States Eye Extensive COTS Solutions

By Thomas Davies


State governments, which have some of the largest administrative systems in the country, historically have sought custom solutions for their enterprisewide administrative needs. But momentum is beginning to swing in the opposite direction.

State purchasing plans and some key awards made over the last few months signal that the value of adopting commercial, off-the-shelf solutions for statewide administrative needs is gaining recognition. (See table at bottom.)

These commercial, off-the-shelf solutions include information technology systems to handle human resources, payroll, personnel, purchasing, accounting and finance.

Companies such as American Management Systems Inc., Baan Co., J.D. Edwards & Co., Oracle Corp., PeopleSoft Inc., SAP and Systems & Computer Technology Corp. are the immediate beneficiaries of this shift in buying practices.

If the results meet or exceed buyer expectations, this trend will have profound implications for other functional areas of state government.

In moving to COTS solutions for their enterprisewide administrative needs, states are making a fundamental change in their IT strategy.

Historically they have been convinced the commercial market could not support their requirements with readily available solutions. As a result, they have built some of the largest legacy systems in the public sector. These systems, whose outdated IT architectures often can be traced back to the late 1970s and early 1980s, consume tremendous amounts of processing and systems maintenance resources.

State buyers clearly are not being short-sighted as they move to replace these legacy administrative systems. They are intentionally implementing enterprisewide solutions that are tightly integrated and support re-engineered business processes.

And they recognize these are once-in-a-generation strategic investments that should not be done with a low-bid award mind-set.

One state agency, Florida's Department of Management Services, recently evaluated the bids for a human resources and payroll system based on weighted criteria. (See table.)

Successfully adopting COTS solutions for administrative needs will convince state leaders that it is possible to do the same in other legacy areas of state government, such as criminal justice, education and health care. States desperately need enterprisewide COTS solutions in these core areas of their business.

And as Internet-based technologies take hold in state government, these buyers will begin to look for mission-critical enterprise solutions that are World Wide Web-enabled.





Thomas Davies is senior vice president of Federal Sources State and Local Government practice in McLean, Va. David DeBrandt provided research support for this article.