM offers e-government consulting services to help its clients decide where they want to go and how to get there. Once that's decided, government customers are ready for applications.IBM and its partners offer a full range of applications for sectors such as public safety, revenue and fiscal services and social services, Cooper said."Governments are trying to get their arms around tax and social services and transform those processes across agencies," said Cooper. "We are helping them focus on one or more of those areas."IBM is one of the top two systems integrators in the state and local market with annual revenue exceeding $1 billion, according to Federal Sources Inc. of McLean, Va. The company has government contracts in all 50 states, Cooper said.Cooper declined to provide an estimate of the company's growth target, but said the company is "very bullish" on the state and local market and believes there is ample opportunity for growth. IBM is trying to strengthen its grip on the e-government portion of the state and local market through partnerships with small companies that have a strong portfolio of government applications.The first four companies to join IBM's e-government program in July 2000 were EzGov Inc. of Atlanta; H.T.E. Inc. of Lake Mary, Fla., ESRI Inc. of Redlands, Calif.; and JPH International of Waterloo, Ontario.To participate, a company's applications must comply with IBM's portal architecture and framework for e-business. Cooper said IBM wants to add more partners to the program.Cooper said that a number of dot-coms won e-government contracts last year by offering services that required no initial investment from the client. The model proved hard to sustain, and many dot-coms had to change their business model, she said."I believe the reality has set in that if governments really want to play in this space, they have to put some real skin in the game, or else success won't be achieved," she said. "We chose not to play in that particular model."That didn't stop IBM from picking up a number of big wins that extend its portfolio and strengthen its reputation in the state and local market. In February 2000, IBM was selected from among a dozen companies to provide the state of California with an online system for renewing vehicle registration and license plates. IBM completed the system within 90 days of the award, Cooper said.Also in California, IBM received an extension to an existing social services contract that is valued upward of $100 million, she said.Cooper said IBM is continuing a project that it began last year to provide Maryland with an electronic business licensing system that enables about 200,000 professionals to renew their licenses online.Similarly, IBM provided Chicago with an online parking ticket payment system that went live last summer. The project earned IBM more than $50 million, Cooper said.Other projects awarded last year include an e-mall project for Louisiana and a Web portal project for Miami and Dade County, Fla.; enterprise resource planning contracts for Baltimore and Pennsylvania; and revenue and fiscal services contracts in Illinois, New York and Ohio, she said.XXXSPLITXXX-By Patience WaitA new name casts a new light on a familiar player in the state and local IT market. On Jan. 1, Andersen Consulting changed its name to Accenture and, as its current ad campaign claims, "Now it gets interesting."Accenture sees electronic government as a major growth area, with a booming 130 percent growth rate for its global e-government business in 2000, well above the market average. The firm brought in about $746 million in all government revenue in 1999, a 35 percent increase over 1998 revenue, with global government programs representing about 8 percent of the company's 1999 business, according to Steve Rohleder, the managing partner for Accenture's USA Government group.Much of Accenture's efforts in state and local markets are aimed at applying Internet-based technologies to traditional government functions. Rohleder said states and localities continue to seek enterprise resource planning solutions integrated with the Internet, along with greater interest in e-government.Last summer Accenture commissioned a study by Wirthlin Worldwide, an opinion research company, which found that over 80 percent of U.S. citizens surveyed thought that e-government creation should be a priority for governments, Rohleder said.Another part of the e-government transformation is translating the concept of customer relationship management into citizen relationship management."The private sector has embraced the need to connect their businesses more directly to their customers. Governments need to consider the same approach," Rohleder said. "Many states are focused on delivering citizen services online, yet some are still in the publish stage, where they push information out but have [only] limited interaction capabilities. Once you tap into the benefits that true CRM can bring, governments will be better positioned to incorporate CRM strategies into their e-government programs."Rohleder pointed to several projects that reflect the company's approach, citing its portal for the state of North Carolina, NC@Your Service, chosen for top honors among almost 200 entries in the annual Best of the Web competition sponsored by the Center for Digital Government and Government Technology magazine. That success led to opportunities for portal work in Delaware, Wyoming, Massachusetts and New York City, to name a few.Another example illustrates the strengthening of government's traditional role: the reconstruction of Tennessee's child support collection system. Since Sept. 1, 1998, Rohleder said, Accenture has helped the state increase its collections by as much as $127 million, from $185 million in 1998 to $312 million last year.One area Accenture considers important but that falls below most citizens' radar screens is electronic procurement. States that pursue e-procurement initiatives are poised to receive a rapid return on their investments, based on the economies of scale realized, Rohleder said.Michigan's Office of Purchasing, for example, conducted its first live e-procurement transaction less than 60 days after deployment, he said."The state is now aggregating employee purchasing, resulting in higher-volume pricing and streamlined procurements," Rohleder said. "The technology is available and states have an opportunity to benefit, not in 12 to 18 months, but in less than three."To boost Accenture's efforts in this and other markets, the company is creating more strategic alliances with other businesses in areas such as consulting, new technologies and outsourcing."We've got 22 different ventures and alliances [in place]," Rohleder said, three of them tied to the firm's government business. "We've tried to look at where we think the market is going in the next 18 months to three years, find companies in the early stages of the maturity curve, [and] ally ourselves as they grow."Most recently, it announced an alliance with election.com, which provides election software and services."As we've formalized our e-democracy industry program, in light of this past fall's presidential elections, we anticipate helping more governments modernize their electoral systems to bring greater continuity, reliability, accuracy and accountability, much as we did in South Africa," he said.XXXSPLITXXX-By Evamarie SochaThe past year saw KPMG Consulting Inc. break from its accounting parent KPMG LLC and establish itself as a major systems integrator in its own right.This proved especially true in the state and local government market, where KPMG Consulting landed among the top systems integrators in Washington Technology's list of "Who's Who in State and Local Systems Integrators."Understanding the business of government, said Ron Salluzzo, senior vice president and segment leader for state and local government, has helped KPMG stand out among systems integrators serving the public sector."When we are talking to clients about issues, they know we are talking from a perspective of [being in] their shoes, and an understanding of more than just the solution that is being presented," Salluzzo said. "We had a meeting with a major client recently, and they said to us, 'One of the reasons we want to keep working with you guys is because you spend the time to understand our problems.'"Part of that experience comes from the firm's longevity in this arena. According to the company, KPMG LLP has more than 85 years' experience serving the public sector.KPMG Consulting was incorporated Jan. 31, 2000, as a separate company from KPMG LLC. KPMG Consulting had revenue of $2.4 billion in 2000.On Feb. 8, 2001, the company had an initial public offering of stock, which closed at $23.48 on its first day of trading, up 30 percent from its offering price.Among the business fueling KPMG Consulting's state and local success in 2000 were the award of an enterprisewide financial system for the commonwealth of Pennsylvania; a contract with the Department of Finance for New York City for document imaging; and the announcement of TexasOnline.com, a public-private partnership between the Texas E-Government Task Force and KPMG Consulting. Working with the Texas Department of Information Resources, KPMG developed the electronic framework and content.Salluzzo said KPMG Consulting's strategy won't deviate much in 2001. Company officials want to be perceived in the market as people who understand the business of government, and focus on areas where the company not only can work, but can work well."One of the issues for state and local government is that everywhere you turn, there is a government, whether it's at the state level, county level or local township citizenship level," he said. "For us, the strategy is to select the places we want to work, bringing our expertise to the table in an efficient manner."Efficient is the operative word, said Salluzzo. "The market itself is fairly open to integrators coming and doing some work, but the ability for the integrator to efficiently service that market is dependent upon how much resource you actually have," he said.KPMG is not planning any acquisitions related to the state and local government market right now, but Salluzzo would not rule out the possibility of future purchases."Any acquisitions would have to be strategic," aimed at a particular quality or expertise, he said. "It would not be just to build size.""Everyone in my practice is committed only to state and local, so we're building expertise," Salluzzo said."We see the market as being a strong market. Because of the procurement rules that exist throughout the country and all governments, it's not a market for the faint of heart," he said."It's certainly not a market for people who want to come in and out of it. But our niche is to stay in it, full time, with a complement of people that service the clients well and add value," he said.XXXSPLITXXX-By Nick WakemanWith skills in areas such as intelligent transportation, welfare-to-work programs and a variety of application services provider offerings, Lockheed Martin Corp. of Bethesda, Md., has built a state and local business that pulls in better than $500 million a year.The unit, known as Lockheed Martin IMS, is based in Washington and is headed by Chief Executive Officer John Brophy, who also founded Brophy & Associates, a major component of the IMS unit that was acquired by Lockheed Martin in 1985.The company has posted strong growth through the years with an annual rate of 25 percent or better, said Kathleen Dezio, IMS spokeswoman.But the unit currently is on the selling block as part of a divestiture strategy by Lockheed Martin. In early 2000, Lockheed Martin Chairman and CEO Vance Coffman announced that IMS and several other units would be sold as the $25.3 billion company focused on its core defense and aerospace businesses.The company as a whole has struggled with issues involving a high debt load, management and integrating the numerous acquisitions it made through the 1990s, according to analysts.Analysts have described the IMS unit as an attractive business that is performing well and can bring in cash to reduce Lockheed Martin's debt load.Each year, IMS collects more than $6.8 billion in child support payments, which accounts for 44 percent of the payments made in the United States. The unit's toll collection business brings in $1.2 billion in tolls and another $500 million in revenue from violations. In its welfare-to-work business, IMS has found jobs for 60,000 welfare recipients, according to data from the IMS Web site.Among the unit's major wins in the past year is a $260 million, 11-year contract with Orange County, Calif., to upgrade the telecommunications infrastructure, provide application development and support. The deal includes new electronic government initiatives and management of the Orange County data center."The county has now entrusted us with the most significant contract in its history," Brophy said when the deal was awarded in November 2000. "Together, we're well-positioned to provide even greater services to Orange County residents through cost-effective e-government applications and a modernized infrastructure that supports them."Dezio cited other major wins, such as a $22 million welfare-to-work project in Fresno County, Calif., and a $24 million contract for child-support payment services in Los Angeles that was a recompete of a contract won in 1991. The Los Angeles child support system is the nation's oldest and processes 350 million payments per year, she said.In addition to welfare-to-work and child-support businesses, IMS' divisions do electronic toll collection, parking management, systems integration and information technology outsourcing.Officials at IMS see infrastructure issues as one of the driving forces in the state and local market, Dezio said. Many state and local governments are building the networking and telecommunications capabilities needed to establish electronic government, she said.During 2000, IMS moved to bolster its position as a leader in toll collection and intelligent transportation systems. With many of its customers in Maryland, Delaware, New York and Philadelphia, IMS moved its systems development center from Louisiana to Rockville, Md. The move puts the unit closer to customers and potential employees."IMS understands that we will maintain our industry leadership position in electronic toll collection only by hiring the best available talent," said Skip Lee, senior vice president and managing director of Transportation Systems and Services when the move was announced in September 2000.XXXSPLITXXX-By Gail Repsher EmeryAfter reorganizing its Systems & Information Technology Group in September 2000 to capitalize on opportunities in the state and local and commercial markets, TRW Inc. expects the group's state and local business to grow 15 percent to 20 percent in the next year."We believe the [state and local] markets we're in ? public safety and transportation and health and human services ? are areas where there is a lot of growth potential," said Dave Zolet, vice president and general manager of the Cleveland company's civil systems programs division. "We are really focusing on growing those markets."The civil systems programs division and the global information technology business division were created in the reorganization.Civil systems was formed to pursue systems engineering and integration and program management for public safety, law enforcement, transportation and aviation customers. Global information was formed to pursue IT solutions across state, federal and commercial business lines.The reorganization, Zolet said, is enabling increased management attention to the growth of TRW's share of the state and local pie."State and local and commercial [business] are our growth engines," Zolet said. "We want to make sure we have management attention and focus on ensuring the success of those businesses."TRW, which celebrates its 100th anniversary this year, is one of the top six systems integrators in the state and local market, according to McLean, Va., market research firm Federal Sources Inc.Federal Sources estimates TRW's annual revenue from state and local government IT contracts at more than $500 million. The Reston, Va., Systems & Information Technology Group brings in more than $300 million of that state and local business a year, Zolet said.TRW reported 2000 sales of $17.2 billion overall. The company employs more than 122,000 worldwide."Last year was a great year for us," Zolet said. TRW's wins in the state and local market last year include a $59 million contract to develop a computer-aided dispatch and mobile data system for Montgomery County, Md., and a $3.2 million contract for a dispatch and emergency operations center in Austin, Texas.The Austin center will handle emergency communications and transportation management for 11 city, county and state agencies. The Montgomery County system will allow police, fire and emergency workers to access law enforcement and public safety data from their vehicles.TRW's ongoing state and local projects include the development of a communications network linking 12 Ohio law enforcement and emergency management agencies. That job, awarded in 1998, is worth $271 million over five years.Now TRW is pursuing a multimillion-dollar contract for an integrated police, fire and emergency personnel communications center in Washington, and a California child support enforcement system contract worth more than $100 million, Zolet said.Later this year, the company will bid on a radio communications network for the state of New York worth hundreds of millions of dollars, he added.TRW brings to the state and local market its long-standing experience in building command centers and radio communication systems for the federal government, Zolet said."What we're taking to the state and local arena are our processes embedded in our culture and our people who have done this before ? and combining that with people who understand the public safety and the health and human services arena ? former police chiefs and fire chiefs," Zolet said. "I don't think any other company can do that."XXXSPLITXXX-By Nick WakemanWhether it is helping to process motor vehicle registrations or improving tax collection systems, Unisys Corp. of Blue Bell, Pa., sees the state and local government market as a source of growth for the $6.9 billion information technology company.Expanding at a clip of between 13 percent and 15 percent annually, the company's state and local division pulled in more than $700 million during 2000.The unit, known as Unisys Public Sector, nabbed major wins in the past year, such as a $169 million contract with New Jersey to provide services to the state's Medicaid system. Another major win was a $12 million contract with Illinois to run a system that issues new license plates.The Illinois project includes elements of electronic government, Web-enabling legacy computer systems and even managing a production facility to manufacture the new plates, said Kevin Curry, the unit's vice president and general manager.Systems for state departments of motor vehicles are an emerging market area for the unit. "There are a lot of older systems that need replacing and modernization," he said.For example, Unisys is working with Virginia to install kiosks citizens can use to renew registrations and driver licenses.Motor vehicle systems fall under the unit's public administration vertical market, which also includes electronic procurement and education systems. Unisys Public Sector has three other business areas: tax and labor revenue systems, justice and public safety and human services.Another growth area for the unit is education systems for both kindergarten through 12th grade and higher education, Curry said."Education is the No. 1 issue on everyone's list. We believe a lot of money is going to be put in that area," he said.Unisys also will be pursuing contracts to develop new voting systems for state and local governments. Unisys has teamed with Microsoft Corp. of Redmond, Wash., and Dell Computer Corp. of Round Rock, Texas, to develop systems that provide election management, such as voter registration, identification, ballot casting and tabulation.In this area, Unisys will be leveraging its international experience, Curry said. In 1996, Unisys installed 77,000 voting machines in Brazil. It also has built a voting system in Costa Rica and an online voting system in Rome.In the United States, Unisys built an online tabulation and reporting system for Minnesota that was used for a presidential preference poll March 7, 2000."It used the state's intranet, so it was very secure," Curry said.Electronic government and the use of the Internet will be among the biggest drivers of government projects, especially because governments are moving beyond posting information online and taking a variety of transactions to the Web, Curry said.More legacy systems are being Web-enabled by states, and states are looking for new ways to bring information and services to citizens, he said."Initially, people were putting portals up to show they were doing something on the Internet," he said. "Now they are tying the portals back into their information systems." The result is more comprehensive services for citizens, Curry said.Some changes are afoot at Unisys as a whole. The company is exploring "strategic alternatives" for its federal business, which might mean the unit will be sold. Even if it is, the state and local unit will pick up more business, because it is taking over the Medicaid processing business from the federal unit, Curry said.The state and local unit also is eyeing acquisitions of its own and building more strategic partnerships to strengthen its market position, he said.XXXSPLITXXX-By Stacy CollettAfter a turbulent year that included losing a major court case, American Management Systems Inc. is refocused on helping state and local governments break down technology barriers between agencies and capitalizing on the new wave of online government-to-business initiatives."[State] governments have realized that businesses aren't going to put up with lousy service anymore. They want the same hassle-free, anywhere, anytime access to government services that they get from any of their suppliers in the business world," said Donna Morea, executive vice president and general manager of AMS' state and local solutions group.That means more one-stop shopping for state and local services, Morea said, a trend that is driving the demand for e-procurement and Web-enabled tax, licensing and registration solutions.In January, AMS completed the first phase of a project to provide online professional licensing for California's departments of Consumer Affairs and General Services. The first phase of the project enables nurses to renew their licenses with the California Board of Registered Nurses and pay renewal fees online.The second phase of the project, scheduled to be completed in May, will provide similar services for cosmetologists, security guards and other professionals.AMS also worked with the Virginia Department of Taxation to implement an Internet filing capability for business and individual taxpayers, called iFile. The Virginia Employment Commission also uses the iFile portal to let businesses register and pay fees to the VEC in addition to paying their taxes."We're breaking down the silos of [state] government agencies, and using technology to provide self-service, one-stop shopping," Morea said.While government-to-business initiatives represent huge opportunities for AMS, the company continues to help state and local governments modernize their approach to individual customer service.In an eight-week project, AMS implemented an online parking ticket payment system for the New York City Parking Violations Bureau. It has also developed Web-enabled human services projects for Kentucky and Louisiana, which provide a wide range of social, educational and medical services at one location.AMS also chalked up a half-dozen tax and revenue projects despite the much-publicized lawsuit filed against the company by the state of Mississippi. In August 2000, AMS negotiated a settlement with the state over a disputed tax project, agreeing to pay $185 million in damages.Morea called the judgment "a huge disappointment ... an injustice and unfair," but added there are no dangling financial repercussions, "so we can just look forward."AMS paid its fine and legal fees in a one-time, before-tax charge of $38 million in the third quarter. AMS' two insurers paid the balance of the fine.A month later, Chairman and Chief Executive Officer Paul Brands announced his retirement. Former executive vice president William Purdy is serving as interim president and chief executive while the search continues for Brands' replacement.Nonetheless, the Fairfax, Va.-based company remains a strong player in the government systems integration market. Total company revenue reached $952 million for the first nine months of 2000, compared to $918 million for the same period in 1999.State and local business represented 25 percent of AMS' revenue, down from 28 percent a year earlier.In 2001, AMS plans to add to its list of acquisitions, which included certain assets of govWorks Inc., a New York developer of e-government services, Synergy Consulting Inc., a Sacramento, Calif., consulting firm, and NY Wired for Education Inc., an Albany, N.Y., company that promotes the use of educational technology throughout the state."We are continually looking for alliances, acquisitions and joint ventures to extend our e-business capabilities and our reach in key account areas ? like California," Morea said.Going forward, Morea sees even more opportunities for interoperability between state and local agencies, and even between higher education and community service organizations. "That's really our focus for 2001," she said.XXXSPLITXXX-2828 N. Haskell Ave.Dallas, TX 75204http://www.acs-inc.comStock symbol: ACSCapabilities include professional services, technology infrastructure, document management services, claims processing, Medicaid and fiscal agent services, and electronic commerce.2100 E. Grand Ave.El Segundo, CA 90245http://www.csc.comStock symbol: CSCCapabilities include IT infrastructure, electronic commerce, change management, consulting and improving organizational efficiency.1633 Broadway, 35th FloorNew York, NY 10019http://www.deloitteconsulting.comNot publicly tradedE-business consulting firm that provides services in all aspects of enterprise transformation, from strategy and processes to information technology and human resources.10 City SquareBoston, MA 02129http://www.keane.comStock symbol: KEAServices include operations improvement and IT consulting, custom application development, e-solutions, customer relationship management, data warehousing, and application outsourcing.1500 PRC DriveMcLean, VA 22102-5050http://www.littonprc.comNot publicly traded divisionProvider of scientific, engineering, information technology-based solutions for public-sector clients. Provides specialized IT services to government customers in local jurisdictions.11419 Sunset Hills RoadReston, VA 20190http://www.maximus.comStock symbol: MMSProvides health and human service program management and consulting services to state and local governments. Services are designed to make government operations more efficient and cost-effective while improving the quality of services government provides its citizens.10260 Campus Point DriveSan Diego, CA 92121http://www.saic.comNot publicly tradedResearch and engineering firm that provides information technology, systems integration and e-business products and services to commercial and government customers.4 Country View RoadMalvern, PA 19355http://www.sctcorp.comStock symbol: SCTCCapabilities include administrative and self-service information systems, consulting, e-government, digital justice and data center management.