Vendors Chase Wealth of New Opportunities in Connecticut

Vendors Chase Wealth of New Opportunities in Connecticut<@VM>Getting a Grip on 'The Good, the Bad and the Ugly'

Rock Regan

By Steve LeSueur, Staff Writer

Connecticut remains fertile ground for information technology business opportunities six months after Republican Gov. John Rowland's abrupt decision to halt a controversial plan to outsource all of the state's IT services.

The state is soliciting proposals from industry for a host of attractive technology projects, including a criminal justice information system designed to improve information sharing among 16 state agencies. Proposals are due Jan. 19 for this hotly pursued project, worth an estimated $15 million to $20 million.

A Nov. 4 bidders conference for the criminal justice system attracted more than 20 leading integrators and software companies, including Deloitte Consulting, IBM Corp., Oracle Corp., PriceWaterhouseCoopers LLP, Science Applications International Corp. and TRW Corp., state and industry officials said.

"Clearly, Connecticut is a state that has to spend money to get things done, both internally and externally," said John Kost, a vice president with TRW Inc.'s public sector solutions. Kost said the Cleveland-based company is interested in partnering with a prime vendor on the criminal justice project and is eyeing a planned child care initiative by the state.

"We know that many companies are interested in Connecticut. It's still a very legitimate market," said James Macaulay, government analyst with Dataquest, a market research arm of the GartnerGroup, Stamford, Conn.

Connecticut officials also are reviewing proposals for an electronic document management initiative that will streamline operations by moving more documents and information online.

The state plans to award a contract by early next year for this effort, which will initially involve two agencies but eventually will integrate 60 government agencies into the system.

Other projects reportedly under consideration by state agencies include a child care management system, a multistate pilot project that will use smart cards to deliver human services benefits, and an integrated taxpayer administration system, which has an estimated value of more than $15 million, according to industry officials.

And there could be other opportunities for vendors as Connecticut shifts more services and transactions online, such as a lobbyist registration system set to begin running early next year.

But the state's strategy for modernizing technology and transforming government took a clear turn after Rowland terminated negotiations with Plano, Texas-based Electronic Data Systems Corp. June 29 to manage its IT infrastructure, said Rock Regan, the state's chief information officer.

While the state will use the private sector where in-house skills and expertise are lacking, Regan said, most day-to-day IT work will be performed in-house. And when outside companies are brought in to develop new systems and applications, a major goal will be for state IT employees to take over operations of those systems.

"We want to do a better job of transferring skills from vendors to our employees," said Regan.

EDS, which was selected in December 1998 for negotiations that were to lead to the landmark IT outsourcing contract valued at $1.35 billion over seven years, planned to take over the bulk of the state's IT functions, including data center operations, desktop support and networks. Rowland wanted EDS to bring cutting-edge technology and expertise from the private sector to streamline government operations and dramatically improve service to the state's citizens.

But the project ignited fierce opposition from the state's IT employees and many of their Democratic allies in the state legislature, who said Connecticut's own workers, if given the chance, could achieve the same goals at a much lower cost.

The drumbeat against the plan continued until Rowland pulled the plug on negotiations, saying he could not get a deal with EDS on terms he considered favorable to the state.

Regan, who was Rowland's right-hand man and the chief villain among the state's IT employees during two years of acrimonious debate over the outsourcing project, acknowledged he is working to rebuild trust among the employees as they become the main players in the new plan to revitalize the state's technology.

"A lot of people are taking a wait-and-see attitude," said Regan, who insisted he is committed to using in-house resources, training employees and creating excitement and support for the state's modernization plan.

So far, former opponents like what they see.

"We have been pleasantly surprised" by Regan's effort, said Rick Melita, a spokesman for the Connecticut State Employees Association. "Rock has to mend some fences in the data processing community, but it's clear he's moving in the right direction of how to fix the problems in the state's IT system."

Melita's sentiments are echoed by Rep. Moira Lyons, the Democratic speaker of the Connecticut House. Lyons, who had expressed strong reservations about the outsourcing plan, praised both Rowland and Regan for bringing state employees into the planning process.

"I'm pleased at the progress that's been shown in including state employees in deciding which direction to go next," she said.

A major part of Regan's effort will be to consolidate the state's IT employees under his Department of Information Technology. About 200 employees work in the department now, while another 300 are dispersed among the various state agencies and departments.

Eventually, all 500 will be brought under the Department of Information Technology, which will allow for better coordination of IT strategy and architecture among the state agencies, Regan said.

Regan also is looking for a new facility to house his expanded department, including a consolidated data center, application development, network managers and a new e-government group. Locating employees together will help with training and the coordination necessary to keep skills up-to-date, he said, adding that he hopes to start moving into the new facility by December 2000.

Some observers suggested that the biggest obstacle to the state's new IT strategy will not be skeptical state employees but department managers hesitant to surrender control over those employees and budgets.

As for EDS, company officials said they have not soured on Connecticut, despite being left standing at the altar by Rowland's decision. The company reportedly spent nearly $10 million competing and preparing for the outsourcing contract.

EDS has a strong presence within the Connecticut government, having processed Medicaid claims and provided other services for the Department of Social Services for 18 years.

Company officials said they are interested in partnering with the state on new IT projects, such as the criminal justice information system.

"We're following all of those things right now. It's just a question of which ones are the right ones for us," said Randolph Dove, an EDS spokesman. By Steve LeSueur

The money and effort that Connecticut poured into its failed outsourcing project was not wasted because state officials learned a number of valuable lessons, said Rock Regan, the state's chief information officer.

Vendors that competed for the contract taught state officials the value of maintaining constant oversight of technology projects and promoting common standards among the agencies. They also passed along tips on initiating an e-government focus and using change management to smooth the way for new technologies.

"We have a better approach to how we use technology to improve government," said Regan.

When Gov. John Rowland put forward his outsourcing plan, opponents criticized him for not having a clear idea of how much the state spent on IT and, therefore, not knowing whether outsourcing really would save money.

But as a result of the outsourcing effort, Connecticut carried out a rigorous inventory of its IT assets and employees and now knows, for example, that it spends about $180 million annually on information technology.

"We learned the good, the bad and the ugly" about the state's strengths and weaknesses, said Regan.

He also expressed confidence that his department can build on those strengths and use what it learned to carry out the original plan to modernize its technology and transform government.

"We won't be able to do it as quickly as with outsourcing, but we can do it," he said.

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