Share the pain, reap the gain

Steve LeSueur

California is facing a $15 billion budget shortfall, and it doesn't have a lot of money to throw at new information technology initiatives. So state CIO Clark Kelso said government agencies will aggressively pursue share-in-savings contracts with their vendors.

California, he said, wants to see a tangible return on its IT spending before making a heavy financial commitment to new projects.

"One of the great challenges ... both for the state and the vendors, is the need for quick results, so we're not financing initiatives over multiyear periods," he said. "Once we start moving, we need to see results in the current fiscal year."

California isn't the only state pushing share-in-savings contracts. Among the companies that stand atop Washington Technology's "Who's Who in the State and Local Market" list, many said state agencies are looking for companies that can share both cost and risk.

Such contracts, of course, are not new, and they do present risks for contractors. Consequently, it's often the large companies with deep pockets that can capitalize on such opportunities.

For our annual "Who's Who" report, Staff Writer William Welsh looks at the share-in-savings phenomenon, as well as other important trends in areas such as outsourcing, ERP and Medicaid processing. It's a huge market, and an equally huge opportunity for those who know what sells.

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