Newstrom tightens the belt

Virginia's new secretary of technology is looking to cut as much as 15 percent to 20 percent from the state's information technology budget to help the state cope with a $3.8 billion shortfall.George Newstrom, who began working for the administration of Virginia Gov. Mark Warner March 1, has been struggling for the past 90 days to get a firm handle on how the state is spending its technology dollars. He said it is imperative that the Office of the Secretary of Technology has a thorough understanding of the situation before implementing new plans."We think there's a great opportunity, once we get a real good picture of where we are, to be able to leverage our capabilities substantially better," Newstrom told "I've suggested to [Warner] that we have the ability to do our job with a different look but in a substantially reduced fashion."Virginia is not alone in trying to gain efficiencies in IT spending. Thirty-nine states reduced their fiscal 2002 budgets by about $15 billion after they were passed, according to a survey of states published in May by the National Association of State Budget Officers and the National Governors Association, both of Washington.Of the states where revenue fell short of expenditures in fiscal 2002, 26 tried to close that budget gap through a strategy of across-the-board cuts, the groups said. California, Florida, New Jersey and Virginia each cut their budgets by more than $1 billion.Virginia has an annual budget of about $25 billion, said Ellen Qualls, Warner's spokeswoman. The state spends about $1 billion annually on IT products and services, Newstrom said.Newstrom told the Governor's Commission on Efficiency and Effectiveness in April that he thinks the state can cut IT spending by 15 percent to 20 percent annually. One of the commission's primary goals is to suggest how state government might make better use of technology to improve service delivery and reduce costs.Newstrom is planning to have a statewide strategic information technology plan in place by midsummer that will address at least a half dozen major issues and initiatives, including data center operations, infrastructure, statewide software licensing and enterprise resource planning, statewide communications and work force issues.He declined to discuss specific details, but said he will explore all alternatives for each category before developing a strategic plan.The comprehensive IT plan will be based on input from the governor, legislature and the new commission, he said."Our ability to put major systems together is questionable because we don't have the strategic plan for the technology that we are building, and the ability to have critical mass around our resources where we can leverage each other's [investments] is missing," he said.Newstrom said that he is willing to consider increased outsourcing as long as it substantially improves the efficiency of current state operations."Outsourcing has a role, but we're going to explore all of the alternatives. I'm happy to list outsourcing as one of the alternatives, but I am not ready to say that it is the alternative that we are going to pick," Newstrom said.As he crafts an information technology plan for the state, Newstrom likely will benefit from several laws passed by the Virginia General Assembly this year: Newstrom controls the departments of information technology and technology planning, Center for Innovative Technology and the Virginia Information Providers Network, which operates the state's portal.Newstrom and his staff are taking steps to improve the tracking and oversight of 55 IT projects worth more than $1 million. Information related to these projects will be incorporated into a Web-based management application known as "Project Dashboard" that enable state officials to evaluate all major initiatives, according to "The First 100 Days" report issued May 14 by Warner.Tom Davies, senior vice president of the market research firm Current Analysis of Sterling, Va., praised Newstrom's willingness to work closely with other groups as he develops a statewide technology plan. "For a new state CIO, success requires building support and consensus for needed reforms on the front end," he said. "Often this results in criticism from those impatient for immediate action. But it pays off in the long run with a higher likelihood of success once a decision has been made and implementation has begun."Dave Cavan, state executive for Virginia for American Management Systems Inc., Fairfax, Va., said Newstrom is part of a new generation of CIOs that come from industry into the public sector. "We expect someone coming in with Newstrom's background and credibility will know what innovations are available and who he would approach to talk to about those innovations," Cavan said.Cavan said Newstrom needs to help Virginia achieve three objectives: build on existing agency successes, consolidate and centralize services where possible and tap the Virginia technology community for assistance."If they do those three things, they'll be very successful," he said.XXXSPLITXXX-Virginia officials are re-evaluating the state's groundbreaking seat management program that started more than three years ago but has been slow to take hold among state agencies.As initially planned, Virginia's seat management contracts were supposed to cover about 60,000 desktops in state agencies, local government and educational institutions. But so far, only a small number of seats have been sold among a handful of agencies, state and industry officials said.Seat management was made available to all state agencies by executive order in 2000 under the Gilmore administration.Virginia's path toward seat management began in 1998 with a pilot project awarded to Halifax Corp. of Alexandria, Va., with the Virginia Department of Transportation and the Virginia Retirement System.Under a separate seat management contract awarded by the Virginia Department of Information Technology in September 2000, state agencies can contract for seat management services with any of the three contract holders: Affiliated Computer Services Inc., Dallas; Dyntek, Irvine, Calif.; and Unisys Corp., Blue Bell, Pa.Halifax holds 6,996 seats with the two agencies, while the three primes hold just 396 seats with seven agencies, state officials said.The state does not require agencies to purchase desktop services from the contract, which is probably the main reason so few orders have been generated, said Frank Burke, managing director of ACS' desktop technology services. For the contract to succeed, "it's incumbent on both the state and the contractors to make the value proposition clear," Burke said.But the state came about as close as possible to mandating seat management in the executive order without violating existing laws, said Eugene Huang, Virginia's deputy secretary of technology. He said the Office of the Secretary of Technology will re-evaluate the seat management contracts as part of its strategic planning process.For now, the Warner administration hasn't decided how to proceed with seat management. The final decision will be weighed from an "enterprise standpoint," Huang said."Can the [state] lease computers and provide IT support for those computers across the entire enterprise more efficiently than outsourcing through seat management? If not, we'll use seat management," he said. "If so, we won't."