Proposals spell dollars for contractors

The California Performance Review's recommendations for improving IT operations would greatly alter how contractors work with the state, but it is unclear how quickly new opportunities would emerge from the reforms.

The report recommends expanding performance-based contracting, modernizing state procurement systems, consolidating state data centers, servers and storage, and consolidating IT contracts wherever possible. It also calls for creating an enterprise architecture, increasing enterprisewide projects and overhauling organization and management of the state's technology programs.

California's continuing financial predicament and the extensive debate expected to follow release of the commission's report mean that any large initiatives are likely to be many months away, said Steve Kolodney, vice president of consulting services for CGI-AMS Inc., Fairfax, Va.

If the administration decides to pursue some of the commission's big-ticket recommendations, the required funding will be included in next year's budget. The governor's budget proposal will be unveiled in January.

State employees "are doing their day-to-day jobs and improving the delivery of service, but major initiatives are awaiting the budget" and the review, Kolodney said.

However, Clark Kelso, California's chief information officer, said he hopes the state can quickly move forward with some initiatives.

"Some of this [reform] is purely administrative, and we are able to do it within existing resources," he said. "So you will see things happening every month or two. "

For example, the state has embarked on acquisition reform via a strategic sourcing initiative, consolidation of data center resources and an overhaul of the state's portal.

But enterprisewide recommendations for legacy system replacement and implementing new enterprisewide processes and systems for accounting, human resources and payroll will need more funding and legislative approval and probably won't be addressed until next year, Kelso said.

The state awarded a strategic sourcing contract to CGI-AMS in June. The company, which is teamed on the project with EDS Corp. subsidiary A.T. Kearney Inc. of Plano, Texas, will help the state leverage the nearly $5 billion it spends on goods and services each year.

CGI-AMS will help the California Department of General Services find opportunities to negotiate new agreements with suppliers and implement other changes to drive down cost and improve efficiency, the company said.

The California Performance Review report calls for the state to consolidate its Health and Human Services Data Center, the Stephen P. Teale Data Center and similar resources in state departments into a single entity to be known as the California State Data Center. The Teale Data Center, which provides services to several state entities, is part of the California Business, Transportation and Housing Agency.

The report recommends removing these two mega data centers from their departments and consolidating them under the state CIO. It also recommends that the two data centers establish a high-speed connection with each other and aggressively market their server hosting and management services to state agencies to lower IT costs.

The data center consolidation is under way, Kelso said.

The report contains other recommendations for process improvements that involve IT, but weren't necessarily set forth as IT reforms, Kelso said. For example, the commission recommended that California expand its use of electronic benefit transfer in health and human resources, he said. The state only provides EBT for its food stamp program.

The report also recommends that California strongly consider developing enterprise systems in finance and administration, human resources and payroll, Kelso said. The state also hopes to tap the private sector to establish an e-procurement system, he said.

These initiatives will need multiyear funding and support of the state legislature, Kelso said.

"We have to make sure the executive and legislative branches are comfortable with the value of creating those systems," he said.

In addition to CGI-AMS, several other large systems integrators are well positioned for future IT opportunities. A short list includes Accenture Ltd., Deloitte Consulting and IBM Corp.

Deloitte won a $38 million contract in January to provide an enterprisewide case management system to the California Administrative Office of the Courts, the company said.

A team led by IBM is providing child support collection services for the California Department of Child Support Services under an eight-year, $801 million contract awarded in 2003. IBM's team includes Accenture and CGI-AMS.

Most, if not all, of these companies have their eye on the systems integration portion of a statewide enterprise resource planning initiative, called the 21st Century Project, which the California State Controller's Office has on hold. The contract is likely to be the model for other state ERP initiatives, analysts and industry officials said.

Initiatives such as one to expand California's electronic benefits transfer programs are unlikely to face legislative opposition, Kelso said. "It saves money, gets better service, and we know it works," he said.

"There are things like that that are going to happen without any controversy at all. Quite a bit can happen without people getting crossways," he said.

Staff Writer William Welsh can be reached at wwelsh@postnewsweektech.com.