Battle brews in California

A report recommending that California establish a new technology department could ignite heated debate over who should ultimately approve big-ticket information technology projects.The question of whether the California Finance Department should approve large IT projects as it does now, or if the power should be shared with the proposed department and the state chief information officer, must be resolved before the new division is established, said Clark Kelso, California's CIO."What we are looking at in the new Technology Department is a very different model," Kelso said. "It's different from what we've done before."The recommendation was one of hundreds set forth in the California Performance Review (CPR) report submitted Aug. 3 to Gov. Arnold Schwarzenegger (R). Schwarzenegger, who created the high-level commission after his election, intends to use the report as a road map to reorganize the California executive branch. The commission said the state's IT programs are in "crisis." "They are distributed across hundreds of agencies with no statewide strategic direction or alignment with overarching statewide goals," the report said. "There is no overall coordination of the state's use of technology, resulting in functions that are poorly organized, duplicative and inefficient from a statewide perspective."Consequently, the commission's recommendations go far beyond California's previous attempts to consolidate IT systems and resources by proposing the creation of a division with broad responsibilities overseeing the state's annual $2 billion in IT spending.As proposed, the new technology division would carry out many of the commission's recommendations for improving how the state manages its IT resources and infrastructure. The department would consolidate data centers and be responsible for networks, information security and project management. Further, the division would lay the groundwork for enterprise resource planning systems for governmentwide functions, including budgeting, human resources and payroll. A state chief technology officer would lead the new division.Until state officials resolve the issues surrounding the proposed technology division, many of the commission's other technology recommendations are likely to remain on paper, analysts and industry observers said."You can't move on those until you have the governance plan in place," said Steve Kolodney, vice president of consulting services for CGI-AMS Inc. of Fairfax, Va. California has struggled for about 15 years to find an effective way to manage its IT investments, Kelso said. The state legislature established a Department of Information Technology in 1995 to improve the state's management of IT projects; but the department, known as DOIT, was disbanded in June 2002 after officials in former Democratic Gov. Gray Davis' administration signed a $95 million enterprise software license with Oracle Corp. of Redwood Shores, Calif., without conducting a competition. Even during DOIT's existence, however, the state allowed other departments and agencies to keep control over application development relative to their functions and responsibilities, Kelso said."We tried to have some centralized control in Finance or in DOIT, but DOIT was never an operational entity," he said. John Kost, managing vice president of worldwide public-sector research at the market research firm Gartner Inc., Stamford, Conn., said the report contains a number of sound recommendations, but it doesn't address the issue of how to implement them. "The CPR says all of the right stuff, it just doesn't make clear who's responsible for executing it," Kost said. "A state CIO can't do it alone."Technology companies that do a lot of business with California reacted positively to the commission's report."It's a big thing -- California has tried this many ways, and none of those [models] are still standing," Kolodney said, referring to the state's previous attempts at IT consolidation.The absence of a strong department has created a decentralized approach to IT management. Each department or agency has looked to its own IT interests, and the California Finance Department has had the final word on whether large, multiyear IT projects go forward. Although he supports creating a technology department, Kelso said he is unsure whether oversight and the authority to approve projects should be shifted from the Finance Department to the new division. "I don't agree with 100 percent of the things in there," Kelso said. "There are some issues where I am 90 percent or 95 percent there, but I want reactions from some of the affected stakeholders." One possible approach would be for IT oversight to reside with the state CIO with the Finance Department supporting that authority, Kost said."Finance is always going to be the biggest hammer," Kost said. If the Finance Department gives its blessing to the CIO's decisions, then "the CIO can take responsibility and still have the hammer of Finance to enforce decisions," he said. The commission's recommendations for IT governance will be reviewed by a wide array of stakeholders, including the executive branch agencies, state auditor, legislative analyst and key state lawmakers, as well as consultants and former state technology officials, Kelso said. "I want to make sure that a lot of people get a chance to weigh in on this governance proposal," he said. Although he did not serve on the performance review commission, Kelso is playing a significant behind-the-scenes role in its decision-making. He helped designate some of the key IT issues worth studying, and appointed some of the members of the IT team assigned to study them. Most of the stakeholders -- the governor, the agency heads and state lawmakers -- who review the proposal for a new technology division are likely to agree on the merits of IT infrastructure consolidation, Kolodney said. The debate will be over IT governance and key issues left unresolved, such as role of the state CIO, he said.After those issues are resolved, the state can move on to more ambitious initiatives, such as ERP implementations, Kelso said. But he warned that such projects would require broad support."We have to make sure the executive and legislative branches are comfortable with the value of creating those systems," Kelso said. Staff Writer William Welsh can be reached at wwelsh@postnewsweektech.com.