States get custom fit for IT budgets

State governments are no different from the taxpayers they serve. Like their constituents, states want to get the most from the money they spend. One way to do that: Make sure IT is closely aligned with political goals and objectives.

To achieve this, states are applying what they learned during the lean times earlier this decade to create new portfolio management systems and processes to ensure that IT spending is prudent and tightly aligned with state government goals.

During those years of cramped budgets, the primary role of IT was to contain costs.
"If your projects weren't saving money, then they were projects that weren't going to be invested in," said Matt Miszewski, president of the National Association of State CIOs and CIO for Wisconsin. "Now, we'll be able to really do portfolio management to align our IT efforts with those greater government goals."

State CIOs are looking at ways to prioritize IT spending, according to industry and government officials. While some states are developing manual review processes to create oversight and set priorities for projects, others are adopting IT applications that can map a project's purpose and cost against goals laid out by state leaders.

Fresh, but quite young

The market for consulting on how a state should set up its prioritization processes and apply IT solutions to assist in the procedure has yet to mature, industry and government officials said. Many states have developed sophisticated ways of thinking about IT spending, but most have yet to apply the same approaches to other, better-funded government agencies, Miszewski said.

Whether states use quantitative or subjective methods of analyzing potential projects, the application of formal methodology results in a more sophisticated way of thinking about IT.

Prioritization is not new, but something the private sector has been doing for some time, said Jerry Simonoff, director of strategic management services for the Virginia Information Technologies Agency.

"Certainly, there are nuances of taking it and applying it in the public sector," Simonoff said. "But it's always comforting when you can talk to decision-makers about how these principles have worked, and worked well, in the private sector."

The private sector has a big role to play in helping states develop more mature thought processes for IT projects, and also in applying IT to how other state agencies consider projects, Miszewski said.

"If I were still doing investment banking work, I would suggest folks move in that direction," he said. "It's a great opportunity, and it's incredibly large."

Developing new processes and implementing new IT systems that aid oversight are two ways the private sector could get involved, Miszewski said.

"The consulting companies of the world are fairly well situated to bring this forward as a management best practice," he said.

Power surge

The increasing empowerment of state CIOs with more enterprisewide authority over IT is a critical factor in fueling business process consistency and technology planning, said Bob Campbell, managing director for the public sector at Deloitte Touche Tohmatsu of New York.

Hard dollars-and-cents business cases are driving IT decision-making, not only for legislative justification, but also for managing the portfolio of IT projects undertaken on a business case driven basis, Campbell said.

States that have adopted sophisticated approaches and can demonstrate an IT project's cost-effectiveness, as well as how closely aligned it is with the state's overall mission, have a greater chance for success, Campbell said.

New York State has a multistep IT prioritization process that involves as many of the state's stakeholders as possible. First, all 60 executive branch agencies must file annual technology plans that detail their IT environments, describe their enterprise architectures and list any initiatives they would like to begin.

Those plans then are reviewed by the CIO's office and the Office for Technology for consistency, the Budget Division to determine necessary funding, and the General Services Offices to evaluate whether or not the purchase can be aggregated with other state purchases, said New York CIO Mike Mittleman.

The three oversight groups then meet with each agency to review technology plans and create a prioritized list of projects for the state, Mittleman said.

"It sounds like a slow process, but these initiatives, at least in New York state, are often very expensive to do," he said. "We're a little cautious, and want to make sure everyone's onboard and understands expectations and commitments."

Both Virginia and Wisconsin, although their processes differ greatly, use quantitative measures to rank projects.

Virginia uses a multistep process. Individual state agencies first submit their strategic IT plans to the Virginia Information Technologies Agency's IT investment board. The board discusses the plans with each agency and determines a proposed project's priority relative to all the other agencies' requests.

At the same time, the agency must submit its plan to the state's Planning and Budgeting Department to determine whether it can be funded. If so, a more thorough review of a final business case is done, projects are weighted based on multiple criteria, and only projects with the highest score are considered, said Dan Ziomek, VITA's associate director for project management.

"This past year, the board went so far as to say, if you don't score above 70, you're not going to make the list," Ziomek said.

Wisconsin's division administrators review IT projects in their divisions each month and report once a year to the CIO, Miszewski said. The state is piloting a portfolio management IT tool set from New York-based United Management Technologies Corp. The company, which Microsoft Corp. bought in December, for more than 15 years has supplied the private sector with portfolio management tools.

The application the company developed for Wisconsin lets users compare weighted projects with one another to determine their relative strategic importance. The system then maps the proposed projects against the state's financial resources and priorities, Miszewski said.

"We get a graph that shows us how the IT projects we're doing are lining up with the goals that have been set by the governor," he said. "It's a pretty slick system."

Staff Writer Ethan Butterfield can be reached at ebutterfield@postnewsweektech.com.