State of the States

In fact, more than 90 percent of public-sector CIOs believe strategic investments in technology will grow revenue and help reduce government overhead, according to the Folsom, Calif.-based Center for Digital Government. This year, state and local governments are expected to spend approximately $80 billion on technology, President George W. Bush has said.

Although IT budgets are tight, money is often available from other sources. Many state-computer departments can garner additional funding, as other agencies or divisions frequently fund IT-related projects that benefit their own operations.

"We're going to see continued spending on security initiatives,not only from an antivirus perspective, but also Homeland Security items," says Mark Struckman, vice president of research at the Center for Digital Government, which helps state and local governments with IT-related policy and governance issues.

Solutions that help states generate revenue or reduce costs are prime candidates for IT investment, says James Krouse, manager of state and local IT market analysis at Reston, Va.-based Input. "[Solutions] with measurable results get the attention,initiatives that can produce some sort of ROI," he says.

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State governments are looking at additional ways to tap the Internet to reduce call-center and personnel costs, says Henry Cheli, president and COO of Annese and Associates, Herkimer, N.Y. "Some states have really taken the approach that making constituents stand on line isn't good business," he says.

States also are looking for ways to better serve their citizens through expanding their use of e-government, says Stephen Rohleder, group chief executive of Accenture's government operating group, which authored a study, "eGovernment Leadership: High Performance, Maximum Value," that takes a look at e-government from an international perspective.

"Some of the conclusions are equally applicable to the state, national or provincial level," Rohleder says. "It's about taking e-government to the next level, which we are terming 'high-performance e-government.'"

For example, working with Accenture, North Carolina developed "North Carolina @ Your Service," a portal designed to give residents access to the state's services and information. "They've really taken the personalization approach to heart and patterned their portal on Amazon.com," Rohleder says.

States are also consolidating operations,eliminating redundancies when each agency operates its own IT infrastructure. "Their key goals are to reduce the redundancy of networking within the government, and consolidate those into one ubiquitous network that can service all agencies," Annese and Associates' Cheli says.

But selling to state government can have its drawbacks, especially for solution providers hoping to provide end-to-end, complex systems.

"We are finding the government would be a difficult space for us because you need to incur expensive, lengthy sales cycles," says Peter Callahan, vice president of sales and marketing at Maximizer Software, Vancouver, B.C., which specializes in CRM solutions. "[Solutions] have to be specialized to the government, but can be applied successfully in those arenas where thousands of people are gathering data so they can mobilize better among the agencies to deal with a national threat or help the taxpayer."

Whether it is a state with a large IT budget or a location with more modest funds and goals, remembering the client's specific needs is a prerequisite to slicing off a piece of the funding pie.