Seven Solutions States Are Buying

Economic recovery and new federal funding is triggering slow but steady growth in state and local IT spending. Overall, state IT spending will grow by 7.6 percent in 2005 and another 4.5 percent by the end of 2006, according to research firm IDC's latest forecast released in February.

"We believe that this is an opportune time for IT providers to target the state and local market space," says Shawn McCarthy, program manager for U.S. IT Opportunity Government and Education at IDC.

Cost-saving IT consolidation and federal mandates for homeland-security goals are the main drivers of current spending patterns, according to the report. A key selling point for VARs is "dual use" projects that can serve as both day-to-day operations and emergency/security needs. A statewide wireless communications network is useful to first-responders as well as libraries, for example.

We have identified seven areas in which VARs can find profitable state business based on these trends.

1. Document Management and Workflow Automation
Governments are still awash in paper, and opportunities to digitize records abound. But the broader trend is workflow automation to expedite the repetitive tasks that depend on forms and other documents.

"It's a very VAR-centric business requiring combinations of disciplines," says Dan Lucarini, senior director of marketing at Bellevue, Wash.-based Captaris. "Content management, business-process analysis and image-processing expertise come together in workflow automation." But Lucarini cautions against overly complicated sales pitches.

"A lot of states get bogged down with business-process analyses that take years and result in detailed workflow maps, but then you have to decide where to start. Pick one process that can be automated and save the state $150,000, then build on that." He says every time he asks a roomful of state employees to name one paper-based task that they do over and over, "hands start flying up, and they start selling themselves."

State finance offices and transportation departments are two places where Captaris finds lots of business. For example, incoming faxes from vendors can be sent to a Captaris RightFax server, which routes a fax to the proper workstation, triggers a data-capture subsystem and begins the automated workflow process.

E-mail also has joined the list of government documents that must be archived and made available to the public upon request. Products to archive e-mail in real-time are key, as well as the ability to store e-mail in a secure repository that conforms to compliance regulations for retention, accuracy and retrieval.

2. Geographic Information Systems
States are beginning to knit together the many geographic information systems (GIS) developed by state agencies and local governments over the years. The Department of Homeland Security funds such initiatives to facilitate emergency response and terrorism intelligence. The states hope to realize cost efficiencies by supplying a centralized infrastructure populated with GIS data uploaded by agencies and local governments.

The opportunities for VARs include normalizing data from different systems and building integrated, Web-based networks of shared GIS information. The challenges include staggering volumes and varieties of data types and users.

For example, Geodata Services of Missoula, Mont., is designing a multiuser "smart map" model of critical structures for all counties, tribal governments and state agencies in Montana. It will incorporate almost 200 critical structure map layers collected from hundreds of government agencies and private organizations, such as phone and utility companies. The system will help answer questions for emergency responders that range from, "What hazardous materials are stored in this building?" to, "Where are the evacuation routes in this school?"

Pennsylvania recently received a $603,000 homeland-security grant to upgrade the Pennsylvania Emergency Incident Response System (PEIRS) with GIS information. It will enable 10 state agencies with emergency-response responsibilities to share mapping, emergency-vehicle routing, geocoding that links addresses to map coordinates, plume modeling that tracks airborne substances and spatial searches. To ensure interoperability with multiple vendors' products, the system will employ open standards developed by the Open Geospatial Consortium of Wayland, Mass. The state plans to select a contractor this summer.

3. Wireless Communications
States are funding wireless initiatives for emergency responders, rural Internet access and mobile civilian employees, left and right. The lion's share of funding goes to police, fire and emergency medical projects.

Arkansas currently has 12 state agencies using different radio systems, as well as additional independent systems run by 75 counties and numerous municipalities. The Arkansas Wireless Information Network (AWIN) was launched this year to create a statewide digital voice/data system shared by all users. The state police will get the first upgrade, at an estimated cost of $25.5 million, funded by homeland-security grants, state bonds and the federal Office of Domestic Preparedness.

Maryland's public-library network has replaced its leased lines with a licensed-frequency wireless backbone. Each county has a 100-Mbps POP from which capacity is distributed to libraries and other public agencies within the county via unlicensed radios supplied by Alvarion. In a creative partnership, Alvarion and systems integrator The Business Information Group of York, Pa., gave the BreezeAccess gear to the counties in exchange for space on county-owned radio towers. The system is serving mobile emergency responders as well as fixed-base users, and will eventually connect video surveillance cameras, too.

State capitol buildings are also going wireless, with 13 states offering Wi-Fi hotspots to legislatures and the public. State parks are offering Wi-Fi in Michigan, Texas, West Virginia and California. Mobile devices for inspectors, caseworkers, legal staff and other civilian field workers are an ongoing effort at state, county and municipal levels.

Municipal wireless networks have become statewide issues as telephone and cable companies lobby state legislatures to prohibit taxpayer-funded municipal networks. Philadelphia's planned $10 million Wi-Fi network, which will be funded by bonds repaid through inexpensive user subscriptions, was threatened by such a bill until thousands of residents besieged the state legislature for a waiver. Texas, Colorado and other states are considering legislation that would limit municipalities' ability to fund Wi-Fi with tax dollars. Nonetheless, many cities are pursuing public/private partnerships that would enable residents to enjoy low-cost Wi-Fi without running afoul of the proposed laws. For example, Granbury, Texas, owns its Wi-Fi network, but its contractor, Frontier Broadband, owns the equipment and sells subscriptions to residents for $20 per month.

4. Networking and Telecommunications
A major trend in state-government networking is consolidation and sharing of network resources. Money is being spent on expanded capacity and upgraded equipment for such mixed-use networks.

State agencies and universities have run separate networks in the past, but now some states are experimenting with ways to consolidate network resources and share costs. North Dakota, for one, has integrated its universities and government into one administrative network to provide human resources, financial information and services to users. Indiana's state agencies, public libraries, K-12 schools and even the public broadcasting system share a network. Delaware's government and university IT departments shared the cost of an Internet2 network upgrade, enabling the schools to get their high-speed research link and the state to eliminate some leased lines.

Consolidated networks usually mean shared applications, too, such as in the case of North Dakota's government/university HR and financial systems. The combination of network hardware, application software, bandwidth provision and management services makes for bigger contracts for VARs.

In addition, Voice over IP is catching on among cost-conscious state agencies. The California Performance Review committee recently recommended adopting VoIP statewide to save an estimated $6.3 million per month, roughly one-third of the state's phone bill. Other states are drawn to VoIP's flexibility in call-center applications.

A VoIP media server from Avaya helps New Jersey's departments of commerce and human services support multiple small call centers. When one center gets slammed with calls, another center can pitch in just by adding its phones' IP addresses to the Avaya VoIP media server. Without this technology, each center would need its own PBX and call-center software. Texas hosts a similar VoIP call-center network, and Alaska is in the process of building one.

5. Information Security
States are buying information-security services and products as part of every new procurement, but general security audits and remediation contracts are scarce.

"Security has become a business-process matter as opposed to point solutions," says Jim Routh, vice president of channel sales for e-mail and file-transfer security-software development at Tumbleweed Communications of Redwood City, Calif. "States are buying security as part of business-automation-process projects."

Tumbleweed's SecureTransport file-transfer software finds its way into VARs' document-management and e-government solutions, such as employers' reporting of new hires to state departments of labor, and its MailGate e-mail security software is often specified in HIPAA-related applications.

But important to keep in mind is that funds for security consulting and audits are tight. "Information security is not tied to homeland-security grants," says Ed Burns, president of Ciber's state and local government division in Englewood, Colo. "The states are funding security out of their own budgets." Even so, he says, Ciber's security practice has seen its business double in the past year, including five new state government accounts.

"One thing driving attention to security is CIOs' coming [into state government] from the commercial sector; they demand more in the way of information security," Burns says.

6. Continuity of Operations Planning and Disaster Recovery
The goal of Continuity of Operations Planning (COOP) is to keep vital government services operating in the wake of disasters both natural and human-caused. COOP involves identification and assessment of risks, contingency plans for evacuation, temporary relocation of staff, restoration of information and communications resources, and emergency response services.

"We've seen a definite uptick in (COOP) business during the last 1 to 2 years," says Kevin Miller, spokesperson for COOP consulting and software firm Strohl Systems Group, based in King of Prussia, Pa. "Homeland-security grants are being tied to risk management and COOP goals," giving states incentives to develop consistent and comprehensive plans.

Strohl provides business impact analysis (BIA) software, which helps organizations identify risks and vulnerabilities, evaluate their probabilities and determine courses of action to mitigate disasters. More than 20 states use Strohl's Living Disaster Recovery Planning System (LDRPS) software to create, maintain and organize comprehensive continuity plans. The state of Maryland recently signed a contract for Strohl's software and consulting services.

"Continuity of operations planning is an important element in assuring the state of Maryland's domestic-preparedness agenda," says Teresa Chapman, State COOP Manager for Maryland. "Strohl's LDRPS and BIA professional planning software will allow the state to gather, analyze and implement these continuity plans in a way we couldn't have done with standalone plans."

Funding for COOP is lean, so a VAR's selling strategy must focus on ease of implementation and use, cost efficiency, and consistency of COOP plans at state and local levels.

Certification and networking with COOP specialists are the keys to gaining entry to this market, Miller says. The Disaster Recovery Institute International (www.drii.org), Falls Church, Va., offers basic and master-level certifications. The Association of Contingency Planners (www.acp-international.com) hosts events and training sessions where vendors and state COOP personnel meet.

7. Enterprise Architecture
Efforts to integrate, consolidate and realign states' IT systems with customer-centric business processes fall under the rubric of "enterprise architecture" or EA. While every state has EA ambitions, few have made progress towards realizing them on a large scale, signaling opportunity for VARs.

"On a scale of 5, I'd have to give most states a 1 or 2," says Barry Van Sant, director of Ciber's enterprise architecture, business-continuity and disaster-recovery group. Funding to plan, promote and implement EA is the major problem, he explains. Federal grants are given for very specific programs, not for integration projects.

"States are doing it themselves due to the funding shortage. They're developing standards (for departments), but not integrating them in an enterprise architecture," says Van Sant, adding that EA projects that get funded are usually obvious examples of waste and inefficiency.

Benefits-eligibility-determination systems are a good example. Separate systems exist for Medicaid, food stamps, welfare payments, energy bill assistance, etc., frustrating caseworkers with duplicate efforts and forcing citizens to apply at several different offices.

Utah is slowly replacing its mainframe-based eligibility systems developed in the 1980s with a $57 million electronic Resource and Eligibility Product (eREP). The first module, rolled out in 2003, is a Web site where residents can find available services. But the system that will actually determine an applicant's eligibility for multiple programs isn't scheduled to go online until 2006.

Pennsylvania and Massachusetts are using Web services and XML to patch together their various legacy eligibility-determination systems. Such projects are slow starts toward an enterprise architecture.

VARs can help state IT directors make their business cases for EA by bringing them examples of EA efficiencies from the private sector, and by selling consulting services to assess opportunities to save duplicate efforts and consolidate IT resources.