State CIOs Speak Out

STATE/LOCAL:

A vast majority of states are cutting IT spending this year. A survey of 27 CIOs at last month's midyear National Association of State CIOs (NASCIO) conference in Pittsburgh revealed that 66 percent do not expect to get more money, while 22 percent expect flat budgets. Only 11 percent said they expect more money.

Making matters worse, many state CIOs and VARs are frustrated by the pace at which federal funds for Homeland Security are being given to the states. While the Bush administration last month released $100 million to specific urban areas, including New York, Washington, D.C., and San Francisco, and requested $2 billion in future funds, state CIOs say they have yet to see any significant funds for state IT initiatives. "We've been hearing all about homeland security money and, frankly, we're not holding our breath anymore," says Aldona Valincenti, CIO of Kentucky.

For systems integrators and solution providers, the lack of funding leaves them in a holding pattern, as well.

"It's very frustrating," says Kay Goss, senior adviser for emergency management services and homeland security at EDS. "We operate on contracts. Once the money comes out, then the RFPs come out, and we respond to them. So it's several months' lag time."

Homeland Security CIO Steve Cooper, who addressed state CIOs back in October, proposed several federal funding initiatives that would encourage interstate information-sharing.

"I would say the flow of funds to the states has been limited," says Gerry Wethington, CIO of Missouri and president of NASCIO. "I think the requests have been limited because there hasn't been enough detail around information exchange and information architecture."

But not all of the blame should fall on the states though, notes Pennsylvania CIO Art Stevens. "The states need to work better with the federal side to make sure that we are taking advantage of all the opportunities that are there," Stevens says. CIOs are planning their annual spring "fly-down" to Washington to meet with key congressional leaders as well as officials in the new Office of Homeland Security and the Office of Budget and Management (OMB).

Cybersecurity and business continuity are still top priorities, says Steve Kolodney, vice president of digital government at AMS. "We're also seeing moderate investments where you can come up with the money if it's going to provide a very quick return on investment," he says. AMS is taking on more capital risk up-front by creating results-oriented contracts, Kolodney notes.

Overall, though, there's less money going around. Most state CIOs are having to make significant cuts in IT spending. Stevens, who has only been Pennsylvania's CIO for about two months, found out on his second day on the job that his IT spending budget was being cut by 35 percent. Stevens, who became a state CIO after a 15-year career as an integrator, most recently with Deloitte Consulting, says no major initiatives are being shelved.

"We are looking to extend time lines and try to make sure as many of the key infrastructure projects we have going stay alive," Stevens says. Among those projects deferred is a new centralized payroll app that would be used for all 80,000 employees of the state. The state also intends to go forward with the rollout of a radio-based emergency communications network, a criminal justice system called Jnet, and the continuation of the rollout of a new telecom network through its partner Adelphia. Of course, homeland security is key on the agenda, Stevens says.

Stevens also considers enterprise app integration a key enabler in helping reduce costs. "We're looking at our organizational structure and identifying the enterprisewide business processes that we want to change," Stevens says. First, though, given the cuts in funding, "we really need to look at project prioritization," he says.

While most cuts are not as high as Pennsylvania's, anywhere from 5 percent to 20 percent is typical, according to a spot poll conducted at the conference. In a survey by NASCIO of the 27 CIOs at the conference, 33 percent said protecting e-government initiatives is the most important priority. Another 33 percent said preserving operational norms is key, while 11 percent said moving forward with enterprise architectures is the key priority.

The latter is vital to helping cut costs, eliminating redundancies and facilitating information-sharing between agencies -- even those where there are interdependencies. That is not an easy thing to push down to agencies, CIOs say, because of issues over turf. New York CIO James Dillon perhaps sums up the challenge best: "We're trying to do centralization on a shoestring. That's difficult to do. It's difficult to sell the idea of centralization, especially as it applies to standards."

Even among the few states where IT is centralized, cuts are being made at the agency level. That's the case in South Dakota, where agencies are yet to reveal where they will make their cuts, says CIO Otto Doll. "How much they cut out of their IT allotments remains to be seen," Doll says.

Other states are still waiting for their IT budgets to be determined. Rock Regan, CIO of Connecticut, says the governor of his state, Republican John Rowland, is in a contentious budget debate with the Democratic-controlled legislature. Although he's preparing for his budget to take a hit, it's not clear how much or what programs will get priority. "There's a lack of clarity [as to] what the budget will look like," Regan says. There's also a lack of clarity on when the stalemate will break, although many believe it could drag into the summer.

Meanwhile, Connecticut has several e-government initiatives on the table. "We know we're not going to get all the money we need. Right now, we have to prioritize what's going to go forward and what is not," Regan says. "It's a real shell game."

In Virginia, CIO George Newstrom is battling to reorganize statewide IT efforts. That has met stiff resistance from Virginia's legislature, which didn't want to give up its hold on this area, according to legislator Joe May, a member of the Virginia House of Delegates. Among the key changes was revamping the procurement process, which takes effect in July.

Overall, many states are looking at radical shifts. Connecticut's Regan says that may mean consolidating hardware and software, and looking at overall lower-cost solutions. "We're looking at a lot of different approaches to things," Regan says.

"At a minimum," adds South Dakota's Doll, "I would suspect most agencies are going to cut back their technology refresh cycles in order to delay expenses." H