· .- scope of technology enhancement task force the technology en hancernent task force was...

Technology

Executive

I - Znhancement Task Force

Summary

for Committee Meeting #2

Sunnie Richer, Citizen Co-chair

Gerald R. Anderson, State Co-chair

October 22, 1991

Update #4

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SCOPE OF TECHNOLOGY ENHANCEMENT TASK FORCE

The Technology En hancernent Task Force was created to: Review the use of technology in providing government services, including:

The configuration of the State's current data processing structure. . The development trends in data processing. Explore efficiency strategies in the related areas of:

Computerization. 9 Magnetic and optical storage. . Artificial intelligence.

Telecommunications. 9 Technology transfer. Review applications software development, including establishment of: 9

. Direction of State efforts. Development of future applications. Management structures and incentives to encourage and reward efficiency and quality.

Assess the Iowa Communications Network, including: . Evaluation of ICN's potential in linking information needs. - Estimated costs of producing anticipated benefits.

Standards to determine the major application priorities.

The Fiscal Scope of the Task Force was determined to include $26.54 Million in direct General Fund investments in technology. (Indirect investments, including personnel or moneys dedicated to programs or activities supported by computers and other technologies are not necessarily reflected in the fiscal scope, but are included in the in the Task Force's charge. The scoping exercise was to assure that no line item dollars from the State's General Fund budget were ignored because no one Task Force recognized a specific line item as being within the scope of its charge.)

The Technology Enhancement Task Force has been divided into two Subgroups focusing on:

. Consolidation Subgroup, with focus on current information service delivery, with specific emphasis on centralizing certain activities to realize economies of scale and eliminate duplication. Enterprise Plan Subgroup, with focus on establishing management framework for future information service delivery.

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Technology Enhancement -- 2 I

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PRIORITIZATION EXERCISE The Task Forces were then asked to apply certain uniform evaluation procedures to produce both short-term priorities and long-term strategies.

Prioritization Exercise. This "prioritization exercise" is intended to identify opportunities for savings in General Fund expenditures in FY93 equal to:

The prioritization exercise is not intended to suggest that cuts of these magnitudes are necessarily good or recommended, but rather to force prioritization. It identifies what functions and activities are central to the Mission of State Government. Savings Opportunities. To carryout its charge and to complete the prioritization exercise the Task Force has identified a range of opportunities that could be implemented in the short-run to effect immediate savings in FY93. ("Could" not necessarily "should.") From the range of opportunities the task Force can then prioritize which options should be resorted to first. Scoping and prioritization may suggest some specific opportunities in FY93 through: 1

Reordered priorities.

. Other savings.

10% (Do existing-services less, or do them more efficiently.) 20% (Serve current needs differently.) 40% (Discontinue existing services and cease serving lower priority needs.)

One-time deferrals until after the budget deficit is eliminated (the GAAP filled).

Efficiencies in current operations. ,

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Technology Enhancement -- 3

FISCAL YEAR 1,993 GENERAL FUND SAVINGS TARGETS Emerging Focus. The full range of analysis has not been performed on the already identified opportunities. More opportunities may yet be identified. Therefore, the Task Force has made no recommendations and has not completed the prioritization exercise. However, several lines of investigation or opportunities have emerged as key focal points of study:

10% (of Fiscal Scope) Range -- $2.7 Million Target: Reorganization of existing data processing activities to obtain economies of scale, increased managerial efficiency and reduced duplication of expense and effort. Several alternative models have been identified and are being investigated. Preliminary research has identified the range of potential savings as being from 20%-25% of current $1 1,585,648 expenditures on data processing. Savings to be shared between General Fund, other State Funds like the Road Use Tax Fund and federally funded, state operated programs like the Department of Employment Services. Annual General Fund potential approximately $1 million. Consolidated hardware purchasing with local government. (Intergovernmental Task Force.) Potential savings unknown. Deferral of Wallace Technology Foundation funding until General Fund deficit is eliminated. FY93 budget for Wallace Foundation is approximately $2.57 Million from the General Fund. Investigation only just begun.

Deferral or elimination of Internet. Rely upon existing, arguably duplicative, resources in IDED or private sector to provide similar informational and coordination services. Potential annual General Fund savings, $500,000. Investigation only just begun. Consolidation of telecommunications for immediate FY93 savings via merger of separate control units into one office. Unknown. Voice messaging or audio response. Unknown. Combination of smaller savings opportunities more fully described elsewhere.

20% (of Fiscal Scope) Range -- $5.3 Million Target.

. 40% (of Fiscal Scope) Range -- $10.4 Million Target (typically longer-term).

Enterprise Plan of technology management and implementation to maximize existing and future efficiencies in information service delivery. Expert systems or Artificial Intelligence (Al), with significant up-front investments and no savings in FY93-94, but promise of significant savings in out years. Examination of ICN. No trend has yet been identified, but ICN is under review both because of the size of the investment and to definitively answer current questions relating to cost/benefit. Improved management process through coordinated Enterprise-wide Management Information System (MIS) for such things as budgeting, accounting (general ledger), purchasing, and payroll. Chief Information Officer (CIO) to assure coordination and enforcement of technology standards.


Need for More Not Less. In fairness, the Technology Enhancement Task Force anticipates that rather than reducing the State's expenditures on technology, it will be necessary to increase technology investments to fully realize savings under discussion by other Task Forces. Efforts such as the Enterprise Plan assures that future State investments in technology return maximized value to the State's citizens and taxpayers.

CONSOLIDATION SUBGROUP

REVIEW OF CURRENT COMPUTER OPERATIONS and

DATA CENTER OPPORTUNITIES

Following Preliminary Reports on Data Center Opportunities do not yet say what should be done, but rather define the range of what could be done. . Nor does it say who should do it. For instance, one methodology to implement consolidation would be to allow existing data

centers to bid on which site would be the new center. Governance and control implementation issues have not yet been addressed. These may be important politically to facilitate implementation, but do not define the available savings from any one option. Rejection of an option for political reasons has an Opportunity cost. The additional amount, if any, that could have been saved over the next lowest cost alternative. Final recommendations await full description of baseline and all options. I

All numbers reported are currently estimates, subject to confirmation and validation.

Technoiogy Enhancement -- 5

1

COMPARISON BASELINE #I: Status Quo Scenario Preliminary Report

Comparison Baseline To evaluate opportunities for savings in data center and computer support functions of state government it is essential to establish the baseline comparison. The costs that will be incurred if no structural change is implemented and the status quo continues. In the case of data centers, the status quo does not mean no change in costs. Existing facilities will have to be expanded or upgraded to meet expanding demand for data processing and electronic storage services. No action is recommended on other data center opportunities until the baseline is established and a// options are fully described.

Baseline Costs FTEs: 481.9 General Fund: $0.0 Other Funds: $0.0 Federal Dollars: $0.0

Projected Capital and Applications Development Expenditures

Department of Transportation (DOT) . . Other mainframes and microcomputers.

Applications Development

Assumptions

General Services Information Services Division (ISD)

Department of Employment Services (DES)

Local Area Networks (LANs) and Personal Computers (PCs)

Analysis

Methodology Issues

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OPPORTUNITY #2: Data Center Common Management Preliminary Report

Consolidate management of existing data processing operations inside of single agency responsible for enterprise-wide service. Common management would charge back its time to each client agency. Common management would establish standards for future expansion and assure highest level of efficiency. Existing facilities could continue to be "owned" by current agencies. Primary benefit, immediate savings through consolidation of staff and elimination of duplicated software licenses, positions, and actions. Could be implemented by 28E agreement or by statute. No adion is recommended on this or ofher data center oppodunHies until the baseline is established and all opfions are fully described.

Savings Potential (Based on estimafes and subject to confirmation.) FTEs: ? FY93 General Fund $990,303.00 FY93 Federal Funds (DES) $644,042.00

$435,891 .OO LocalTax$: None

- Longevity: On-going savings, all future years Timeframe: Immediately, but certainly by FY93,

FY93 Other State Funds (DOT Road Use Tax Fund) I

Analysis 1

Assumptions (M&iafi i d ~ e ;~pl?t?d * Managerial savings on magnitude of 10-20%.

Systems savings on magnitude of 2040%.

Applications savings on magnitude of 515%. If applications are lefl in each user agency, savings less, but still significant. Operational savings on magnitude of 0-5%.

Software savings allocated 1/3 to each user agency. Actual distribution would vary depending upon usage. Current ratios close to 30-40% for 3 major agencies.

Modeled on experience of state and private sector data center managers and information supplied by vendors on software license costs (both operating systems software and common applications software).

esf!,~!st& S W ~ ~ S . !

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Methodology

Implementation I s sues Three major funding sources for existing data centers. =

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Federal Dollars - DES

General Fund - General Services Information Services Division (iSD)

Road Use Tax Fund - DOT

Upgrades planned or expected based on past experience and demand trends for all 3 existing systems within 18-24 months. Transfers support funchon outside of client agency, Perceived danger of lower quality service from outside agency.

OPPORTUNITY #3: Data Center Outsourcing Prelim h a ry Report

Opportunity Contract with an outside, private sector vendor to provide data center and other computer support services on an enterprise-wide basis. Outsourcing would replace existing hardware and services currently maintained by a variety of individual agencies. A precondition to implementation is establishment of satisfactory cost and quality standards.

No action is recommended on this or other data center oppoffunities until the baseline is established and all options are fully described. Final report on Outsourcing will be based upon information supplied by prospective vendors, but will not be confractually binding. Estimates have not ahvays been met in implementing such contracts in the private sector, so the estimate should be used to establish the order of magnitude of savings available, but not necessarily the exact dollar amount to be realized. Consideration of Outsourcing focused on stmctural efficiencies.

Savings Potential FTEs: 00 (not yet determined) General Fund $0 (not yet determined) Other Funds: $0 (not yet determined) LocalTax$: None Longevity: On-going savings, all future years Implementation Timeframe: 1-2 years

Analysis = Assump?i!bnc

Economies of scale are available through coordinated purchase of data processing and computer support services from the private sector. Quality of service can be maintained or improved for all client agencies. =

Methodology Request for Information (RFI) or other information supplied by major private sector vendor.

Implementation Issues . Departments or Agencies effected: 9 General Services.

DOT. DES.

Existing equipment to be replaced by outsourcing ma! not be full! amortized. (Sale or trade-in ialue issues.)


OPPORTUNITY #4: Data Center Consolidation Preliminary Report

0 pportu n ity Consolidate data processing operations inside of state government into one or two mainframe computers under common management and common ownership. Currently state agencies or state funded entities have a variety of mainframe and micro computers. The majority are IBM machines with common operating architecture and operating systems resulting in duplication of personnel, services and license fees just to maintain the operating systems. Of the remainder, some duplication exists because of running more than one type of basic applications software, like PROFS or E-Mail, or human resources (payroll), accounting (general ledger), and budget. Long-term savings on the order of 25% could be achieved through consolidation. Implementation would have to be phased in, with some operating savings available immediately, at the cost of capital investment in a new, larger mainframe. Some of the capital costs of consolidation are offset by the need to upgrade existing systems to accommodate growing demand within 18-24 months. Capital will need to be invested in central data centers inside of 2 years. Choice is how to spend the dollars to maximize efficiencies.

No action is recommended on this or other data center opportunities until the baseline is established and all options are fully described. Final report on Outsourchg will be based upon infoffr)ation supplied by prospective vendors, but will not be contractually binding. Estimates have not always been met in implementing such contracts in the private sector, so the estimate should be used to establish the order of magnifude of savings available, but not necessarily the exact dollar amount to be realized.

Operational Savings Potential (Based on estimates and subject to confirmation.) FTEs: 00 (Not yet determined)

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FY93 General Fund $1,734,579.00 FY93 Federal Funds (DES) $1,168,518.00 FY93 Other State Funds (DOT Road Use Tax Fund)

*Assumes replacing 3 existing data centers with a single larger data center and consolidating maintenance and support of local area networks (LA&) and (PCs).

$765,5 1 7 .OO*

Necessary Capital Investment FY93 General Fund $1,266,666.00* FY93 Federal Funds (DES pays proportional share) $1,266,666.00

$1,266,666.00 *Assumes replacing existing 3 Executive Branch data centers in Central Iowa with a single larger data center. Assumes distribution of total costs 1/3 to each existing operating entity. Actual division may vary depending upon use. DES cannot cliarge Federal Government more than actual cost, but can pass on full cost to federal dollars.

FY93 Other State Funds (DOT Road Use Tax Fund)


Net Savings Potential after Necessary Capital-Investment FY93 General Fund $467,913.00 FY93 Federal Funds (DES) -$98,148.00* FY93 Other State Funds (DOT Road Use Tax Fund) -$501,149.00"

*CompaTe to planned upgrade expenses under status quo. For each fund, the net cost is still less with consolidation than with necessary expenditures for same user with non-consolidated data centers. . Local Tax Dollars: None, though future potential for savings through intergovernmental cooperation are not foreclosed, and are

probably enhanced by consolidation. Longevity: On-going savings, all future years Timeframe: 1-2 years

An a I ys is Assumptions . a

Managerial savings on magnitude of 1525%.

Systems savings on magnitude of 20-30%.

Applications savings on magnitude of 515%. If applications are left in each client agency, savings less, but still significant. Operational savings on magnitude of 2-35%. Software savings and capital expenditures allocated 113 to each client agency. Actual distribution would vary depending upon usage. Current ratios close to 30-40% for each agency.

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Methodology Modeled on experience of state and private sector data center managers and information Supplied by vendors on sofhvare license costs (both operating systems software and common applications software).

!rnp!eme!?!a!im !ssr?es Three major funding sources for existing data centers.

General Fund - General Services Information Services Division (ISD)

Road Use Tax Fund - DOT

Federal Dollars - DES

Upgrades planned or expected based on past experience and demand trends for all 3 existing systems within 18-24 months. Centralization increases the magnitude of a major computer disaster. Transfers support function outside of user agency. Perceived danger of lower quality service from outside agency. Savings are not directly proportional to number of machines, but rather to number of machines and size of machines. Single larger computer's software licenses not 1/3 the cost of existing machines because license fee is also capacity dependent. Transfer of applications control to central manager likely to be most controversial but would reduce potential for duplication of efforts.


OPPORTUNITY #5: Intrapreneurial Data Center Preliminary Report

Opportunity This is a refinement of either the common management option or the consolidated data center option. An operation could be organized to operate on a fee for service basis within state government. It would be initially capitalized by contributions of people and/or capital from existing computer operations. Profits would accrue to the participating client agencies while providing market incentives to the enterprise-wide data center to maintain service levels. Income would allow rational planning for future expansion without the need to fully expense capital acquisitions in the first year even though benefits are accrued over the life of the capital. Intended to deliver some of the managerial benefits of outsourcing within a state ownership model. May require the potential of competitive outsourcing to keep the enterprise-wide data center honest. No action is recommended on this or other data center opporfunifies until the baseline is established and all options are fully described. Final report on Intrapreneurial Model may not be able to identify current savings, but should describe managerial incentives to obtain low cost/high qualify service for client agencies.

Savings Potential FTEs: 00 (not yet determined) General Fund $0 (not yet determined) Other Funds: $0 (not yet determined) LocalTax$: None (none anticipated unless local government participates) Longevity: On-going savings, all future years

4-2 years . limeframe: -,

An a I ysis Assumptions a . a .

Outsourcing may offer immediate savings on a tactical basis.

Long-term, outsourcing may be less rewarding as a strategic plan because of profit load of private vendor.

Outsourcing may foreclose ability to make choices in the future. (Over time the State loses current ability to fend for itself.)

Equal technical expertise and managerial skill exists in the public sector or can be created so that outsourcing has no inherent qualitative advantage.

Methodology * Review of legal issues of organization.

Review of business or economic issues of effective managerial incentives.

Implementation Issues


ENTERPRISE PLAN

The Enterprise Plan Subgroup is following the Information Service Delivery Model contained in the Strategic Automation Plan of September 26, 1991. The Model focuses on:

1. Management through standards rather than control through ownership. 2. Corporate ownership rather than agency ownership. 3. Integrated planning and use for equipment and systems. 4. Service oriented responsiveness. 5. User based funding. 6. Focal point for data communications.

The Enterprise Plan would become the State's Business Plan for Information Service Delivery. Emerging Focus for FY93. Lines of investigation or opportunities emerging as key focal points of study for the Enterprise Plan Subgroup include:

Consolidation of telecommunications to achieve immediate savings in FY93 through merger of separate control units into one office. Investigation of voice messaging or audio response as a savings opportunity.

Expert systems or Artificial Intelligence (Al), with significant up-front investments and no savings in FY93-94, but promise of significant savings in out years. Improved management process through coordinated Enterprise-wide Management information System (MIS) for such things as budgeting, accounting (general ledger), purchasing, and payroll. Chief Information Officer (CIO) to assure coordination and enforcement of technology standards.

- Longer term Savings.

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SUGGESTED CRITERIA FOR REVIEW OF OPPORTUNITIES

Cost Shift to Local

G over n m en t ? If so, reject.

More People Hig h/Low I Se:ed I I

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High'High I

Revenue Impact? Revenue Neutral or Net

Negative Savings Reject.

I I I Filter progressively higher priority opportunity through I I

7

I ' . I Fewer People

process. Preserve aclions high and to the right.

LowILow Low/High 1 Served 1 I 1

Low Priority Needs <--- Long-term, Self-actualization vs. Short-term, Life-threatening, food and shelter

=- High Priority Needs

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Central to State's Mission? I- If not, target. '

Investments.

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Code or Constitutional Change Required?

If so note as implementation issue, and consider in assigning implementation timeframe.


OPPORTUNITY INVl -

Opportunity

latus Quo Scenario for Central Data rocessing

ommon Management for existing lata Processing Centers, iaintaining separate facilities and eparate ownership

lutsource Central Data Processing )n Information Utility Model to private rendor

ieneral f4 NTORY FOR TECHN( jeneral Fund FTEs

dlber 'unding ;ources

Revenue

LOGY nmeframe

ENHANCEMENT TASK FORCE lmpiementation Issues

Pros and Cons

PRO Agencies with dedicated funding (State or Federal) enjoy substantial programming benefits from autonomy. CON Autonomy has sacrificed available economies of scale, increasing the cost of services to General Fund agencies. CON 18-24 mo. window of opportunity because of planned sxpanslons of all existirfg mainframes.

PRO Immediate FY93 Savings. PRO 3 funds share savings in personnel, software and capital. PRO Coordinated planning and standards development. leading to future efficiencies. PRO Combmes.similar functlons consistent with Total Quality Management (TQM) model. PRO Systems/programming resources can be allocated to the State's highest priority projects. PRO Reduced software license fees. PRO Would not require transfer of title to capital and could permit "owner" agenpies to continue current capital accounting practices. CON Proper allocation of management fees more difficult. Would require job billing. CON Ma.nagement of a distributed staff is more difficult than a single site. CON Transfers responsibility for client agency support function outside of client agency. CON Difficulty responding to individual agency priorities. @ON Appiicaiion deveiopmeni priority conflicts. CON Software savings not as great as with single mainframe.

PRO Immediate FY93 savings. PRO Reduce size of state government. PRO Same quality service at reduced cost. PRO Eliminate need to expense capital investments. CON Outside vendor's profit load means economies of scale and coordinated management not fully realized by state. CON Reduced flexibility as State loses ability to fend for itself.


;onsolidation of Central Data 'rocessing within State Government in Information Utility Model

ntrapreneurial Data Processing Wanagement Refinement

Personal Computer and communications acquisitions reforms

Scoped and rejected as immediate opportunity. Total state expenditures for each of past two years averaged approximately 3.5 million, but only 10-1 2% was from General Fund and much of that was fully reimbursable from regulated industries.

.371 NA

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Loss of Federal $

PRO 3 different funds share savings in personnel, software, and capital. PRO Combines similar functions consistent with TQM. PRO Unified management lo establish standards, leading to future efficiencies. PRO Systemslprogramming resources can be allocated to the State's highest priority projects. PRO Reducedsoftware license fees. CON Increases magnitude of major computer disaster. CON Transfers responsibility for agency support function outside of agency. CON Difficulty responding to individual agency priorities. CON Application development priority conflicts. CON Software savings not directly proportional to number of mainframes.

w93 Considered

and Rejected

PRO Outsourcing's advantages while retaining full benefit of economies of scale and coordinated management in state government.

CON Potential benefits of acquisition reforms limited given priorities of Task Force. Appropriate for attention by management if any of the coordinated management models are implemented. CON Freeze on purchases considered and rejected both for relative small size of potential savings and loss in productivity. Freeze woulc also inappropriately limit new program implementation and jeopardize receipt of federal $ for some projects. Cost of implementing could exceed anticipated savings.


GOING FORWARD -- PLANS AND PROGRESS TO DATE

Opportunity

Data Center and Computer Support Opportunities HYPOTHESIS

Multiple Data Centers 0 Duplication in process, equipment. software

licenses and people may exist.

B Multiple Network Functions 0 Duplication of networkinglcommunications

activities in multiple agencies may exist.

Similar Applications in u s e in Multiple Data Centers

0 Duplication applications at multiple locations could be combined to reduce support staff.

0 Common applications could be used to address same need in multiple agencies. . Duplication in Application

Development 0 Use off-the-shelf software -commercial and

government to reduce software development costs.

Status Quo Baseline Scenario

Common Management

Percent Comp/efe

50%

25%

85%

Remaining Tasks

0 Complete description of Status Quo for fair and accurate comparison of opportunities.

Cl Price and complete description of Outsourcing option.

0 Fully describe and develop intrapreneurial Diita Center option.

0 Complete examination of operations, system support. software, hardware. facilities, backup and recovery.

0 Tables of Organization of Existing Data Centers and Computer Support Operations. 0 Budget Summaries of Existing Data Centers and Computer Support Operations

0 Expansion Plans of Existing Data Centers and Computer Support Operations. 0 Expansion Predictions of Existing Data Centers and Computer Support Operations based upon

0 Determination of Agency to Manage Data Processing and Computer Support based upon Objective

0 Table of Organization of Proposed Common Management Structure.

Cl includes available efficiencies like Auto tape loader. 0 Comparison against alternative strategies or opportunities, like outsourcing.

recent history (to validate stated intentions).

Criteria.


Consolidation $ Size - $3.6 MM' lmplemenlatiori Timing - FY93-FY95 Duration of Benefits - Permanent Linkage - Executive Branch Review Task Force

;ross combined General Fund, Federal Fund and ther State Fund operational savings. Not net wings, does not include necessary capital lvestment as baseline expansion plans for fair xnparison not yet complete.

Outsourcing $ Size -TED Implementation Timing - Short-term Duration of Benefits - Permanent Linkage - Privatization Task Force

Intrapreneurial Data Center within State Government, capitalized from existing operations. $ Size - TBD Implementation Timing - TBD Duration of Benefits - Permanent Linkage - Executive Branch Review Task Forct and Intergovernmental Task Force Management refinement lo other options.

LGca! Gcvemmen! Coordi!-!a!Ion. Cl Duplication in programs, hardware, software,

and personnel may offer opportunities for cooperation to reduce fixed and variable costs and to share the savings.

$ Size - TBD Implementation Timing - Long-term Duration of Benefits - Permanent Linkage - Intergovernmental Task Force, Executive Branch Review Task Force and Statewide Service Delivery Task Force

05%

5%

5%

0%

0 Includes savings from reduced software license expenses. 0 Confirmation of Estimated Budgets based upon Fy93 Budget Submissions. 0 Expansion Plans of Existing Data Centers and Computer Support Operations. 0 Expansion Predictions of Existing Data Centers and Computer Support Operations based upon

0 Determination of Agency lo Manage Data Processing and Computer Support based upon Objective

0 Table of Organization of Proposed Common Management Structure. 0 Comparison against alternative strategies or opportunities, like outsourcing.

0 Submit Request for Proposal or obtain reasonable baseline numbers informally from a major

recent history (to validate stated intentions).

Criteria.

outsourcing entity in the private sector (IBM or EDS). (iBM may be fastest because of current relationship in setvicing existing mainframes.)

0 Comparison against alternative strategies or opportunities. (Both short-run and long-run analysis should be performed.)

0 Possible management option or variation of both common management and consolidation models. 0 Full description of option.

Part of Enterprise Plan review of strategic planning to maximize efficiency. 1

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0 Determine size and scope of Local Governmental computer operations with potential for sharing 10 achieve economies of scale.

13 Including common applications: Budget Accounting (General Ledger) Payroll (Human Resources)

Data Cenlers 0 And common facilities or hardware:

0 Survey Local Governments regarding willingness to cooperate. 0 Explore mutually acceptable methodologies to facilitate sharing


Enterprise Plan $ Size -- TED Implementation Timing -- Long-term Duration of Benefits - Permanent Linkage - All Task Forces

Iowa Communications Network (ICN) 0 Demonstrate that State ownership of fiber optic

network is cost effective.

0 Identify other applications of technology to Improve efficiency of government services dependent upon ICN for feasibility.

$ Size - $9.8 MM annually Implementation Timing - Long-term Duration of Benefits - Permanent Unkage - Statewide Service Delivery Task Force

Economic Development Technology Incubators

B Wallace Foundation (DED) 0 Defer investments in technology incubator until

afler GAAP is filled.

$ Size - $2.57 MM Implementation Timing - N93 Duration of Benefits - Annual while deferred Linkage - none

25%

10%

10%

0 Determine emerging technologies likely to effect government services and offer eniciencies.

0 Describe current major technological development efforts by State, including optical storage projects

0 Develop Chief Information Ofticer proposal to avoid duplication between branches of government,

0 Describe plan or methodology to develop uniform "Enterprise-wide" standards.

and research incubator projects.

including Legislative, Executive, and Judicial.

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a Provide summary description of ICN, including technical description, intended uses, history of development, and limitations on action.

0 Perform CosVBenefit analysis, including potential for increased quantity and quality of services and lower gross and per unit costs.

0 Identify Cost Avoidance Potential of ICN to provide fairer and more accurate comparisons. (Without ICN what would its benefits cost?)

0 Determine estimated Phase 111 costs.

Cl Identify other applications of technology to improve efficiency of government services dependent upon Ule ICN for feasibility.

Work to be done by Booz-Allen and Subcommittee of Task Force.

Cl Define program.

Cl Detail expected benefits.

0 Detail expected benefits to efficiency of state government.

Cl Detail timeframe of expected benefits.

0 Identify federal funding linkages if any.

0 Will deferral close a special window of opportunity?


Internet (DED) 0 Eliminate Internet program and rely upon

private sources lo coordinate Iowa educational resources available to assist Economic Development.

$ Size - TBD Implementation Timing - FY93 Duration of Benefits - One time. LinkaQe - none

.Primary Research Computer Center 0 Defer investment in technology incubator until

after GAAP is filled.

$ Size - TBD Implementation Timing - FY93 Duration of Benefits - Annual while deferred Linkage - none

Other Opportunities

Executive Strategy Planning Document $ Size - TBD Implementation Timing - ? Duration of Benefits - ? Linkage - ?

Voice Mail as a substitute for secretarial support FTE's $ Size - TBD Implementation Timing - Short-term Duration of Benefits - Permanent Linkage - Executive Branch Review Task Force and Statewide Service Delivery Task Force

10%

10%

0%

0%

0 Define program.

0 Detail expected benefits.

0 Detail expected benefits to efficiency of slate government.

0 Detail limeframe of expected benefits.

0 Identify federal funding linkages if any.

0 Will deferral close a special window of opportunity?

0 Define program.

0 Detail expected benefits.

D Detail expected benefits to efficiency of stale government.

0 Detail timeframe of expected benefits.

0 Identify federal funding linkages if any. 0 Will deferral close a special window of opportunity?

0 Define opportunity more fully.

0 Prioritize research efforts.

0 Delegate opportunity development to appropriate staff and Task Force members or Subgroup.

0 Define opporiuniiy more iuiiy.

0 Prioritize research efforts.

0 Delegate opportunity development to appropriate staff and Task Force members or Subgroup.

0 Determine approximate number of FTEs dedicated to telephone messaging.

Technology Enhancement -- 20 '

Examine Technology Strategies for t he Future. 0 New technology could offer benefits in

efficiency and quality of State Services.

$ Size - TBD Implementation Timing - Long-term Duration of Benefits - Permanent Linkage - Statewide Service Delivery Task Force

5% 0 Electronic Data Interchange.

0 Artificial Intelligence (Al), like knowledge based computer applications like Medicaid "Expert" System, for application reviews and caseworker use to improve productivity and reduce errors without need for "expert" employees at point-of-service.

0 Computer Applications Systems Engineering.

0 Open Architecture Computer Systems.

0 Electronic funds transfer (EFT)

0 Electronic Benefits Transfer (EBT)

0 Electronic Data Interchange (EDI), e.g., for claims processing and purchasing.

0 Mandatory use of direct payroll deposit for state employees.

0 Telecommuting.

0 Teleconferencing as alternative to travel.

0 Expanded use of electronic mail and calendars.

0 Digital records storage and retrieval, for such things as Vital Records.

0 Common Geographic Information System (GIs). 0 Simpler upload and download of IFAS data?

0 Information distribution through electronic bulletin boards (replace Iowa Administrative Bulletin?) 0 Remote client service delivery, e.g. 'automaled license machine'.

0 Shared agency databasesldata catalogue so agencies know what Is already available Lo avoid

Q Improved agency access to NSFNET and other high speed networks.

0 Identify other opportunities. 0 Describe operational or practical benefits of each opportunity. (Narrative description.)

0 Estimate potential dollar-value benefit of each opportunity.

Q Price magnitude of Investment necessary to rLalize benefits of each opportunity.

0 Provide long-term strategic planning guidance to State policymakers. (Prioritize State efforts.)

duplicate collection and storage.


Consulting Services 0 Some departments have limited technical

expertise.

0 Never become aware of potential savings from even standard off-the-shelf opportunities.

0 No systematic method to provide occasional support and technological review or standardization.

$ Size - TED Implementation Timing - Long-term Duration of Benefits - Continuing Linkage -Statewide Service Delivery Task Force and Executive Branch Review Task Force

Outsourcing of Routine Functions. 0 Routine functions, like data entry, could be

more cost effectively accomplished.

0 Duplication of routine functions could be reduced or eliminated lhrough coordination or control.

$ Size - TBD Implementation Timing - Long-term Duration of Benefits - Permanent Linkage - Statewide Service Delivery Task FCXC8

1 Coordinate Emergency Voice Communications. 0 Various Emergency and Public Safety 1

orientated agencies maintain separate and uncoordinated voice communication systems (radio communications for the most part).

$ Size - TED Implementation Timing - ? Duration of Benefits - Permanent Linkage - Intergovernmental Task Force, Statewide Service Delivery Task Force and Executive Branch Review Task Force

15%

25%

15%

0 Could be part of Enterprise Plan or Common Management option under Data Centers and Computer Support.

0 Part of Enterprise Plan assignment to detail process lo systematically reduce by rote functions or

0 Identify opportunities for rote job automation.

0 Require data entry once at initial point of service.

0 Require private sector lo provide information In electronic form as condition of some applications or

0 Identify duplicative data entry opportunities.

duplicative efforts.

filings.

0 Identify all agencies maintaining emergency voice or radio communication facilities. 0 Define systems currenUy in use.

0 Determine money spent by each agency In connection with emergency voice or radio

0 Identify pros and cons of alternatives to status quo.

communication facilities.

Technology Enhancement -- 22 '

rState Printing Facilities. 0 Duplication of printing and electronic publishing

facilities exists, suggesting potentials for economies of scale.

$ Size -TED Implementation Timing - ? Duration of Benefits -- Permanent Linkage - Statewide Service Delivery Task Force and Executive Branch Review Task Force

TecForc2.SAM d pw/l0/20/9 1

0% 0 Identify all agencies maintaining printing or electronic publishing facilities (DOT, DES, and General

0 Define systems currently in use.

0 Determine money spent by each agency in connection with maintaining printing or electronic

0 Identify pros and cons of alternatives to status quo.

0 identify range of options and price alternative solutions. (Similar options to data centers.)

Services known).

publishing facilities.

I

I


IOWA BUSINESS c:ouNcrL

REVIEW OF THE STATE OF IOWA'S INFORMATION '

RESOURCES, SYSTEMS AMC, TECHNOLOGY

FINAL REPORT

DECEMBER I , 19139

. .

I .^

11.

111.

IV.

V.

EXECUTIVE SUMMARY .............................................. .. ...... 1

PROJECT OVERVIEW .......................................................

STUDY APPROACH, METHODOLOGY AND TEAM .............

GENERAL FINDINGS AND OBSERVATIONS. ....................

RE C 0 M M E ND AT1 0 N S ......................................................

APPENDIX A: OTHER OPPORTUNITIES

5

6

9

12

* . , . ........ ... . . . . . . . . . . . . ........ . . . .. . . . . . . . . . . . . : . -.. . . . . . ................................. . . . . _ . ,

. . ~

. -. -., : .j

t

..

. .

I

i - : . . . : .:. . . . . . . . . - '

..:. : . . '. , , , '' I ' . - ......... ,. , . .:. x\:: '::, '. ' . 1 % - ' ! ' .

#

I

I

This study was initiated by the Iowa Business Council as a high level review to iden t i e systems and data base improvement opportunities in the Iowa s ta te government comrnmity. Specific objectives were to identify opportunities to:

I

1 1 .

Improve access and integration of the state's information systems.

I

I Enhance social and economic results of state programs through more i efficient and integrated use of information resources.

~

0 Improve communications and partnership of business, government and education.

The s tudy team consisted of information systems representatives of IBC companies, selected state agencies, and Ernst, & Young. The project approach was structured to provide for efficient collectiori of information, and t o facilitate a broad range of participation. Project activities :included:

Phase I: Project Startup and Team Organization

Phase 2: Information Systems and Data Base Survey

~ Phase 3: Agency Inteniews .

Phase 4: Report Preparation and Presentation

It is expected that the contents. of this report will serve as a basis for policy recommendations t o government, business and education.

.. I ~

I 1

. . I . .. . . . .? , . . ’ . . . ;,-.:. ,~ ’. . I . . .’ . :.. . . . ,. , .... .*. . . ._ . -.... ,

4 1

I

E X E C U T I V E S ~ Y

The findings and observations i n the study were directed a t identifying opportunities for change, but may also serve to enlighten the public in the mission, operation and culture of Iowa state government. Key findings and observations include:

a

0

0

0

c

Agency Missions are Highly Varied ’-- The state is a large, complex organization, with many agencies subject t o a strong federal influence. The Legislature, Judicial Branch and Universities are not directly accountable to the Governor.

Iowa State Government as an Enterprise I- Gene& observations: - The spirit of cooperation is excellent,.

Technical personnel are highly motivated, committed professionals. The state has a strong technical base. Institutional barriers exist, particularly in budget process.

- - - TIN Council Has Proven To Be Effective -- The Telecommunications and Information Management (TIM) Council was established by executive order to coordinate telecommunications and information systems. The Council has contributed t o the spirit of cooperation, and has proven’to be successful i n coordinating large projects such a s the Iowa Tel ecommunica ti ons Network.

Shorbrange and Operational Focus in I?Ianning Information Sys@ms -- Planning focus is on projects of immediate impact. Information needs for the review of policy effectiveness, and support for projects with long-term impact should be more emphasized.

Informat ion Resource Visibility Needs to Be Improved -- Agencies cooperate well in sharing information but finding out what is available requires a lot of initiative.

Other Obstades and Concerns -- General observations:

- There are headcount limits even when other funds are available. - Organizational infrastructure i s not upgraded as easily as technology t o be used and supported. Technology capital replacement is dificult with cunent purchase and lease strategies.

-

2

. . . . . .. . : ' , : ' a . , :. , ' 1 . , ._ . ...- ..

2 . . .... . . .

EXECUTIVE SUMIIMY

, . mofReco m e n d a b o w

The recommendations presented in this report are concepts and directions for change and to realize improvement opportunities. The recommendations in . general reflect a consensus of study team members. Key recommendations are: .

Expand TIM Council -- Broaden functional responsibilities for policy, planning and review, expand participation and include other interest groups, and add high level staff,

Lmp~ernent ~gency-level Strategic mormation Systems Planning -- Link Futures Agenda, agency business plans and agency information system plans over the long-range planning horizon.

0 Implement an Information Resource Center -- Centralize the catalog of information resources and provide a clearinghouse function of information access transactions.

Establish and Fund W D Program for New Technology Applications - Fund special projects with TIM Council oversight, and limit institutional barriers t o R & D project initiation and procurement.

Establish Multi-year Technology Budget -- Fund projects to achieve full completion over a multi-year period.

.. er ODr>ortumbes

Other improvement opportunities identified in the study include:

0 ' Central Catalog of Application Systems -- Software center may include

reusable code (i,e., general use software) and could be integrated with the Information Resource Center.

Comprehensive Data Security Program -- Data access and security should be reviewed and re-evaluated, particularly with respect to the Information Resource Center concept.

Economic Development Program Data Base -- An opportunity exists to better identify and track information on widespread economic development activities by a number of interests throughout the state.

0

3

. . .. %.-.(* ;,.. , , , ,. .. .. . -, . _ . . . . . .-.. 6

,'

EXECUTrVE SUhl3IARY

Information Resource Focus Groups -- Expanded use of information resource focus groups will enhance information sharing and tracking of policy effectiveness.

Emerging TechnoIogy Shared Development - Publidprivate partnerships b pioneer and coordinate standards on emerging technologies is an opportunity to share risks and costs for both production and research.

c

4

i

11. PROJECTOVERVIEW

1

. . . . . . . . . . . . . . .

' b ' . . . . . . . . . . . . . . . . . . . . . . . . . . . ..

. *

PRaTECTOVERMEW

Charter This study was initiated by the Iowa Business Council (IBC) t o identify opportunities for improvements in information systems and information resource sharing in Iowa state government. It was the intent of the IBC to conduct a n objective review, with an emphasis on management directions and processes ra ther than 'specific projects and tasks. The results will help the public understand the challenges and success of the state of Iowa in applying information technology.

Participants in the study exhibited a high degree of professionalism, a spirit-of cooperation, and an open, honest dialogue of problems, issues and opportunities within the framework set by the study idormation resources.

'

.

Identify opportunities to more effectively integrate the state's information systems and provide better access t o the state's information resources.

Identify opportunities t o enhance social and economic results of state programs through the use of information 'resources in an integrated and efficient way.

Identify opportunities to improve communications and partnership of private industry and state govepment, and among state agencies.

The findings of this study will serve as a basis for policy recommendations to ~

government, business and education.

5

. . . ' . ... .. . . . .

.

111. STUDYAPPROACH,hlETHODOLOGYANDTEAM

._..

( . . . . . .. 63: . .; i . :

’ /

STUDY APPROACH, METHODOLOGY AM) TEAM

Jim Hoffman of Telecomm*USA served as chairman. Ernst &,Young designed the survey and format for follow-up interviews. The oversight combittee, high- level information of€icers from the state and IBC companies, advised the consultant throughout the process. The committee divided itself into task teams,. which included a representative of the state and IBC, to conduct the interviews. Ernst & Young staff participated in the interviews in most cases.

Phase 1:

Phase 2:

Phase 3:

Phase 4:

Project Start-up and Team Organization -- D&g this phase, study objectives were drafted, project team assignments were made and team members were oriented to the study.

Wormation Systems and Database Survey - A survey document was drafted and reviewed, issued to state agencies and reviewed by team members. The survey provided information that helped team members understand the agency:

Mission and goals,

* Planning processes, 0

* Technology architectures.

Agency Interviews -- A number of follow-up interviews with agency chief executives helped team members understand:

e Agency mission and role of information technology, ’

* Planning processes and obstacles t o change,

* Influence of external organizations, * Means of exploring’ and encouraging innovations, and @ Other problems and issues.

Report Preparation and Presentation -- A draft report was prepared by the consultant and reviewed by the advisory committee. IBC members reviewed and approved the final report.

Role of systems and technology,

Key systems and information resources, and i

@ Role and effectiveness of the TIM Council,

_ .

6

. _. -. .%

.> . . . . .: ..... - - . . . . .I' . .' . .. . - . ., ' . ' . . I.

STUDY APPROACH, METHODOLOGY AM) TEAM

community of Survey InterestlDeDartment Ii?.mme

Revenue, Finance and &@tion

0 Management Yes 0 General Services Yes 0 Personnel. Yes 0 Revenue & Finance Yes

Economic Development and Commerce

0 Economic Development Yes 0 Employment Services Yes

Commerce Yes 0

Education

0 University of Iowa Yes 0 Board of Regents Yes 0 Education No

Hospitals & Clinics Yes 0 Towa College Aid Comm.Yes 0 Univ. of Northern Iowa Yes 0 Iowa State Univ. No

- 0 University of Iowa

crLminal3ustice

0 Public Safety Yes 0 Corrections Yes 0 Public Defense Yes 0 Iowa Judicial Dept. Yes 0 Attorney General Yes

IILkdm! Team Part icipants

Bob Delaney, The

Yes Financial Group Yes Dde Nelson, Dept. No of General Services Yes

. Principal

, Jim Hoffman

Yes Linda Travis,, Yes Dept. of Economic Yes

TeIecomm*USA

D eve1 o pmen t

John Swanson, Pioneer Hi-Bred,

Yes International Yes Lee Shope, Univ. No of Iowa

No Yes Yes No

Yes Y e s No No Yes

Bob Hennings, U S West Communication .

Larry Grund, Department of . Public Safety

7

STUDY APPROACH, -0DOLOGY AND TEAM ,

community of Survey

m r t a t i o n and Natural Resoumes

Transportation Yes Natural Resources Yes

In te r e st/D eD a dm e n t EsRQw2

HeaJth and KumanResources

Human Services Public Health Human Rights Civil Rights Cultural Affairs Elder Affairs Blind

- @ State Legislature

Yes Y e s Yes No No Yes Yes

Yes

8

hk?xim

Yes Yes

Yes Y e s No No No NO No

Yes

Team Pa rticiDan tS

John Coleman, IBP, Inc. N o m Baker, Dept. of Transportation

Dale Dooley, Iowa Transfer System

.Ray Camp, Dept. of Human Services

J im Hoffman, Tel ecomm*USA Dennis Prouty, Legislative Fiscal Bureau

i .a

~ . . . . . . ? . . . ' . . . . ._ . 1 . . . _ . . . . : ;.._ .

4 .' ; . . . . .. .. . . . . . . , . .... . . . . . :* . - , . , : 4 :' . . .. .. ' . - " "

IV. GE\'ERAL FlXDlh'GS Ah?) OBSERVATIONS

4 . . , . . . . .. , ._ . . . . .

, . . . ~ ---._.._. .. . .

‘ I

GEh7ERAL FIh?)INGS AMD OBSERVATIONS

Several observations are noted from study findings in the way of background pertaining to Iowa’s planning and use of information technology.

d Van’ed Ape n c n b o w * *

Agency missions are derived from state laws, and state and federal programs. Missions generally are specific to a department’s division level, and represent a broad range of public services and government operations overall. The private sector analogy is that of a conglomerate, with several business units linked to a joint venture of two corporate entities.

Information technology is taking on an increasingly vital role i n virtually all departmentldivision missions, but is often well below potential in support of the Agency mission.

Gowrnmen t as an Enternrise - G e n e 4 0bsemtion.c

It is important to understand the culture and workings of state government in planning and using systems and technology. Among these are:

Spirit of Cooperation b o n g Agencies is Excellent -- Agencies with larger computer centers are effectively networked, and a spirit of cooperation and mutual interest is very evident.

Highly Motivated, Committed Professionals -- The technology leadership ~

among state agencies is generally very competent and has demonstrated a long-tern commitment to making technology work effectively for the state.

a Strong Technology Base -- Installed technology base is current and very . strong, but needs are also growing rapidly.

Institutional Barriers Esist -- Key barriers t o planning and effective integration of information technology include:

0

- Budget allocations are annual,

- Leadership turnover in political process. . - Program mandates lack comprehensive plan (and budget), and

9

. . . . . . . . t .

. . . . . . . . . . . . . . . ................. . . . . . I - ., . .":: ::.'̂ > . . . . . . i.'. :"

. .

C

GEhTERAL FINDINGS AND OBSERVATIONS I

I Council Role/Effectiven-

T h e Telecommunications and Information' Management (TIM) Council was established by executive order to coordinate state telecommunications and information systems. The Information Management Committee (IMC), a working group within TIM, has acted to set management direction and standards for a number of information technology management areas.

The TIM Council and the IMC provide a cooperative approach to .sharing information 2nd coordinating plans for information technology. Currently outside of the scope of the TIM Council are a number of information technology management issues:

I

~

Integrated technology planning, except for a few projects of identified mutual interests,

0 Strategic information systems planning, Plan, budget and project oversight,

0 Technology and systems application planning, 0 Policy determination, 0 Standards enforcement, and 0

While the TIM Council has worked as a cooperative group, it does not have a policy making oversight or budget review role.

- j

* I

Dedicated resources t o facilitate technology coordination and integration.

I

le of

The findings indicate that public input to agency technology planning is less than expected, and in many cases nonexistent. There are some agencies where public input is actively sought and well used. It should also be noted that inter-agency communication appears to be good overall where project impact overlaps into other .areas.

10

... . . . , *.'. ? , ' .: . . .. . .. , . . _ . .. .3

.. i . _ :. . . . .. . - .. f . . .>, " ., . , .. .'.*

,

GENERAL FINDINGS AND OBSERVATIONS

Research and development in the application of emerging, advanced technology is not being accomplished in a consistent or well organized way, Agencies are very supportive of this concept, but discussions of an information technology fund to promote this sort of activity have not met with much success.. An organized approach is needed to explore technological innovation and to share the results and knowledge within state government.

. .

Operational vs. Policy Focus -- Information needs and the implementing of information technology tend to focus on day-to-day business operations. The information needs in terms of evaluating policy effectiveness and program results in general are not being addressed. Interdisciplinary focus groups and significant information sharing within a community of interest for policy level assessments appear to exist only where the federal government has initiated the framework (e.g., National Criminal Information Center, Occupational Information Coordinating Committee, etc.).

0 Staffing Limitations -- Some projects are deferred or cannot be implemented due to mandated stafing caps, sometimes even when other funds may be available t o hire people. As a result, outside contractors are often used which may be more costly.

0 Access to Information Resources -- The information assets of the state have not been identified and cataloged t o promote ease of access. More effort is needed to catalog, describe and document Iowa's information resources, and t o maintain the information. Opportunities to share information resources with the private sector should be exploited, especially where there is high impact (e.g., economic development).

0 Organization Structure -0 In a number of areas, organization structure does not support cunent level technology potential. The issues involve organizational planning, job classification and skill level requirements, recruitment practices, and training.

0 Technology Capital Replacement -- Funding mechanisms typically constrain capital replacement. Since capital replacement does not compete well with other priorities in the budget cycle, older technology is maintained and integrated with newer applications.

11

,

.

V. RECOhWNDATIONS

IDEX3FORCHANGE .

The recommendations identified below are a preliminary list of suggested actions to capitalize' on the opportunities identified in the survey and executive interviews. The recommendations are conceptual rather than specific. Further analysis of more detailed requirements and an implementation plan for each recommendation are beyond the scope of this study. We recommend the following be addressed:

0

Establish and Fund Research and Development Program for New

0

Expand and Strengthen the TIM Council and the iMC Educate Departmental Executives and Legislators in the Potential of Information 'i'echnology Implement Agency Strategic Information Systems Planning Implement an Information Resource Center

Establish Multi-year Technology Project Budget Process

I

I Technology Applications . I

d StrenPtae nthe"l3 ' i count3 '1 and the IMC

The TIM Council and Information Management Committee have already proven to be effective in providing leadership, creating an atmosphere of cooperation in large technology projects, and in defining standards and directions in key technology areas. However, the Council lacks authority to review budgets and coordinate planning. Limitations of the TI33 Council and IMC should be addressed, particularly in membership, responsibility and staffing:

0 Membership -- .Broaden TIM membership to include full range of interest groups in information technology planning:

- Maintain department heads as steering committee. Add designated representatives from Legislature t o gain public policy

Include selected, rotational participation .from private sector, to

Include selected representatives from the public and special interest

- perspective, and to create project champions in the budget review process.

evaluate opportunities of common interest, and to share in IMC work efforts.

groups, primarily t o gain perspective on project impact.

-

-

RECOMMENBATIONS

- project management (cross agency projects)

Staffing -- Add high level, permanent staff to provide effective management and support in the key responsibilities noted above, and particularly in the areas of:

I

; I

i

Other organizational models for technology leadership may be considered, such

I ~ I I Responsibility -- Expand functional role of TIM Council, IMC and support .

organization to include: ! I ,

Part of the technology leadership equation is departmental executives and

potential. Achieving tha t will require education, i n the form of retreats, management forums, and other special programs with specific focus of enhancing government executive understanding of information technology

' potential and the strategic implications in the (appropriate) community of interests. The need for executive education is shared with the private sector and may have greater quality and value if participated in and funded on a shared (publidprivate) basis.

legislators who have a sense of .vision and understanding of technology's I I

~

I I

b l e m e n t M a c v stratepl 'c Information Svstem Planning

Implementing a strategic planning process has significant potential if i t serves to define and link:

- Strategic gods - Critical success factors - Information needs - Information resources

The planning process needs to integrate and be driven by strategic initiatives as defined in-the Futures Agenda process. The planning vision needs to be strategic and long-range, well beyond the next budget cycle, and provides a direct alignment of business strategy and information technology strategy. ..

wume Center

The information resource center concept provides significant opportunities for both internal and external (to Iowa state government) systems and information resource sharing. The organization may be a function reporting to the TIM Council, may exist within General Services'ISD, o r may be a stand alone commission with some staff resource assistance by the private sector. The Information Resource Center will s e n e t o catalog information resources and shareable system code/program products, and will act as a clearinghouse of information access transactions. The Information Resource Center would operate on a proactive basis t o ensure accurate and complete cataloging of the state's information resources, to encourage use where the interests of the state are well served, and t o educate potential users of the Resource Center in the

- availability and value of Iowa's information resources.

blish and Fund =seam h and D eve? OD m e nt Proaam for New Teckno?oq

The infoAation technology fund concept has a lo t of merit and should be adopted. In addition to funding, a method of governance and means of knowledge diffusion is needed t o establish the "R & D Program." Organizationally, the TIM Council appears to be best positioned t o provide control and direction t o R & D efforts. Dedicated resources may be used, or agency initiatives may be funded on a grant basis (and possibly with staff resource assistance) with well defined project reporting requirements. Some projects mzy be initiated on a joint venture basis

. ~ t h other government entities or private sector interests. Program effectiveness will also be enhanced if institutional restrictions &re relaxed, particularly with respect to low-bid criteria.

14

. .

Funding projects to achieve full completion over a multi-year period has several economic and management advantages. Multi-year funding also works well to enhance the coordination of state funds to a multi-year federal program. Technology and major systems project planning and budgeting nee& t o be separated from the annual operations budget.

I ’ c

c

Other opportunities identified in the study which may be addressed by the framework to be established with the recommendations a re the following:

Central Catalog of Application Systems and Information Resources -- Creation of a central catalog of application systems, reusable program products, and information resources (data bases) will facilitate shared system, software and data use. .

, . Comprehensive Data Security P r o g r a m -0 Implementation of a comprehensive information security pr0gra.m is complementary t o central cataloging of systems and information resources. The process of defining and reviewing system access and data security requires s a c i e n t detail which allows identification of redundancies and common data usages and needs.

Economic Development P r o g r a m Data Base -- Economic development programs in the State of Iowa are widespread with many interests involved. Central management of economic development may not be desirable given tha t the efforts of chambers of commerce, community. colleges, business groups, local government, and others are all contributing to. Iowa's economic development. What is needed is a central economic development data base to identify and describe the various economic development ~

programs, including:

- Sponsor (e.g., Department of Economic Development, Local Chamber of Commerce, Local Community College, etc.)

- Funding Source and Budget - Program Focus (e.g., Jobs, Job Training, New Business, etc.) - Program Participants - Program Administrative Data

16

Information Resource FOCUS Gmups and Coordinating Commitfees -- Use of information resources t o evaluate policy effectiveness and opportunities for policy change requires a dedicated effort and an exchange of viewpoints. Creating focus groups and information coordinating committees on a broader scale, with a charter specifically to share information to enhance policy effectiveness, has significant potential. Creating a fonun for broad participation, fiom legislators to the public, will also enhance the focus on policy effectiveness in identifying information needs.

GIS Shared Development -- Geographic Information Systems is one of the best examples of an emerging technology application and data base where a joint public/private development effort is advantageous. The costs of development are high and there is a tremendous value in using shared technology standards and data to facilitate coordinated efforts i n infrastructure and capital projects planning. Opportunities also exist for joint research efforts using emerging technology.

17

Technology Enhancement Task Force Draft Work Plan

September 5, 1991

Community Based Service Delivery Model

Meeting 1: 8/27

Meeting 2: by 9/20

Meeting 3: by 10/1

Meeting 4: by 10/15

Meeting 5: 10/30

Meeting 6: by 11/05

Meeting 7: by 11/15

Develop work plan and establish subcommittees

Receive reports on Iowa’s current system, prior studies and recommendations, and other states’ systems. Identify and evaluate alternatives Development recommendations.

Receive subcommittee reports on inventory of existing government services, prior studies and recommendations, existing models and other states’ systems.

Brainstorming session on questions. Review, identify, and evaluate alternatives. Develop recommendations.

Full Group

Review draft report.

Final report issued.

I

.. , . . . . . ... . . .. .. . . .~

,,i;.;,:.-.\:*: - . . . . . , . . . ' & * . n

THE PROJECT DELIVERABLES SHOULD CAPTURE ALL IDEAS AND ISSUES WHILE PRESENTING A GAMEPLAN TO PROCEED WITH SIGNIFICANT IMPROVEMENT OPPORTUNITIES

PROJECT DELIVERABLES

I GOVERNOR'S COMMITTEE REPORT - OPTIONS FOR 10%/20%/40% IMPROVEMENTS - INTEGRATED RECOMMENDATIONS (SUBSET OF 10%/20%/40%) - NEAR-TERM IMPLEMENTATION STEPS AND PROJECT BENEFITS - ELEMENTS OF A PRELIMINARY V I S I O N - NEXT STEPS

- 1 TASK FORCE REPORTS - ISSUES CONSIDERED - NEAR-TERM RECOMMENDATIONS AND PROJECTED BENEFITS - NEXT STEPS

I

I EXECUTIVE SUMMARY PRESENTATIONS FOR VARIOUS CONSTITUENCIES

I BACKGROUND DATA USED/GENERATED

jw/b:daleS.spendref.p13

THE TASK FORCES ARE RESPONSIBLE FOR GENERATING RECOMMENDATIONS AND MUST OPERATE AT TWO LEVELS

I THE TASK FORCES ARE THE "ENGINE" OF T H I S EFFORT

1 EACH TASK FORCE WILL BE DEVELOPING RECOMMENDATIONS I N I T S AREAS OF R E S P O N S I B I L I T Y

I IMPORTANTLY, THE TASK FORCES WILL DEVELOP TWO TYPES OF RECOMMENDATIONS

:)

3

- NEAR-TERM, ACTIONABLE ITEMS FOR IMPLEMENTATION AS PART OF NEXT YEAR'S BUDGET ELEMENTS OF A LONGER-TERM V I S I O N TO B E REFINED GOING FORWARD

-

I ALSO, THE 10%/20%/40% RULE APPLIES

I TASK FORCES SHOULD HELP INVOLVE DEPARTMENT HEADS I N THE PROCESS - THEY WILL BE AN IMPORTANT SOURCE OF UNDERSTANDING AND

- T H E I R P A R T I C I P A T I O N I S V I T A L TO IMPLEMENTATION IDEAS

jw/b:daleS. spendref .p12

~ . . . I

jw/b:dale5.spendref.p14

WE B E L I E V E THERE ARE THREE IMPORTANT ISSUES TO DISCUSS THAT WILL GUIDE THE PROCESS

I

I SCOPE -- WHAT EXACTLY ARE MY TASK FORCE'S AREAS OF RESPONSIBILITY?

I TARGETS -- WHAT MAGNITUDE OF PERFORMANCE IMPROVEMENT?

I TIMING -- I S THE FOCUS NEAR-TERM OR LONG-TERM?

I I

1

I

I i I

1 i I

i

- 1

I

-

THERE ARE FOUR MAJOR STEPS I N THE PROCESS

WORKPLAN

TASKS

PREPARE AND FACILITATE THE R ETR EAT

DEVELOP RECOMMENDATIONS

REVISE AND INTEGRATE RECOMMENDATIONS

PREPARE AND PUBLISH RECOMMENDATIONS

jw/b:daleEi.spendref .p15

DATE

9/8 13 20 27 10/4 18 25 11/1 8 15 22 29 12/6 13 - .- .-.- .-.-.- .-.-.- .-.- .- .- .- ------ ------

---- ------...--------- . ....................

----------- . ----------- *-.- - .- .- .- .- .- .-.- .- .- .-.- - - - -

Retreat Shift Emphasis Final 9/17 From Task Forces Report

to Executive 12/11 Committee 10/25

. .

4.

SCOPE OF TECHNOLOGY TASK FORCE

The Techology Task Force will review the use of technology in providing govemment services and explore application development strategies. To accomplish this, the Technology Task Force will:

1.

2.

3.

4.

Assess the configuration of data processing center structure and development.

Determine the potential of the Iowa Communications Network in linking information needs.

Examine the standards to determine the major application priorities, direction, and development process. - &/+ 2kF7/-

Examine other related issues in support of these items.

IOWA’S COMPUTER NETWORK Political ’ Regents1 U N I I

I

Subdivisions ISU

Cities

Federal Schools

Branches

Leg is 1 at i ve

January, 1991

I I

Most State Departments Human Services Revenue & Finance Corrections Natural Resources Education

Other States Missouri Nebraska Kansas Oklahoma Illinois

I n f o rm at i o n S e tvices Division Interactive Network

MVS Partition I VM Partition I A#lVTAhi I PROFS NeMew V1W INFO v4m Netview Perf. Mon V1 R4

U"ETMaMgerV2RO

IE

lSNl Gc '7

PROTOCOW STATISTICS:

I I

SNA bcal Unes.. . . . . . . 66 SNA SOLC ModemslMu'xes . . 5T7

3270 Controlunits . . . . 328 Terminals . . . . -4467 R J W E

SNA GATEWAY Remote . . . . . 2907 BEsync Local. ..... 1560 To kenRIng W E D evloes.... 11

D E D I C A T E D I S P E C I A L I Z E D S E R V I C E S

I/O Channels I I I

C A M P U S N E T W O R K

I pn r IBM #m

IBM #I ISM bl 3274-A41 - 317e0inils - 3174-01n ils ACFMCP

- ' I 1

R W 2 coax

GATEWAY L I N K S I

I I

I I m Xerox 3700

Prepared bv: Doug Kern, Manager, Data Comrnunicatfons Bevlsed: 9/17191

c ISD - DATA COMMUNICATIONS SUBDIVISION . ISD NETWORK: TERMINALS SUPPORTED/DISTRIBUTION BY DEPARTNENT

FISCAL, YEAR: ACTUAL PROJECTED*

1988 1989 1990 1991 1992 Human Services ........ 1,474 1,811 2,042 2,166 2,380

294 35 1 359 395 ... Revenue and Finance 219

General Services 274

Natural Resources 156

...... 276 319 . 332 365

237 264 289 318 ..... ........ Transportation 8 10 7 0 0

.............. . Commerce 63 73 81 74 81

Education 90 134 172 198 218 ............. ............. Management 38 39 39 40 44

Secretary of State 35 34 34 37 ..... 32

............... I . D . O . P . 44 46 54 65 72 A l l other agencies 302 ..... 410 735 866 953

1993

2,620

430

402

350

0

90

- TOTAL 2,700 3,365 4,098 4,423 4,863

Actual % Change 25% 22% 81 10% 10% \/ \/ \/ \/ \/

240

4s

41

79

1,048

5,348

OTHER NETWORKS: DOT 409 267 278 329 362 398

JSI 185 163 225 300 330 363

...................

................... ........... UOI-........ 27 24 24 29 32 35

MISSOURI. .............. 6 5 9 9 10 ' 1 1

................... - 26 29 31 EPA - c

TOTAL 627 459 ' 536 693 763 838

Actual Change -27% 17% 30% 10% 10% \/ \/ \/ ' \/ \/

TOTAL SUPPORTED 3,327 3,824 4,634 5,116 5,626 6,186

Actual % Change 15% 21% 10% 10% 10% PC's Attached (included i n total) 1,309 1,366 * Projected:

\/ \ / \I \ / \/

Projections based on 10$ annual growth factor for 1992, 1993.

September 20, 1991 Doug Kern, Manager, ISD ,Data Communications PROFS. 9 1094CDPOO35

FY 92 DP Budgets for State Data Centers vs. Other Agencies

S1 ate DP Cen $58,7

million

h er Agencies $1 4,6

million

September 1991 DPCenter

\ Software, and Communications in Agencies/Institutions

H ardwarc S2L3 million

)m mu n 1 cat i on $7,1 rnjlllon

s vc

Soft ware $7.1 million

September 1991 '

Hardware

FY 92 FTE of Staff for DP in State Agencies and Institutions

Total 992.6

A P PJ 4

i cut 053

ns

Manage eo,7

i a1

Operational 385,6

September 1991 FTEPosi t

FY 92 Staff Budgets DP in State Agencies and Institutions

Total ' $37.8 million

. . Systems S4.9 milljon

Applicutions $167 mi 11 ion

$11.2 million

Septern ber I991 FTEBndge

4 . FY 92 DP for Staff in Agencies /Institutions

In ternul Staff $33.8 mi 1 l'ion

Totd $3Z8 million

. .

Externul Services , SO12 million

. .

Comrnu nlcut 1 ons $33 mllllon

Septern ber 1991 Internal

..

. .*

FY 92 DP Budgets for State Agencies and Institutions

Staff Budget $37,8 mi 11 ion

Totcrl $73.3 mlJJion H ardware/Product s/S er v 1 ces .

$35.5 mf11 f on

September 1991 S t af lB ud

I ’ V

I I

i I

MAJOR APPLICATIONS UNDER CONS IDERATION/IMPLEMENTATION

n GEOGRAPHIC INFORMATION SYSTEMS

n KNOWLEDGE BASED SYSTEMS

I IMAGE SYSTEMS

I RELATIONAL DATA BASES

n COMPUTER A IDED SYSTEMS ENGINEERING

I REPOSITORY SYSTEMS

I BUSINESS RECOVERY

I HUMAN RESOURCE SYSTEM

I INTERCONNECTION OF E - M A I L SYSTEMS

jw/b:daleS.spendref .p l

A L T E R N A T I V E S

8 INCREASE TAXES

I RESTRICT SERVICES

I -EXTEND PRODUCTIVITY

jw/b:dale5.spendref .p2

MAJOR STATE PROJECTS

TECHNOLOGIES IOWA COMMUNICATIONS NETWORK

ARTIFICIAL INTELLIGENCE SYSTEMS-

- I E L I G I B I L I T Y ADVISOR - DHS n UNEMPLOYMENT E L I G I B I L I T Y - DES

IMAGE PROCESSING

8 PROBLEM DRIVERS - DOT U C C I /CORPORATIONS - SECRETARY OF STATE

C n A t S n E , TOOLS - IDOP

O F F I C E V I S I O N - I S D

BOOKMANAGER ( P I LOT) - ISD/IBM

APPL ICATEONS DATA LOCATOR SYSTEM

\

- DOM/ IAg STATE

,IOWA REVENUE INFORMATION SYSTEM ,- DRF

HUMAN RESOURCE INFORMATION SYSTEM - IDOP

IPERS SYSTEMS - IDOP

- jw/b:daleS.spendref .p3

' .

i

IBM 3081-D24

IBM 3081-K32

IBM 3084-Q64

IBM 3090-300E

IBM 3090-300J

ISD COMPUTER CAPACITY

INSTALLED

12-83

06-85

08-86

.02-89

07-91

1

dal 5. spendref ,p4

FY 9 1 PERSONAL COMPUTER ACQUIS IT IONS

TOTAL jw/b:dale5.spendref.p5

I

(486)

IMPATIBLE)

PORTABLE

LT

T H I S MONTH

2 1

15 2

30 23

8

66

1

YTD TOTAL

3 14 . 9

23 1

24 195

25 1 4

21 8 4

85 1 1

12 9 1

15 2 1 1 4 1 2

4 4 1

111 2

3 10

2 1

2 ‘ 2 6

15 2 2

83 5 ---- ----

173 T H I S MO, 743 T H I S FY

- ---7’-------- I-----

1 , : . '1 - i *

FY 90 PERSONAL COMPUTER ACQUISITIONS

PS/2.-80

TOTAL

T H I S MONTH

1

.* jw/b:daleS.spendref.p6

YTD TOTAL

4 3 9

21 1

99 70 31

2 10 1 9

32 118 1

45 27 23

:D L T

1 1

:HINE BID

2 13 6

65 2 5 9 1

1 15 10 .2

33 T H I S MO, 689 T H I S FY

i ---7'-------- 7----

THE PROJECT OVERVIEW STATES THE PROBLEM SIMPLY: "THE LEVEL OF SPENDING BY THE STATE OF IOWA HAS EXCEEDED I T S REVENUES"

I THE IMMEDIATE SYMPTOM: THREE DOWNWARD BUDGET ADJUSTMENTS I N THE LAST FISCAL YEAR AND A 3,25% REDUCTION I N THE CURRENT YEAR

I ALSO, THERE I S A STATE CONCERN THAT RESOURCES EARMARKED FOR LONG-TERM INVESTMENT ARE AT R I S K

I THE OVERVIEW ALSO NOTES SOME TRENDS:

- AGING OF THE POPULATION - SHIFT FROM RURAL TO URBAN/SUBURBAN - ECONOMIC TRENDS AND NEW TECHNOLOGIES - SHIFT OF THE SERVICE "BURDEN" TO STATE GOVERNMENT

I THE BOTTOM LINE: THE WAY THE STATE OF IOWA DELIVERS SERVICES HAS NOT CHANGED I N RESPONSE TO THESE FACTORS -- AND I T MUST CHANGE TO RELIEVE BUDGET PRESSURES

jw/b:dale5. spendref .p7

,---- - ---r-----

THERE ARE THREE "CONSENSUS'' THEMES

I ECONOMIC D I V E R S I F I C A T I O N I S THE KEY TO BREAKING THE BOOM-BUST CYCLE - A S I G N I F I C A N T PROPORTION OF IOWA'S ECONOMY I S S T I L L

- PERCEPTION THAT ENTREPRENEURIAL R ISK-TAKING I S LACKING

- C A P I T A L CONSTRAINTS MAY HINDER DEVELOPMENT - TURNING RESEARCH INTO COMMERCIALLY EXPLOITABLE

TECHNOLOGIES NEEDS TO BE FURTHER STRENGTHENED

BASED ON FARMING AND FARM RELATED INDUSTRIES

I N IOWAN CULTURE

I A HIGHLY EDUCATED WORK FORCE WILL B E NECESSARY TO COMPETE I N AN INCREASINGLY GLOBAL ECONOMY - NOT COMPETING WITH MIDWEST, OR EVEN OTHER STATES, BUT

OTHER COUNTRIES - TECHNOLOGIES TO SPARK A "RURAL RENAISSANCE" REQU I RE

- TOP F L I G H T WORKFORCE REQUIRED TO ATTRACT A D D I T I O N A L ADVANCED S K I L L S

OPERATIONS

I IOWA'S TOP QUALITY OF L I F E MUST B E GUARDED AGAINST EROSION BY ECONOMIC CHANGES

I - PRESERVE A SENSE OF COMMUNITY - STEM THE T I D E OF ALCOHOL AND DRUG ABUSE - MAINTAIN SOME OF THE CLEANEST AIR, 'WATER AND SOIL IN THE

NATION - SERVICE INFRASTRUCTURE TO SUPPORT ECONOMIC GROWTH - SERVE LARGE AND GROWING COHORT OF ELDERS ADEQUATELY

WITHOUT RETARDING DEVELOPMENT

jwlb :dale5. spendref .p8

--7'----- ,----

TO USE THE BUSINESS ANALOGY, WE WOULD SUGGEST THAT THE STATE OF IOWA NEEDS TO FUNDAMENTALLY RE-THINK I T S MISSION AND STRATEGY

a THE IDENTIFIED TRENDS ARE NOT G O I N G TO GO AWAYJ AND UNKNOWN FACTORS WILL COMPLICATE THE PICTURE

I WHILE IMPLEMENTATION OF GAAP ACCOUNTING IS AN IMPPRTANT . EFFORT, I T SHOULD NOT OBSCURE THE FUNDAMENTALS -- THERE IS

A PERSISTENT, STRUCTURAL DEFICIT THAT MUST BE ADDRESSED

I INCREMENTAL, STOP-GAP MEASURES WILL NOT POSITION THE STATE FOR LONG-TERM GROWTH AND SUCCESS

I A NEW DEFINITION OF THE STATE'S M I S S I O N I S REQUIRED, AS WELL AS A STRATEGY FOR CARRYING OUT THAT MISSION

jw/b:daleS.spendref.p9

- ,--- - --7'----- _______

THERE I S AN IMPORTANT D I S T I N C T I O N BETWEEN T H I S PROBLEM FORMULATION AND OTHER APPROACHES

DEFINITION OF A MISSION AND STRATEGY STARTS FROM A CLEAN

- CHALLENGES BASIC ASSUMPTIONS - RECASTS THE STATUS QUO AS JUST ANOTHER OPTION

SHEET OF PAPER.

- - I S BASED ON IDENTIFYING REQUIREMENTS AND FORMULATING THE MOST EFFECTIVE, EFFICIENT WAYS TO MEET THOSE REQUIREMENTS

a OTHER, INCREMENTAL APPROACHES TEND TO BE ISSUE-DRIVEN - IDENTIFIED PROBLEMS WITH THE WAY WE DO THINGS TODAY - SETS OUT TO RESOLVE THOSE SPECIFIC PROBLEMS - ACCEPTS THE STATUS QUO, WITH IMPROVEMENTS

jw/b: dale. spendref .p10 ~

----r----- ------

THE "CLEAN SHEET OF PAPER" APPROACH MUST BE TEMPERED BY TIMING REAL I TIES

I I N ORDER TO MEET BUDGET DEADLINES AND BEGIN TO GET PROGRAMS I N MOTION, T H I S COMMITTEE MUST REPORT B Y MID-DECEMBER

I i

I .WE CAN A L L AGREE THAT WE CANNOT REDESIGN STATE GOVERNMENT I N 12 WEEKS

I WE NEED TO AGREE ON A SENSE OF WHAT CAN BE ACCOMPLISHED I N T H I S TIMEFRAME BY EACH TASK FORCE

- UNDERSTANDING OF CURRENT S ITUATION -

- UNDERSTANDING OF FUNDAMENTALS, INCLUDING ISSUES

PRELIMINARY V I S I O N / M I S S I O N FOR HOW FUNCTIONS COULD WORK DIFFERENTLY

- QUANTIFIABLE, NEAR-TERM IMPROVEMENT OPPORTUNITIES - IMPLEMENTATION PLANS - LONG-TERM OPPORTUNITIES--QUANTIFIABLE WHERE POSSIBLE--

WITH ISSUES TO RESOLVE - WORK REMAINING TO BE ACCOMPLISHED

1 F U L L IMPLEMENTATION OF A FUNDAMENTAL NEW V I S I O N T Y P I C A L L Y .TAKES 3 TO 5 YEARS

---r----- ,----

THE TASK FORCES ARE RESPONSIBLE FOR GENERATING RECOMMENDATIONS AND MUST OPERATE AT TWO LEVELS

a THE TASK FORCES ARE THE "ENGINE" OF T H I S EFFORT

a EACH TASK FORCE WILL BE DEVELOPING RECOMMENDATIONS I N I T S AREAS OF RESPONSIBILITY

a IMPORTANTLY, THE TASK FORCES WILL DEVELOP TWO TYPES OF RECOMMENDATIONS - NEAR-TERM, ACTIONABLE ITEMS FOR IMPLEMENTATION AS PART

OF NEXT YEAR'S BUDGET - ELEMENTS OF A LONGER-TERM V I S I O N TO BE REFINED GOING

FORWARD

a ALSO, THE 10%/20%/40% RULE APPLIES

a TASK FORCES SHOULD HELP INVOLVE DEPARTMENT HEADS I N THE PROCESS - THEY WILL BE AN IMPORTANT SOURCE OF UNDERSTANDING AND

IDEAS - T H E I R P A R T I C I P A T I O N IS V I T A L TO IMPLEMENTATION

jw/b:daleS.spendref .p12

'~ ---r----- _----- --___

THE PROJECT DELIVERABLES SHOULD CAPTURE ALL IDEAS AND ISSUES WHILE PRESENTING A GAMEPLAN TO PROCEED WITH SIGNIFICANT IMPROVEMENT OPPORTUNITIES

PROJECT DELIVERABLES

I GOVERNOR'S COMMITTEE REPORT . - OPTIONS FOR 10%/20%/40% IMPROVEMENTS

- INTEGRATED RECOMMENDATIONS (SUBSET OF 10%/20%/40%) - NEAR-TERM IMPLEMENTATION STEPS AND PROJECT BENEFITS - ELEMENTS OF A PRELIMINARY VISION - NEXT STEPS

I TASK FORCE REPORTS - ISSUES CONSIDERED - NEAR-TERM RECOMMENDATIONS AND PROJECTED BENEFITS - NEXT STEPS

I EXECUTIVE SUMMARY PRESENTATIONS FOR VARIOUS CONSTITUENCIES

I BACKGROUND DATA USED/GENERATED

~ _ _ _ _ ---1 -------- _I-----

I I

'. I

WE BELIEVE THERE ARE THREE IMPORTANT ISSUES TO DISCUSS THAT WILL GUIDE THE PROCESS

I SCOPE -- WHAT EXACTLY ARE MY TASK FORCE'S AREAS OF RESPONSIBILITY?

I TARGETS -- WHAT MAGNITUDE OF PERFORMANCE IMPROVEMENT?

T I M I N G -- I S THE FOCUS NEAR-TERM OR LONG-TERM? I

jwlb: dales. spendref. p i 4

_____ --7'----- -----

THERE ARE FOUR MAJOR STEPS IN THE PROCESS

WORKPLAN

m TASKS

PREPARE AND F A C I L I T A T E THE RETREAT

DEVELOP RECOMMENDATIONS

REVISE AND INTEGRATE RECOMMENDATIONS

PREPARE AND P U B L I S H RECOMMENDATIONS

DATE

9/8 13 20 27 10/4 18 25 11/1 8 15 22 29 12/6 13

R e t r e a t 9/17

jw/b:dale5.spendref.p15 1 -

S h i f t E m p h a s i s Final R e p o r t F r o m Task Forces

t o E x e c u t i v e C o m m i t t e e 10/25

12/11

IOWA BUSINESS COUNCIL

INFORMATION RESOURCES, SYSTEMS AND TECHNOLOGY REVIEW OF THE STATE OF IOWA'S

DECEMBER 1, 1989

SUMMARY

, EXPAND TIM COUNCIL I

I IMPLEMENT AN INFORMATION RESOURCE CENTER IMPLEMENT AGENCY LEVEL STRATEGIC INFORMATION' SYSTEMS P L A N N I N G

ESTABLISH AND FUND R & D PROGRAM FOR NEW TECHNOLOGY A P P L I C A T I O N S

, ESTABLISH MULTI -YEAR TECHNOLOGY BUDGET, I EDUCATE DEPARTMENTAL EXECUTIVES AND LEGISLATORS I N T H E

P O T E N T I A L OF INFORMATION TECHNOLOGY

jw/b:daleS.spendref.p.lS.l

--_____ ---7'------- 7-------

OTHER OPPORTUNITIES

I CENTRAL CATALOG OF APPLICATION SYSTEMS AND INFORMATION RESOURCES

I COMPREHENSIVE DATA SECURITY PROGRAM

I ECONOMIC DEVELOPMENT PROGRAM DATABASE

I INFORMATION RESOURCE FOCUS GROUPS AND COORDINATING COMMITTEES

I G I I S I SHARED DEVELOPMENT

jw/b:daleS .spendref .p16

- P I - - - - -

- --7’------ --

TELE-COMMUNICATIONS/INFORMATION MANAGEMENT (T , I ,M, 1 COUNCIL AUTOMATION STUDY - 1988

ARCHITECTURE - //OPEN SYSTEMS// TECHNOLOGY FUND

INFORMATION MANAGEMENT COMMITTEE - COORDINATION O F

DEPARTMENTAL IaS, SUBCOMMITTEES - a EDUCATION i O F F I C E AUTOMATION 4 P U B L I C A T I O N i STANDARDS i CAREER ENHANCEMENT

INFORMATION RESOURCES RULES AND MEANS

COORDINATOR OF I , S , T R A I N I N G - NOT IMPLEMENTED

CAREER ENHANCEMENT - COMPLETED

D I S A S T E R RECOVERY

jw/b:daleS. spendref .pi7

- STARC

P/C PURCHASES (GENERAL SERVICES PURCHASING ONLY)

F Y 90 689 GI $5,000* = $3,475,000**

F Y 91 743 $5,000 = $3,715,000

* **

$5,000 PER MACHINE IS AN ESTIMATE NOT A L L FUNDS ARE GENERAL FUND

EXCLUDES: J U D I C I A L LEGISLATURE DEPT, OF TRANSPORTATION REGENTS


DEPARTMENT NAME

AGRICULTURE

DATA PROCESSING POSITIONS BY DEPARTMENT

JUSTICE, -DCPT, OF PROSECUTING ATTORNEY TRNG BLIND, DEPT, OF COMMERCE ADMINISTRATION

CULTURAL AFFAIRS, DEPT, OF

EDUCATION, DEPT, OF

ELDER AFFAIRS, DEPT, OF EMP, SERVICES, DEPT, OF GENERAL SERVICES, DEPT, OF

UTILITIES DIVISION CORRECTIONS

CULTURAL AFFAIRS, I P T

VOCATIONAL REHAB I L ITATI ON COLLEGE AID COMMISSION

HUMAN RIGHTS

ECON, DEVELOP,, DEPT, OF

HUMAN SERVICES, DEPT, OF INSPECTIONS & APPEALS RAC I NG COMM I ss I ON NATURAL RESOURCES PERSONNEL, DEPT, OF PUBLIC DEFENSE, DEPT, OF PUBLIC HEALTH, DEPT, OF PUBLIC SAFETY, DEPT, OF REV, & FINANCE, DEPT, OF

SECRETARY OF STATE TRANSPORTATION, DEPT, OF TREASURER OF STATE IOWA

LOTTERY D IVI s ION

I su- . UN I

TOTAL POSITIONS

5

TOTAL 995

jw/b:daleS.spendref .p19

--7---- P I - - - -

BY UEPARTMENT

I CLASSIFICATION DATA ENTRY OPERATOR I DATA ENTRY OPERATOR I 1 DATA ENTRY SUPERVISOR I DATA ENTRY SUPERVISOR I1 SYSTEM SUPPORT WORKER I

DATA PROCESSING SUPERVISOR COMPUTER OPERATOR I COMPUTER OPERATOR I I I COMPUTER OPERATIONS MANAGER

COMPUTER PROGRAMMER TRAINEE COMPUTER PROGRAMMER PROGRAMMER/ANALYST LEAD PROGRAMMER

SYSTEM SUPPORT WORKER 11 SYSTEM SUPPORT WORKER 111

COMPUTER OPERATOR I I

COMPUTER OPERATIONS MANAGER

SYSTEMS ANALYST SR, SYSTEMS ANALYST SR, SYSTEMS ANALYST SUPV, DATA PROCESSING MANAGER

SR, SYSTEMS PROGRAMMER

DATA PROCESSING SPEC, I 1

6 SYSTEMS PROGRAMMER

DATA PROCESSING SPEC, I DATA PROCESSING ADMIN, I DATA PROCESSING ADMIN, I 1 DATA PROCESSING ADMIN I I I I KEY ENTRY OPERATOR I KEY ENTRY OPERATOR I 1 DATA TECHNICIAN I DATA TECHNICIAN I 1 DATA TECHNICIAN 111 STATISTICAL DATA PROCESSOR

KEY ENTRY OPERATOR 111

TOTAL

I I 1

POSITIONS HELD

72 117 7 1 6 40 20 6 4 1 97 57 4 3 TOTAL 471 2 38 98 29 68 44 25 22 16 12 17 16 7 0 1 10 40 9 3

TOTAL

TOTAL

TOTAL

TOTAL

326

28

33

8

44 22 1 TOTAL 129

995


/

STATE OF IOWA

Governor's Committee on Spending Reform I TECHNOLOGY ENHANCEMENT TASK FORCE I I

. PWIELIMNARY PROPOSALS

m PROGRESS UPDATE

November 18,1991

S'nnk Richer, Cirizerr co-chair and Gerald R Anderson, State &-C%air

IUW91

Vl[Sl[ON. The Technology Enhancement Task Force advanced the following principles or vision for maximizing the returns from technology in Iowa Government:

+ Technological efficiency sewes the public interest of the citizens and taxpayers of the State of Iowa.

+ The State of Iowa has an obligation to develop systems and information service delivery capabilities that reduce the cost of Iowa Government and state services.

+ Technology improves the productivity of Iowa Government.

+ Iowa must treat technology as an asset to provide more efficient government and usable information senrices for the State and its citizens. Technology is not just a cost, but an investment.

+ The State of Iowa needs an Enterprisewide Strategic Automation Plan that incorporates individual departments' tactical automation plans. The strategic automation plan should follow these principles:

4 AutomationlCommunication resources should be managed through standards and priorities.

+ Information systems should be under corporate ownership. 4 Automatiodcommunication systems should be integrated between

departments. + Systems should provide senrice oriented responsiveness.

User based funding should be adopted. 4 Data communication capability and future technology should be

developed under corporate sponsorship (as opposed to departmental or agency sponsorship).

+ The State of Iowa needs to adopt information technology standards and priorities enterprise-wide (between branches of government and across departmental or agency boundaries within branches of government) to define high return programs for development and to capture greater economies of scale and compatibility.

+ The State of Iowa must pursue available opportunities for sharing of data, data processing systems, applications, and other technology options between levels of government, between all branches of government, and across departmental and agency boundaries within a branch of government.

Technology Enhancement - Page I

CHARGE. 0 Technology Enhancement Task Force charge:

+ Review the use of technology in providing government services, induding: + The configuration of the State's current data processing structure. + The development trends in data pmsi'ng.

+ Explore efficiency strategies In the related areas of: + Computerization. + Magnetic and optical storage. + M i a 1 intelfiience. + Telecommunications. + Techmlogytransfer.

+ Review applications software development, induding establishment of: Standards to determine the major application priorities.

+ Direction of State efforts. + Development of future applications. + Management structures and incentives to encourage and reward efficiency and quality.

+ Assess the Iowa Communications Network, including: + Evaluation of ICN's potential in linking information needs. + Estimated costs of producing anticipated benefds.

Technology Enhancement - Page 2

I v I I

SCOPE. The Fiscal Scope of the Task Force includes $24.81 million in direct General Fund investments in technology. (Indirect investments, including personnel or moneys dedicated to programs or activities supported by computers and other technologies are not necessarily reflected in the fscal scope, but are included in the in the Task Force's charge. The scoping exercise assures that no line item from the State's General Fund budget is ignored because no one Task Force recognized a specific item as being within the scope of its charge.)

PRIORITIZATION EXERCISE. The Task Force applied certain uniform evaluation procedures to produce both short-term priorities and long-term strategies.

+ Prioritization Exercise. The "prioritization exercise" identified opportunities for savings in General Fund expenditures in FY93 equal to:

10% (Do existing services less, or do them more efficiently.) 20% (Serve current needs differently.)

+ 40% (Discontinue existing services and cease serving lower priority needs.)

+ Savings Opportunities. To carryout its charge and to complete the prioritization exercise the Task Force identified a range of opportunities that could be implemented in the short-run to effect immediate savings in FY93. ("Could" not necessarily "should.") From the range of opportunities the Task Force then prioritiied which options should be resorted to first.

+ Scoping and-prioritization may suggest some specific opportunities in FY93 through: + Onetime deferrals until after the budget deficit is eliminated (the GAAP filled). + Reordered priorities. + Efficiencies in current operatiins.

Other savings.


7--- .I_

--7'------ --

0 FY93 GENERAL FUND LINE ITEMS SCOPED TO TECHNOLOGY ENHANCEMENT TASK FORCE:

Description by DEP'T'ATOR CLASS

ADMINISTRATION Legislative Branch

General Services - Communications Division

. Information Sewices Division Revenue and Finance

Secretary of State General O f f i i - Implementation of Imaging for UCC filings

TOTAL ADMINISTRATION

Legislative Computer Bureau

- I Operatiins Infomatiin and Management

ECONOMIC DEVELOPMENT Department of Economic Development, Technology Transfer AccoUnt - Wallace Technofogy Foundation - Internet

Primary ResearcNComputer Center (DEDs LAN)

TOTAL ECONOMIC DNELOPMENT

EDUCATION Department of Cultural Affairs, Telecommunications (ICN)

TOTAL EDUCATION

JUSTICE Department of Justice lClS Computer

TOTAL JUSTICE

TRANSPORTATION AND SAFETY Department of Public Safety - Communications * AFlS

TOTAL TRANSPORTATION AND SAFETY TOTAL TECHNOLOGY ENHANCEMENT TASK FORCE SCOPE OF FOCUS

1.35

0.16 6.64

1.94

;b95 12.15

2.s 0.5

m 3.41

4.84

m 0.88

3.04

a5 2La

24.81


'01

'i I

l v18 /91

0 Need for More Technology, Not Less.

+ In fairness, the Technology Enhancement Task Force anticipates tbat rather than reducing the State's expenditures on technology, it will be necessary to increase technology investments to fully realiie savings under d*wssion by other Task Forces. Efforts such as the Enterprise Plan assures that future State investments in technology return maximized value .to the State's citiiens and taxpayers. + The p r i o r i t i i exercise is not intended to suggest that cuts of these magnitudes

(10/20/40%) are necessarify good or recommended, but rather to force prioritization. + It identifies what fundions and adi i e s are central to the h4iss.m of State Government.

in the case of Technology enhancement, higher magnitude savings could be produced in other areas of state services only by investing in technology like information services.

+ Significant reductions in the utiliition of technology would reduce the . potential to realiie savings in other areas.

0 Across the board budget cuts endanger existing technology investments and ability to deliver future savings.


I OPPORWNIW

10% Savings Target - Maintain 3.25% across the board cut - Data Center consolidation

Entqdse Plan short-term savings from coordinated Applications development - State and Local Governments' i n f m i n systems coordination

- Ownership and operation of ICN Phases I and I I (Average annual net gain from 25 year life-cycle.) State owned printing fadlitks consolidation under common management.

$2.48 Million Target

20% Savings Target Implementation of Department of Human Services "X-PERT' Miil Intelliiem System

- Wallace Technology Foundation funding only to support current obliiatiins

- Internet funding to preserve current staff and research with reduced overhead and variable expenses Increase use of voice mail to reduce number of secretarial and receptionist FIE'S

$4.96 Million Target

40% Savings Target - Enterprise Plan of technology management . X-pert systems or M f i a l Intelligence (AI) - Enterprise-wide Management Information System

(MIS)

. SAVINGS ($ MILLIONS)

lUrW9.l

0.27 0.5

1.02

0.47

3 -

5.71 (271 wlo net gain on ICN investment)

7.6 (Average annual rehrm over 5 yrs.)

1

0.5

2

13.15 (4.21 Counting only those items not

requiring an investment brealize savings)

? ? ?

- Chief Information Officer (CIO) or directorlleader a. information systems and technology

$9.92 Million Target (typically longer-term)


?

Capadty to realize 40% magnitude savings h g h l i e d by counting the average annual life-cyde net savings of only 2 prominent technology investments in 10/20% Ranges

0 The Technology Enhancement Task Force prioritized potential savings opportunities within the range of savings targets as follows:

+ 10% (of Fiscal Scope) Range - $2.48 Million Target. Maintain FY02 across the board mciuctkm of 3.25% for scoped FY93 General Fund budget line items not specifically addressed ekewhere. (ISD Budget addressed under dafa center reorganization, so excepted.) Agencies have lived with this level of redudiocl for most of FY82. Individual exceptions should be based upon demonstrated need, supported by ability to deliiery net savings through investment in technolosy assets. (SeCretary of State's Imaging System excepted due to positive return on tec@nology investment.) Total General Fund savings = $266,825.

+ Reorganization of existing data processing activities to obtain ecorromies of scale, increased managerial efficiency and reduced d u p l i i sf expense and effort. Several affemative models have been identified and should be considered. The Task Force berives the range of potential savings is between 20%-25% of current W92 total budget for the executive branch data processing of $13.1 Million ($6.03 Million GF.) Savings am to be shared between General Fund, other State Funds like the Road Use Tax Fund and federally funded, state operated programs like the Department of Employment SenriceS. Total Savings: $1,320,085 (Common Management Model) to

. $1,807,505 (Consolidation Model). FY93 General Fund potential operational savings of approximately $95,685 (Common Management Model) to $541,872 (Consdidation Model - requires capital investment, especially if not phased in). Short-term savings in applications devekpment realized through implementing an Enterprise-wide Plan of technology management to maximize existing and future efficiencies in informatiin service delivery. $2,408,629 total savings and $1,017,991 GF. State and Local Governments' information systems coordination to capture economies of scale and process efficiencies through shared applications and consoliied purchasing (especially hardware and c o m m soffware). (Intergovernmental Task Force linkage.) Real i ion of potential savings primarily dependent upon voluntary cooperatiin of counties, cities, school districts and state. Reasonably antidpated savings expected to be less than for consolidatin of state enterprise data processing. Approximate range of savings potential estimated to be between 510% of participating entities' appkathns, hardware and operating software budgets, induding both mainframe and personal computers. Even if only 5% savings realized, GF Savings 0.47 Milliin. Ownership and operation of Iowa Communicatiorrs Network (ICN) Phases I and II. The ICN (Parts 1 and 2 now under construction) is admittedly an immediate increase in average annual expenditures of $5 million over current costs to support the state's voice and data communication needs. The ICN yields greatly expanded capacity and flexibiliity for growth in existing uses and new applications for a fwed annual cost of $15 million. At the end of the 15 year financing period the state Owns an asset of significant value with an expected liie-cyde of at least another 10 years of benefiis. The alternative - continued purchase of services from the commercial telecommunications network - has recently escalated in cost faster than the rate of inflation or tax revenues. ICN Parts 1 and 2 are reasonably anticipated to have a significant positive return on investment over their life-cyde and to be more cost efficient than current purchasing practices,

-

.


1 U r r n I

ICN Parts 1

"one-stop shopping" government service centers recommended by the Statewide Service Delivery Task Force. Parts 1 and 2 are also conditions precedent to the benefi of distance learning offered on a local option basis thorough Phase 111. Continuation of ICN Parts 1 and 2 is recommended. Given 25 year We-cyde cosf and estimate of $75 m i l l i i net return on Parts 1 & 2, average annual savings of $3 million even assuming no growth in usage for current needs or benefii from distance learning and other "new" uses.

+ c o n s o l i i of state owned printing f ad l i i under similar model to data processing centers. Mandatory privatization or insourdng to Prison Industries is specifica((y not recommended. Current practices already utiiie m e sector and Prison Industries when economically viable to meet dearly defined quai and service standads. Total savings estimated at 5% of approximately $22,500,000 spent annually on printing, photocopying, and graphics = $1,125,000, and W,OOO GF.

Implementation of Department of Human Services %-F'ERT" Artificial Intelligence System to manage intake and processing requirements of various benefd and entitlement programs. DHS's %-PERT" is example of investment in technology to realize signifiint savings in out-years. Even assuming worst case upfmnt investment of $8.9 Million, X-PERT return a net average annual savings over the first 5 years of $7.6 Million. Maintenance of Wallace Technology Foundation funding to support current obligations and sustain minimum staffing levels to preserve expertise until General Fund deficit is eliminated. FY93 budget for Wallace Foundation is approximately $3.54 milliin from the General Fund (GF FTE's = 3.3). Recommend funding for FY93 at $2.5 Million, for $1 million in savings. Deferral or elimination of Internet. Rely upon existing, arguably duplicative, resources in IDED or private sector to provide similar informational and coordination services. Potential annual General Fund savings, $362,000 (GF FTE's - 3). Internet does ppvide material benefits to lowa businesses and couM be central to State's efforts to expand export markets. Internet is primarily information oriented. It is not the only swrce of governmental assistance to small business, and its information services may compete with some available in the private sector. Significant investments in start-up expenses and staff expertise have already been made, and loss of investment to date or duplication of expenses should be avoided if possible. Scoped at $5OO,OOO for FY93. Increase use of voice messaging or audio response to reduce number of secretarial and receptionist FTE's. Exact savings have not been established and may be realiued in form of increased producti i of existing staff. At minimum, voice mail could reduce trend factor in growth of state government personnel needs. Combination of smaller savings opportunities more fully described elsewhere.

particularly given growth trends in voice and data transmission demand. and 2 establish a statewide infonnation systems support structure for the distributed

( '1 c \

+ 20% (of Fiscal scope) bnge - $4.96 Million Target. +

+

+

+

+

+ 40% (of Fiscal Scope) Range - $9.92 Million Target (typically longer-term). + Long-term benefds of Enterprise Plan of technology management and implementation to

maximize existing and future efficiencies in information setvice delivery including establishing of standards for information systems between all branches of government and across all departmental and agency boundaries within a branch of government. Expert systems or Artificial Intelligence (Al), with significant up-front investments and no savings in FY93-94, but promise of significant savings in out-years. DHS's X-pert System could be used as a model to demonstrate benefds and to establish archidecture for future expansion to other uses.

+

. Technology Enhancement - Page 8

i 1

Improved management process through coordinated Enterprise-wide Management Jnfonation System (MIS) for budgeting, accounting (general ledger), purchasing, and payroll. Chief Information Officer (CIO) or director/leader of information systems and technology efforts across departmental boundaries. CIO to assure coordination and enforcement of technology standards. This role precondition to realiing savings in other departments. Termination of the ICN could be an option at the 4O%*level In FY93, but only after thorough review of impact of mntmctual damages. tt would be imprudent to terminate the contract to save an antkipated $s miili i P/93 appmptiation, if a $22 million Charge is incurred. Under GAAP accounting the contingent liability of the $22 million contradual damage liibilii would need to be resewed in FY93, even if the payment was not made untii subsequent years. Further, $22 milbn in termination damages is more than the total $21 million out-of-pocket expenses for Phase I & I1 (excluding Community Colleges' share) estimated by Booz-Alen.

+


I DATA CEPTI'EW -i CON§OLIDATION MODELS. <-

0 Opportunity - Cut costs by changing how data processing is performed by the state. 5 basic models being explored:

4 Status Quo Multiple Data Centers with similar hardware and software run by Multiple Agencies with Multiple Staff%

General Senrices, Information Services Division (ISD). DOT. DES.

+ Board of Regents: 1. ISU Administrative. 2. Iowa Administrative. 3. UNI Administrative. 4. University Hospitals. 5. ISU Academic. 6. IowaAcademic. 7. UNlAcademic.

+ Data Center Common Management - retain distributed mainframe computers, but harmonize operations through:

Common management with time charged back proportionately to dient agencies. + Networking of distributed mainframes to allow remote operations and sharing of

capacity.

4 Consolidated Data Centers - consolidate management, staff, and mainframe computer operations into a single operation serving client agencies.

+ Outsourcing - replace distributed mainframe data processing operations with centralized contracting with outside vendor of data services.

+ lnsourcing or Intrapreneurial Model - replace distributed mainframe data processing operations with competitive user fee based contracting with a State entity utilizing the staff and equipment of existing agencies' data center operations.

-

ANALYSIS:

+ $73.2 Million Total State FY 92 Budget for data processing is $73.2 Million, including Judiciary, Legislative, and Executive Branches, and the Regents' institutions.

+ $13.1 Million is information systems FY92 Budget for 3 Executive Branch Agencies' data centers (not including applications), with $6.03 Million in GF dollars. ( W i i applications and LANs $33.76 Million total.)

+ Range of savings available from alternative models in FY93 is from $1,320,085 ($95,685 GF) to $1,807,505 (541,872 GF).


.. r . .

1mw91

+ Range :of*available savings over iong-run is from 5% to 30%. (30% operational savings would require substantial capital investment and totally

- integrated management between branches and across departmental and agency boundaries within a branch.)

+ Investment may be required to realize long-run savings.

c

I, l’ *. -‘I

I

IV1W9I

CI COMMON ASSUMPTIONS OF DATA CENTER MODELS: - The 5 data center models share the following assumptions in an attempt to compare apples to apples:

9.

2.

I .

3.

4.

5.

6.

7.

T& Board of Regents imtitukm have been exduded from anticipated savings in F(93, kr recognition that the Regents are perfming their own review of internal axts savings. The Board of Regents is, however, cooperating in the development of a coordinated enterprise wide plan, and savings wiU be reaked beyond FY93 from c~~pecati~n between Executive Branch agencies and the Regents. The Task Force advises the Regents to consider data pcrocessing center oorrsdidation as well. Any available ecOclOmieS or efficiencies available through coordination with the Executive Branch shoukl be exploited. .The need for mutual support in disaster recovery planning b especially obvious. Applications systems development, and progmming have been exduded by the Task Force, following the recommendation that development should remain with the individual client agency, subject to enterprise-wide developmeclt standards and priorities 8s established under the Enterprise Plan. Savings in applicat.bns systems development, and programming are anticipated to result from the development ofthe Entefprise-wide Plan and its implementation after FY93. Legislative and Judicial computer centers have been excluded, because of potential ~~overseparat ionofpowersbetweenthe~~ofStateGovemmerrt . Savings on the magnitude of 5% (common managemenf or improved coordination) - 30% (verbal estimate by EDS repmen&& e) are available through cooperation or consolidation, and could be reartzed and shared by all three branches if a m e n s u s could be reached. While separation of powers prevents a forced consdidatii, the Task Force advises all branches to consider the benefii of voluntary cooperation in future planning. The 5 models indude only the three existing Executive Branch mainframe computer data centers. Smaller minicomputer operations and Local Area Networks (LANs) are not included, but again Savings Will be generated m these areas beyond FY93 through adoption of an Enterprise-wide Plan. Any anticipated realized savings revert proportionally to the source of funding. The three key Executive Branch data centers are funded primarilythrough the General Fund (General Swices' ISD), the Road Use Tax Fund (DOT), and Federal funding (DES). Computer Aided Design (CAD), fingerprint analysis, and other specialized hardware and software have been excluded to simplify the models to manageable proportions and because of governance issues over appl i i ins. Wrth specialized applications there tends to be no division of labor between mputer support serviceS and primary service delivery, making it difficult to transfer computer related fundions without also depriving the dient agency of primary seniice delivery FTE's. Under the Enterprise Plan, new technology investments are to be shared between departments so that all benefit from innovation.

Common assumptions were applied to establish a hierarchical ranking of models and to determine a range of magnitude of savings available. In implementation one or all of the assumptions might be ignored as necessary to maximize savings or to rationalize implementation of a particular model.


+ The following Frelrnlnary Proposals on Data Center Opportunities define the i c .,. "f range of what could be 'done.

The report does not say who should do identified functions. . For instance, one methoddogyto hpkment condidation would be to allow existing data centers to bid on which site would bethe new center.

Governance and control implementation issues have not been addressed. . These may be important pdii l iy to facilitate butdonotdefinethe

6 All numbers reported are estimates based on numbers supplied by affected agencies.

0 Rejection of an option for political reasons has an opportunity cost:

available savings from anyone optioll.

+ Opportunity Cost = The additional amount, if any, that could have been saved over the next lowest cost alternative.

Technobgy Enhancement - Page 13

..

CI DATA CENTER BASELINE COMPARISON - STATUS QUO MODEL:

+ Comparison Baseline - To evaluate opportunities for savings in data center and computer support functions of state government it is essential to

These costs that will be Incurred if 110 structural change is implemented and the status quo continues. In the caseofdatacenters, the status quo does not mean no change h costs. ustitlg fadliies will have to be expanded or upgraded to meet expanding demand for data processing and electronic storage services.

establish the baseline.comparison. _. . 1 .

+ BaselineCosts. 4 General Fund (General Senrices): $6.03

6 Federal Funds (DES): $3.18 TotalFunds $13.1

* OtherFunds(DOT): $3.84

+ Projected capital and applications development expenditures are substantial and could be better leveraged through improved management of existing resources. Substantial new capital investments due or expected in at least the following general areas:

Other mainframes and microcomputers. * + Applications Development. .

Local Area Networks (LANs) and Personal Computers (PCs).

+ Analysis. ~

6 Assumptions. Reorganization of current data center operzltions has substantial potential to realize savings in both FY93 and the long-run.

Cost and FE informatiin supplied by agencies in response to survey. Cos@ validated against line-item budgets and by follow-up with agencies. Fault for any e m in any fgures reporting shared by affected agency. Later CocFedjOns to reflect realii should be allowed, but debate over "accuracy" of numbers should not be allowed to undermine v a r i i of the Task Force's analysis or recommendations. Given short timeframe allowed the Task Force dedicated a substantial amount of its time and resources to review of the data center operations.

Methodology.

- .

+ Pros and Cons of Maintaining the Status Quo. PRO Agencies with dedicated funding (State or Federal) enjoy substantial programming

benefds fmm autonomy. CON Autonomy has sacrificed available economies of scale, increasing the cost of services to

General Fund agencies. CON 18-24 mo. window of opportunity because of planned expansions of all existing

mainframes.


I I . , ..

-- I I

1lAWI

(c -) , . 0 COMMON MANAGEMENT: ' '.

+ Opportunity: Data Center Common Management - Consolidate management of existing data processing operations inside of single agency responsible for enterprisewide senrice. + Retain distributed mainframe computers, but harmonize operations through common

management with time charged back pnoportionately to dent agencies. + Common management wwld establish standards for future expansion and assure

highest level of efficiency. Existing facilities could continue to be "owneda by current agencies.

+ Primary benefit, immediate savings through consolidation of staff and elimination of dup(icated software rinses, positiotrs, and actions.

+ Could & implemented by 28E agreement or by statute.

+ Savings Potential. + FY93 General Fund (66% of ISD) $95,685

FY93 Federal Funds (100% DES + 34% ISD) $245,765 + W93 Other State Funds $106,700

(DOT 100% Road UseTax Fund) + Total: $643,110 + Longew. Ongoing savings, all'future years + Timeframe: Immediately, but certainly by fV93,

+ Analysis + Assumptiiqs (Median value reporfedin estimaedsavings.) - Managerial savings on magnitude of 25%.

Dstn'buted site licenses as priced by vendor.

Methodology Modeled on experience of state and private sector data center managers and informatiin suppfii by vendors on software license costs (both operating systems software and common applications sortware).

+ Implementation Issues + Three major funding sourns for existing data centers.

* Road Use Tax Fund - DOT Federal Dollars - DES

General Fund - General Services InformatiOn Services Division (ISD)

+ Upgrades planned or expected based on past experience and demand trends for all 3 existing systems within 18-24 months. Transfers support fundiin outside of dient agency,

+ Perceived danger of lower quality service from outside agency.

+ Savings are primarily from distributed license option and managerial staff savings. + Assumes that all sites (DOT, DES and ISD) are all on the same release (update) of IBM

operating system software.


+ Current managerial budget of $1,162,582 for 27 FTE's. +

+

Model assumes managerial staff cost reductions of between 20.25%. Further assumes all operating software problems can be sotved from one site. Them may be some personnel savings in the Operating soffware support fundion because ofthis abiiii, but not reflected in reported cost savings.

+ Common management assures development of a common data arch'iecture and compatibili, Cbmmon management facilites later improvements in operations through; + economiesofscale, + reduced dupliiion of effort, and

oth8fadVant@es.

*

+ Common management should lead to only one operating system software package supported by a central service source, but would preserve multiple "competency centers" for client agencies' applications software. 6 For instance, specialized engineering applications software would continue to be run and

supported by the DOT, even though mn on the operating system under common management.

PRO

PRO PRO PRO CON

CON

CON

PRO PRO PRO PRO PRO PRO PRO

CON CON CON CON CON

+ Pros and Cons of Common Management Model. Eliminates the duplicate purchase of operating software, reducing software costs approximately $157,503. Shares expertise amss existing agency boundaries. Increases standardiiin, allowing future cost savings. A d d i i i l software cost savings through volume purchasing and site licenses. Higher communications cost. (This is a result of increased use of networked mainframes for distributed data pFocessing and for remote software maintenance. Cost minimized by ICN's focedcost for data transmissii, regardless of any increase in traffii volume.) Slower terminal response time. (Again, ICNs fiber optics will provide faster response time than the copper wire of the current commercial telecommunications netwrk, mitigating or eliminating this ribili.) Mixed funding sources requires added administrative and audii costs to appmp~Wdy attribute costs and savings. Immediate FY93 Savings. 3 funds share savings in personnel, software and capital. Coordinated planning and standards development, leading to future efficiencies. Combines similar functions consistent with Total Quality Management (TQM) model. Systemslpmgramming resources can be allocated to the State's highest priority projects. Reduced software license fees. Would not require transfer of title to capital and could permit "owneI" agencies to continue current capital accounting practices. Management of a distributed staff is more difficult than a single Site. Transfers responsibility for client agency support function outside of dient agency. Difficulty responding to individual agency priorities. Application development priority conflicts. Software savings not as great as with single mainframe.

.

<


\

0 CONSOLIDATION MODEL:

+ Opportunity - consolidate management, staff, and mainframe computer operations into a single operation serving client agencies. + Consolidate data processing operations inside of M e government into one or two

mainframe computers under common management and common ownership. + Currently state agencies or state funded entities have a variety of mainframe and micro

computers. The are ISM machines with common operating architecture and operating systems resulting in duplication of personnel, senrfces and license fees just to maintain the operating systems. Of the remainder, some d u p I i i exists because of running more than one type of basic applications so&vare, like PROFS or E-Mail, or human TBSWTCBS (payroll), accounting (general ledger), and budget.

+ Long-term savings on the order of 25% could be achieved through cxmso l i i . Implementation would have to be phased in, with some operating savings available immediately, at the cost of capital investment in a new, larger mainframe, perhaps phased in as current leases expire. . Some ofthe capital costs of consdidation are offset by the need to upgrade existing systems to accommodate growing demand within 18-24 months.

+ Capital will need to be invested in central data centers inside of 2 years. Choice is how to spend the dollars to maximize efficlendes.

+ Operational Savings Potential. + FY93 General Fund: $541,872' + FY93 Federal Funds (DES): $756,782* + FY93 OthfX''%t8 Funds: $sos,ss?'

TOTAL $1,807,505 (DOT Road Use Tax Fund)

+ Local Tax Dollars: None, though future potential for savings through intergovernmental cooperation are not foreched, and are probably enhanced by consolidation. . Longevity: O w i n g savings, all Mure years.

Timeframe: Phased in from starting point of common

*Assumes replacing 3 existing data centers with a single larger data center, but leaving maintenance and support of local area networks (LANs) and (PCs) and speciafiied a p p l i support with dient agencies. (DES cannot charge Federal Government more than actual cost, but can pass on full cost to federal dollars.)

management over 2-3 years as current leases expire and user demand requires.

+ Necessary Capital Investment.

+

Capital investment will be necessary to realize available operational savings. If phased in over time as current hardware leases expire or demands for increased capacity require expansion, capital costs eoutd be minimal. Past experience is that current leasdpurchase expenses will also support the required upgrade upon expiration. Cost trend for unit of capacity historically has decreased with improvements in technology. .

Technology Enhancement - Page I 7

i r . ! D

+ If implemented July 1,1992, capital costs could be significant due to buy-outs of current contracts.

+ Implementation Issues Three major funding sources for existing data centers. -

General Fund - General Services Information Services Division (ISD)

Federal Ddlar~ - DES Road U S ~ T ~ X Fund - DOT.

Upgrades planned or 8xpeckd based on past experience and demand trends for all 3 existing systems within 18-24 months. Centra l i in increases the magnitude of a major computer disaster. Transfers support fundion outside of user agency. Perceived danger of lower quality service from outside agency. Savings are not directly proportional to number of machines, but rather 10 number of machines and size of machines. Single m e r computer's software flcenses not 1/3 the cost of existing machines because r i e fee k a h capacity dependent. Transfer of spPrcat&ns confrol to central manager likely to be most controversial but would reduce potential for duptication of efforts. Required transition time may makes it df l i l t to fully realize available savings in FY93. Each existing Executive Branch data center has some growth capacity, but none has the ability to take on the work of any of the others. Each center has a capacity plan that pmjects upgrades in different fscal years, but over the next 18 months to two years. This has made assessing transitional cosfs difficutt to assess. Even with no adion, additional investments will be required to handle anticipated growth in demand for services and storage. Current model assumes that upgrade costs will be split one-third to each agency, but actual split would be proportional to use, and upgrade costs would therefore be shared in proportion to the growth trends of existing dient agencies. Problems with providing predictable General Fund capital investments would need to be addressed. Only central processor costs and savings have been projected, even though additional savings may occur in the storage and communications area. When upgrading a processor many options are available, so there are many more options or permutations when consoring than under the common management model. Choices made will affect capacity for 5.7 years.

+ Pros and Cons of Consolidation of mainframe data processing into single data center. PRO Lower software costs. PRO Lower personnel costs in operatiins, software support, and management. CON Possible lack of physical space in any one of the existing data centers for a centralized

data center. CON Potentially high transition costs to reake operational savings. CON Batch pFocessing (wall dock time) may become a p r o m and other "service" issues.. CON Greater exposure to a single disaster or outage. CON Capacity planning is more difficult. CON Higher communicafans cost as local response time is needed in remote locations. (Fiber

optics such as the ICN could mitigate these cost and speed concerns.) -

- 1 1


. I .. ..

0 OUTSOURCING MODEL. ? 9 , ._

+ Opportunity - Contract with an outside, private sector vendor to provide data center, information processing and other computer support services on an enterprisewide basis. + Outsourclng would replace existing hardware and savkes currently maintained by a

variety of individual agencies. + A precondition to hnplementatlon is establishment of satisfactory. cust and quality

standards.

+ Outsourcing Savings Potential - Range of 14%-30% + m. 00 (not yet determined) + GenersdFund $0 (not yet determined) + OtherFunds: $0 (not yet determined)

Loca(Tax$: None 4 Longevity: Ongoing savings, diminishing h future years as

demand and dependency increase. + Implementation Timeframe: 1-2 years

+ Analysii

-

.

* + Assumptioris Economies of scale are available through coordinated purchase of data processing and computer support services from the private sector. Quality of service can be maintained or improved for all dient agencies.

Request for Information (MI) or other information supplied by major private sector vendor. 14%-20% estimate or realized savings reflects range of Opinion by mendors, and especially members ofthe Task Force with experience with outsourcing. 40% estimate reflects typical vendor estimate of savings on defined operations, but is subject to adjustments in practice for incremental and reduced charges. Vendors suggest realized range of25%30%.

I

+ Methodology

+ Implementation Issues + Major Departments or Agencies effected have separate cultures.

GeneralServices. DOT. - DES.

+ Existing equipment to be replaced by outsourcing may not be fully amortized. (Sale or trade-in value issues.) Similar to Consolidation model, phase-in may be necessary to implement outsourcing. Maintenance of service standads and preservation of savings requires exceptionally thorough definition of services being contracted, otherwise "add-ons" or change orders can seriously diminish benefits. Need for independent consuttant's review to develop adequate request for proposal or RFP.

+

.


+ Why Might an Enterprise Outsource? 6 Reduced and more predictable costs.

Amid pending capital investments in new hardware or software. + Obtain benefits of economies of scale and collective expertise. + Dissatiiactiin with current informatiin systems, including such issues as:

Organizationissues. Applicatii infrastructure.

Investment performance (retum on capital). Flexibiilii and responsiveness to enterprise demands and needs.

+ Organizational signal for change.

+ Key Issues to be Addressed Before Deciding to Outsource: Ownership and Control. (Consider possible need to pull-back in-house in the future.) InteIleCtual property retention. (Outsowing per se reduces and loses in-house lcnowledge that is not easy to replace.)

+ Additional volume or reduced charges. (Unexpected volume or work tends to be relativefy expensive.)

+ Contract dssolution and recapture of operatiin. + Increased management complexity,

Vendor W - i n (If you like the sh&, need to keep vendor locked in.) + Strategic vs Tactical Systems.

+ Leveraged Components, or Where do the Savings Come From? + People. (Outsourcing can reduce the required staff as much as 50% through reliance on

vendor's central talent pool.) + Hadware. (Economies of scale more apparent over 100-150 MIPS, suggesting that to

fully maximize economies of scale f m outsourcing that the Regents' opemths would need to be included, not just the 3 pn'mary executive branch agencles.) Software.

+ Faalities.

+ KeystoSuccess: Remember outsburcing is not an "all or nattring" issue, it merits a careful objective

Just because one part is ripe for outsourcing does not mean all current operations are. Strategies should be selectively applied.

+ Communicate key pros and cons to policymakern, not just potential savings. ,

+ Documentation of existing system's services, costs and obligations necessary to obtain a viable bid.

6 The assumptions used to determine in-house costs and outsource price must both be documented in objective terms.

+ Alternatives to outsourcing, that achieve similar results, should be documented and reviewed prior to making a decisions.

6 A decision to stay in-house must include a financial and managerial commitment to fu existing problems.

study.

.


--._I --- I -- I 1

Imml ,*-. +,

i, ) + DeciiionTree: - - , + Sponsorship - Who owns what (Enterprise level, agency level, or vendor).

Financial - Operational savings. 4

+ Technical - Analysis of what is transferable to vendor. + Sewice Level - Defined in specific and objective terms.

Business Solution - Pricing the Options. Make it yourself (keep in-house) Buy it from a vendor(outsource)

+ Request for Proposal/Contract.

Outsourcing Information technology is a sendce provided by a large number of commercial vendors. Specific contads have been made wifh hvo potential biddep if the State were to select outsoudng as fhe preferred model in order to mlled this information (ISM and EDS).. Requesf f i r Infixmation dcstribufed to vendors to she the opportunity. Estimates In response to RF.. will not be confradually binding. Estimates have not always been met In implementing such contracts In the private secfor, so the estimate should be used to establish the order of magnitude of savings available, but not necessarily the exact dollar amount to be realized. Consideration of Outsourcing should focus on stnrctural efllciencies.

+ Loss of Control and Ownership Issues: + Outsouring does have potential problems.

One common misconception is that outsourcing automatically means that the dient gives up ownership of all elements of *tS existing information services or data processing operations.

+ In reality, ownership of many elements can be determined by contract, with the dient retaining an interest or ownership in many key areas.

+ The following chart details the areas open for ownership by the dient in an butsourcing arrangement. Ownership depends on contract terms and conditions

+ Chart highlights that data security and ownership must be considered up-hnt.

OutscKIrdng May No No No YeS

Business Stake % No No No %

.


. .

PRO PRO

PRO PRO

PRO

PRO

CON

CON

CON

CON

CON CON

CON

CON

+ Pros and Cons of Outsourcing data processing to a private vendor. . j - . ,

Immediate -93 savings. Reduce size of state govemment. Significant reduction in information tech- costs and assets. Establishes an agreed40 long-term budget. Eliminate need to expense capital W-. Step fundion investments become incremental costs. Clarifies ente@se's long-term infomation axvices strategy by eliminating conff i over conitrd. Refocuses enteqxise on central "what to do &suesa of its business rather than the "how-to issuesu of techndogy. Vendor's expertise may offer access to talent and resources not otherwise #ailable to the benefit ofthe d i i enterprise. Outsidevendots profid load means ecocKwnles of scale and coordinated management not fulty realized by state. Reduced fkxiiilii as State loses abitii to fend for W. Loss of internal control makes for a risky, cosfty and dfltcutt decision to d i e the contraa. Restricts range of We options. To realize promised savings, dient must still manage *mmental charges (fee for seivice on top of foted confrclct for unexpeded services.) Contract negoWon and maintenance is an okgoing process. Constant confad with the vendor is required. Some internal costs may not be readiv apparent ortransfertable to the vendor. Significant cost savings come from laying off personnel. Layoffs can cause morale and labor relation pmblems throughout the enterprise. Evaluation of emerging technology remains an in-house management fundion of the dient enterprise (with reduced w i s e and experience.) Potentid for business disruptions with commerdal vendor (bankruptcy, mergers and acquisitions).

+ OUTSOURCING OF ROUTINE DATA ENTRY. + Outsourcing of routine data entry should be considered by every agency.

More appropriate for review after estabbhing common management for data processing, because it will be easier to detect specifii opportunities.

+ If data p m s i n g is outsourced, so should routine data entry.

.


,

* 1 INSOURCING OR INTRAPRENEURIAL MODEL..

+ The insourcing option is a refinement of either the common management option or the consoIidated data center option. The State's data processing operation could be organized to operate on a fee for service basis within state government

It w M be initially capitalized by contributions of people and/or capital from existing mputeroperations.

6 Profits would accrue to the participating d i i agencies while providing market incentives to the enterprise-wide data center to maintain sewice levels.

+ Income would allow rational planning for future expansion without the need to fully expense Capital acquisitions in the first year even though benefii are a m e d over the life of the capital. Long-term contract with diiflt agencies wouM s m income stream.

+ Intended to dethfer some of the managerial benefits of outsourcing within a state ownership model, while avoiding the deteriments of outsowcing.

+ May require the potential of competitive outsourcing to keep the enterprise-wide data centerhonest.

I -

+ Savings Potential. m s : 00 (not yet determined) General Fund $0 (not yet determined)

+ Other Funds: $0 (not yet determined) 6 LocalTax$: None (none anticipated unless local government participates)

Longevity Ongoing savings, all future years + Timeframe:. 1-2 years

+ Analysis.

.

+ Assumptions. Outsourcing may offer immediate short-term savings on a tactical basis, but strategic risk over long-term is high, explaining the search for vending in-house or insourcing. Long-term, outsourcing may be less rewarding 8s a strategic plan becaused profii load of private vendor. Outsourcing .may foredose ability to make choices in the future. (Over time the State loses current ability to fend for itself.) Equal technical expertise and managerial skill exists in the public sector or can be created so that outsourcing has no inherent qual i i ie advantage.

Review of legal issues of organization. Review of business or economic issues of effective managerial incentives.

+ Methodology.

+ Implementation Issues. .


i I .

1 i DATA CENTER MODEL DISPOSITIONS:

+ All 5 options should be costed out. Request for Information being prepared to price reasonable Outsourcing Model savings. (Applications not' included - change from original model.) + Common Management - Estimated FY93 GF savings of $9oo,OOO. (13.9%)

Consdidation - Estimated FY93 operational savings of $1.3 million. (20%) (Note, does not include potentially necessary capital investment to realize savings. capital investment needs minimized if phased in as current leases expire or natural upgrade needs arise. liming impads capital investment estimates severely. Task Force advised that estabtiihing Common Management in FY93 would build bridge to future eoonomies as appropriate alternatives are more fully defined.)

+ Outsourcing - 20%-25% savings have been realized in the short-run by private industry.

+ lnsourdng or Intrapreneurial Model - Possible compromise between Consdidation and Outsourcing with some advantages of each, but reduced risks or disadvantages compared to the outsourcing model. May require capital investment, and would definatety require change in business practices to user based funding through long-term insouring contmcts. Savings estimated between 15%25%.

-

+ Because of potential magnitude of savings, leading contenders for long-term savings are Consolidation and Insourcing. Outsourcing's long-term desireablity was seriously questionted by Task Force members. Outsourcing's primary advantage was seen as ability to break the paradigm of the status quo in one fell swoop. Request for Information (RFI) currently out to selected private vendors to size outsourcing opportunity. Results from RFI may, or may not be determinative. Outsourcing has greater risks than Consolidation or Insourcing , so must demonstrate greater potential savings to be viable. State may choose some of each opportunity, such as selective outsourcing and common management with some consolidated staff.

+ Applications not to be induded in comparative models. Current models ther-re reflect that applications development (user oriented soffware or programming) will remain with dient agencies. (Results in lower projected savings than earlier reports.) Harmonization of applications development addressed in Enterprise Plan Opportunity, though not quantified here. Regents will not be included in consolidation model, but Regents will cooperate in Enterprise Wide Plan of operations, including coordination of software and resources, disaster recovery, etc. . Regents will examine consolidation of its centers within its own planning process, but will coordinate efforts with Executive Branch, including inviting GSD to participate. Need to compare costs over 5.7 year time horizon. Savings in -93 may be more than consumed by increased costs in later years if not implemented appropriately. These dedsions are not recommendations, but were made to simplify analysis of the major options.

- + Decisions by Task Force in constructing models

+

+

+

+

+

.


/ \ t, 0 Remaining Steps Before Implementation.

+ Receive response to Outsourcing Request for Information (RFI) from private vendors (IBM and EDS) to size potential savings.

+ Validate budget numbers provided by agencies.

+ Validate estimated savings by comparison against results demonstrated by other studies and actual practice in both public and private sector.

c

0 Possible Recommendations.

+ State should consider possibility of contracting with a consultant for a review of operations before makin a final decision. ma- b ccmtmt with a consultant or consultants for a mpmhensiie evaluation of the state's-data processing and telecommunications requirements. The study should indude an examhation of the state's current appGcatii of data pn>cessing and telecommunications services, and the physical and organizational envirocunents in which the secvices are utiiied; the state's future data processing and telecommun*catiorrs requirements; possible methods of reducing current expenditures for data processing and telecrxnmunicat*m; possiMe methods for cwrtafning future expendiires for data processing and telecommurricationS Senrices; and pbbabk new appriions of data pIocessing and tdecommunicatiotls services that will be required by state agencies during fscal years FY93 to FY98."

"The General Assembly shou I? appropriate a reasonable amount to the department of

+ A consultant may, or may not be helpful, but definition of contemplated scope of senrices must be clear and expected work product clearly defined so that produd developed is usable.

+ Any proposal must be affordable and doable.

+ Competitive pricing of outsourcing and insourcing would offer direct comparisons 'of opportunity cost to privatize versus cost to retain capacity and full return on investments inside of State Government.

+ Savings are available in FY93 through at minimum adoption of common management. .

Cl Minimum recommended level of action is adoption of common management in FY93 to plan towards phased consolidation of Enterprise data processing assets.

+ Consolidation might be accomplished through one or more of the remaining models: + Consolidation. + Outsourcing. + Insourcing.


-I_ --- I

i 0 OPPORTUNITY - PERSONAL COMPUTER ACQUISITIONS REFORM.

+ Personal Computer acquisitions reforms or restrictions were considered by the Task Force as a potential source of immediate savings in FY93.

+ But after the potential savings were scoped, a freere on personal computer purchases or other specific reforms were rejected as an immediate opportunity.

+ Total state expenditures for each of past two years averaged approximately 3.7 million. . + but only 1042% was from General Fund and much of that was fully reimbursable from

regulated industries. c

Gene&lFundFY92 . $0.371 M i l l i i Oth6rFundsFY92 $3.343 M i l l i i

+ Total $3.714 Million* lmpact on Revenue Loss of Federal $ and Regulated Industries

reimbursements. Exdudes WT, Regents', Legislative Brand\, and Judical Branch. Educational discounts

available to Regents' reduce the potential savings a v a i i e to the Regents' for PCs.

+ Potential benefits of acquisition reforms limited given priorities of Task Force. Appropriate for attention by management when data processing reforms and Enterprise Plan are implemented.

+ Freeze on purchases considered and rejected both for relative small size of potential savings and loss in productivity. + Freeze would also inappropriately limit new program implementation and jeopardize

receipt of federal $ for some projects. * Cost of implementing could exceed anticipated savings.

+ Site licenses for software should be investigated. + Recommendations.

DOS 5.0 Upgrade would be appropriate for all State personal computers to impmve uniformity of operating systems and to save on cosfs of piecemeal upgrades. Site license may not produce net savings in acquisition costs alone as many users would never upgrade to DOS 5.0 as evidenced by the number of personal computers running on much earlier versions of DOS. Savings in operational support services and compatibility of data still justi i DOS 5.0. Other standad software packages may be appropriate for site licenses or standardization.

Greater volume discounts could be available from some vendors if state would commit to a specific level of purchases of personal computers.

State has in recent years, annually purchased approximately 750 P.C.'s, with supporting software, printers, modems, and LANs for approximate net cost per work station. ISM discounts not volume dependent, but other vendors would offersubstantial discounts for a bulk purchase.

I


0 OPPORTUNITY - LOCAL GOVERNMENT COORDINATION.

+ Increased cooperation and coordination of information systems development, purchasing and operation could yield colle'nre savings for both State and local Iowa governments.

+ Savings Potential - Range of 5%-10%. m s : Not determined.

4 GeneralFund: 4 OtherFunds: + Total + LocalTax$: 4 Implementation Timeframe: 1-2 years, with gteater long-term potential.

Assumes that 5% savings in hardware and software data processing budgets can be Mked thmugh increased cooridination and voluntary cooperation of purchasing and pmcesses at Enterprise level,

+ Analysis.

- + Assumptions.

D u p T i in programs, hardware, software, and personnel may offer opportunities for ampedon to reduce faced and variable cosfs and to share the Savings. Duration of Benefii - Permanent. Linkage - Intergovernmental Task Force, Executive Branch Review Task Force and Statewide Service Delivery Task Force !

+ Current situation: Counties, cities, school districts do own data processing with some commonality in equipment. Local government (cities and counties) face many similar problems that can be handled cooperatively to capture available savings. Typically each political subdivision develops ils own way to sa t i i the requirements of their constituents and rules or duties imposed by the state or federal government. The result is that the same process is being done in many W i n s by a multitude of means with varying degrees of SUCCBSS.

+ Some common processes with potential for savings through shared solutions indude: . Budgets. Accounting. Voter registration. Motor vehide licensing.

In many Csises the information collected at the h l level needs to be shared and transmitted to the state. Even here sometimes data is entered twice when both users store information eledronically but transmit the records by hardcopy.

Property tax cdlections and records.

+ Guiding Principles: Data should be captured once and at the dosest point possible to the point of origination. This process results in fewer errors and reduced costs of cl>rrecZi or duplicated data entry efforts.

- Technology Enhancement - Page 27

r , I .

.* Sharing the application costs would produce cdledive savings for all participants compared to current practices. Savings are available in:

Application development, and Application support and maintenance.

+ Examples: + The Department of Transportation supports the licensing and titling of motor vehicles in

all Iowa counties. This allows local government to deliver services in a uniform and efficient manner.

+ Voter registration and election setvices are provided by the state to 69 county offices. This gives the participating mum. Control over its own data yet allows the state to pmvide up to date information in a consdiied manner. The process also reduces appIic&tii development expenses for partidpating count*bs, reducing local qtpense aM the need for expensive, skilled staff or private consultants. The voter systems utiries the DOT communications network.

+ Many other systems could be developed, purchased, shared or transferred that could pro&e uniformity of data and delivery of services to the local level at reduced cost to both local governme@ and the State. These are examples ofthe State as a wholesaler of services to the local retail level handled by political subdiiions.

+ Nextsteps: + Determine size and scope. (Extend consolidation models to include information supplied

by League of Municipalities and ISAC to determine status quo cost to local government.)

Model magnitude of savings based upon success stories in other states. + Determine common applications.

Recommend Sharing Structure.

Recommendations for State and Local Government Coordination of lnformation Systems.

- + Iowa State and local government should form a partnership to develop and support information systems serving common needs.

Shared appli&ion development, maintenance, data entry and transmission and hardware costs will generate collective savings for all participants.

+ Cooperative efforts will allow local governments to carry out similar functions and provide a standard process for the sharing of data between the state and local governments.

The group should indude the facilitator, the State's common manager of information systems; the wholesalers, the State dient agencies' department directors; and the retailiers, bcal governmental leaders. Participation of departmental level managers and local leaders required to establish diredon and foundation for development of cooperation with local governmental subdivisions. The group could continue the work begun by members of the Technology Enhancement Task Force, Statewide Service Delivery Task Force and Intergovernmental Task Force.

+ An ongoing group should be formed to encourage such &operative efforts.

+

+


. . . .

+ It is imperative that local governments become partners in the development (1) of any system to reduce shared costs and improve efficiency. Consensus based partidpatiin avoids any issue of acontror and insures that local needs are being met - a basic test of a service oriented system. Partnership based *user groups’’ should be formed to promote on going enhancements.


-- 7 ---. I_- I -_._

EWEWNSE PLAN 0 OPPORTUNITY - ENTERPRISE PLAN FOR THE TECHNOLOGY

NECESSARY TO COST-EFFICI ENTLY IMPLEMENT THE BUSINESS PLAN OF IOWA GOVERNMENT.

+ Economies of scale and efficien&ek are available through the implementation . of an Enterprise Plan following the I n h a t i o n Service Delivery Model contained in ~e Strategic Automation Plan of September 26, 1991. The Mode1 Wses on: + Management through standards rather than confrol through ownership. + Corporate ownership rather than agency ownership. + Integrated planning and use for equipment and systems.

Seniice oriehted responsiveness. + User based funding. + Focal point for data communications.

+ Problems identified: + No coordination mechankm exists to assure available savings are captured. + No coordination mechanism exists to educate dient agencies (the information users)

about what tools (software or hardware) might be available to answer problems or needs.

+ No prioritization of applications development effort. + No statewide business plan amss all branches of government.

No coordination mechanism to maximize the return on technology investments between levels of government or between branches of government or a m s departmental or agency boundaries within a branch.

- + Technology oriented solutions under discussion or in process in State Government include: + The Department of Transportation is implementing an imaging system to store and

retrieve files, allowing electronic access to "originar' files stored in Ames to primary users in Des Moines. Electronic transmission and filing of birth and death certificates, and other vital records. The Secretary of State's office will soon be the first in the country to transfer Uniform Commercial Code information (liens) electronlcalty, with no paper. Accounting firms and the Department of Revenue and Flnance could both p~ocess tax returns faster this way. Electronic filing can be used for accounting, muting, retrieval, problem resolution, and tracking. The Secretary of State is also working on an imaging system. End goal should be a system allowing digital transfer of informatiion. Businesses and citizens could access the public records database with personal computers or the information kiosks, and the State could charge businesses for their time. There would be no need on most routine business for the information customer to speak with anyone directly. The Department of Human Services has been conducting a test program in Cedar Rapids for about 3 years using "Smart cards" for Aid to Dependent Children (ADC) payments. The electronic benefd transfer (EBT) cares are similar to Autom'ated Teller Machine (ATM) or Shazam cards. The program has been successful in delivering both -


cost savings and reducing losses due to e m or loss, but it has not been extended bmnd Unn County. Iowa currently has the greatest per capita access to electmnic funds transfer terminals in the nation due to the success of the private Iowa Transfer System (ITS) in establishing a uniform and cooperative electtonic funds transfer network

+ Similarly, Iowa has estabbhed expertise in user operated computer terminals in the form of the Iowa Lottery's player-activated terminals with touchscreecrs. he Department of Natural Resources has investigated the possibilii of using Lottee terminals or banks' ATM machines b issue hunting and fishing licenses.

+ The electronic teminak already in common use in the state suggest the pot- for direct service deliiery via technology. (Every citizen in Iowa is already within 20 m W of an ATM machine and within I 0 miles of a lottery terminal.) Direct access for common citizen services could be deliiered via an ekcbmlc "information kTosl<" with a user

. friendly touchscreen computer connected to an artificial intelligence mailjrame computer system via the state's fiber opfk communication netwok Electronic debiting and crqdiing of benefii and payments would substantially reduce losses-due to fraud or e m . Such direct service terminals could actually be a step beyond the 2030 regional service centers currently under consideration. At minimum such direct service terminals could supplement those one-stop shops for government services by pmviding an afternative doser to home for many Iowans.

- + A unified senrice delivery system as described would require an "individua(0riented" database rather than a functional database. The technology b avabble. The twhology can deliier substantial net oparational savings, but organizational issues of sewice a-s departmental and agency boundaries must be mlved through an Enterprise Plan and creation of a central coordinafins entity able to direct ~esources and priorities to achieve the goals of the Enterprise of Iowa Government.

4 The Task Force recognized the perception of "Impersonal service" in connecfiOn with electronic devices like voice mail. These concerns should be oveTcome by the convenience and cost savings of direct service options. Security of some data would also have to be addressed in the Enterprise standards. Some segments of the State's database must continue to be restricted access. A major advantage of direct senfice via technology optiions would be the extension of service hours fmm the current Monday to Friday, 8:OO a.m. to 430 p.m., to 2dhOu1-s a day, 7 days a week. Such a direct service system would increase the need for an on-line, real-time access nehvork, such as the ICN. Some fundions could be batch processed, but most would require immediate access to information. via a network able to handle widely varying bads at high speed. One obvious problem is funding the necessary investment to realie future savings. The difficuw in financing technological capital improvements is illustrated by the failure to fund the Department of Human Sewice's $9 million dollar X-pert System, despite expedatiin of $46 million in savings in the first 5 years. one obviolis answer is multiiyear budgets or funding commitments for technology investments with long-run returns.

4

+

+

4

.


0 RecornmenGations 1dr Enterprise Plan:

+ Creation of Business Plan: As a first step, the State of Iowa needs to develop a business plan dearly identifying its mission and goah in providing sewices to lowa citizens and taxpayers.

+ The Report of the Governor's Spending Reform Committee could clearly be the first step in writing a comprehensive business plan for the Enterprise of Iowa Government. The business plan should indude:

+ Wore tfie potential of technology to generate savings can be evaluated, the State must know what it needs done and what standards of performance are expected.

+- The business plan should ideally incorporate the needs of local government and should dearly define the services to be provided by state government: 6 on a-le bask to local government, and

on a retail basis directly to Citizens.

all branches of state government, and all departments and agencies within a branch of state government.

+ The Enterprise Plan should assure the creation of a technological platform to move data and share data across the state:

between all levels of government, 6 between branches of state government, and

acToss departmental and agency boundaries within a branch of government.

+ The ICN, Parts 1 and 2 now under construction, is that platform, and the backbone of Iowa's future information system network.

ICN Parts 1 and 2 are a necessary precondition to realizing the savings of a improved coordination of all aspects of Iowa Government.

+ ICN Part 3, offers further opportunities beyond the educational benefii of distance learning, but it is the need for a data net that makes Parts 1 and 2 viable, cost effedive and necessary with or without Part 3.

+ A Chief Information Officer (CIO) or directorAeader of information'systms and technology efforts across departmental boundaries is needed as a central coordinator of information systems and technology.

The CIO role is to assure coordination and enforcement of technology standards. Creation of the CIO role Is a precondition to realizing savings in other departments.

+ The 'CIO could be a single person or a properly empowered Board with M i e n participation.

+ Common standards must be developed for state information systems and other technologies by the CIO and an entity representing the Client Agencies. Client agencies must participate in setting standards in any service oriented plan.

+ The State should adopt Enterprise-wide management information systems and processes, including shared human resource programs, budgeting, accounting, finance and general ledger systems.


,. . . = * * .

/- -- \ ' t >I

6 The lack of unified MIS means that manages frequently do not have the necessary infomation to make intelligent, informed dedsions, and management decisions and results are subject to inadequate oversight. State leaders currently do not have the necessary information to properly, and objectively evaluate the performance of departmental or agency administrators or to plan for Iowa's future.

+ An Enterprise -Plan must' provide for planned adoption of high-retum emerging technologies consistent with the Technology Inventory. The process should provide for regularized research, development, and dissemination efforts on emerging technologies, like: + Artificial Inteltigence. '(like DHS X-PERT System.) 6 Geographic Information System + Remote dient service defivety, like automated license machines (Lottery model). + Optical or Electronic Imaging (DOT, DHS, Secretary of State). 6 State Services platform for moving the data - ICN. TIM Council may be able to assist in fully developing this function in state government.

c

. + The State of Iowa should also address the limitations on funding capital investments in technology to realize savings. 6 Treating technical investments as an expense entirely in the first year of the investment,

when projected benefrts extend over the liiecyde of the asset, encourages the inefficient status quo and discourages realization of available economies. Recommend muttiiyear budgeting or long-term insourcing contracts as available means to smooth out the budgetary cycle.

j I .

+ Applications savings available in FY93 and beyond through: Development of objective measures of a p p l i i n development productivity. Information systems standards.

+ Leasing of staff from agencies with temporary work lags to agencies in need to better match staffing levels to demand amss the Enterprise.

+ Increased use of consultants to develop custom applications. 4 Greater use of off-the-shelf software. 6 Increased sharing of software and programs with other States and governmental

subdivisions. 6 Adoption where appropriate of Computer Aided Systems Engineering (CASE) tools to

speed development.

+ FY92 Applications budget for Executive Branch agencies = $9,634,516, representing 250.5 m s . Range of savings available in FY93 through adoption of enterprise wide plan on order of 5-10%, or between $ 481,725 and $963,451.

+ Enterprise level coordination of client agencies' applications development staff could deliver efficiencies through leasing of staff from agencies with

- Technolbgy Enhancement - Page 33

r - .. . lVIW91

temporary work lags to agencies in need without a reduction in quantity or qualityofwork .

+ High-retum technology inventory, with potential to generate savings.. Enterprise Plan requires a process to exploit an inveuitory of high return technology to maximize available savings and qualii impmvements.’ Initial matfix of technology options and interested agenda included.

- - ., .

; .-


Inventory of High Return Technologies Under Consideration by Agency Departments lmaglng Geographlo Audlo Knowledge

lnformatlon Response Based System System (01s)

Bllnd Commlsslon Commerce

Computer RelaHonal Smart Card Executhre Vldm Text Asslsted Data Ease lnformatlon Canfewnclng Management Systems Systems

Engtneerlng

Publlc Defense I I I I I I I I I Publlc Health I

This is an inventory of high return technological solutions In process inside of state government. Other agencies may be able to benefit from the use of technology to maximize efficiency.

I

TecForcSsam dpw/l1/6/91

.a OPPORTUNITY - DEPARTMENT OF HUMAN SERVICES X-PERT SYSTEM.

+ DHS X-PERT System is a Knowledge Based (Artificial Intelligence) system to support initial and ongoing eligibility determination in the Economic A s s i i n c e and Medicaid programs. + 1989 study determined that X-PERT would signifintfy improve program administration. + Prototype demonstrated through proofof-concept. + X-PERT necessary to improve porky development and communication, DHS already

criticized for complexity of rules making uniform and fair application dfficuft. . + X-PERT brings the knowledge of experts to every dient, every worker and every

e r i i b i r i decislon. + X-PERT is based on the cumulative knowledge of policy materials, correctly interpreted

by experts and induding day-today field staff experience. + X-PERT explains its reasoning as it applies knowledge.

+ Savings Potential - + DHS Development Cost $4.3 Million + General Services ISD Accelerated Upgrade Costs $4.6-7.6 Million

(Upgrade will also sewe other systems and agencies and is eventually required by other demand growth. If coordinated with data center reorganbtii, resulting no net upgrade cost should resuft.)

+ Total estimated cost to implement in -93 $8.9 Million + Total estimated savings over 5 years $46.9 Million 6 Average annual savings $7.6 - $9.38 Million + Approximate pay-back period of investment 1 year

+ Need for technological assistance is growing. + DHS mission is to efficiently provide timely and accurate benefds to eligible dients, in a

dient-centered environment that promotes seJf-sMiency. + Current process used to implement mission is functionally obsolete and incapable of

handling demand due to: Accelerating rate of change. 654 updates to the workers' manual in one year, 14 new medical programs in 5 years. Program complexity. More than 30 Medicaid programs, with inconsistent standards program to program. Patterns of American family life. "Blended families". including both eligible and ineligible persons for various combinations of programs complicates decision making process. Permutations easily handled by "trained computer."

+ Anticipated results of implementing X-PERT. + Anticipated results underline the need for X-PERT. In the first 5 years of operation

$46,861,417 to be realized in redirected resources, such as gains in learning curve, and in savings, such as paper and mailing reductions. Accompanying changes in the way policy is developed and communicated to-staff adds resuks of at least $514,100 in additional savings and redirected resources. .

+


0 OPPORTUNITY - VOICE MAIL.

11/78/91

+ Voice Mail Savings Potential - Material reduction in secretarial support FTE's and improved productivity of production and managerial staff. ~

+ m s : Not determined: ~ .. 9 %

GenemlFund: Not determined.. \ *

OtherFunds: Not determined: LocalTax$: None

.

+ Longevity: on-going savings. + Implementation Timefram FYs3

Actual cost(benefe impact of voice mail was not possible to determine in the short periodof time allowed for this study. Analysis of departmental budgets in this area'complicated by fact that job titles do not always reflect the range of duties actually performed or the criticality of the position.

+ Analysis.

0

Assumptions. Increase use of Voice Mail or audio response could reduce number of secretarial and teceptionistms. Voice Mail could reduce other related CdmmuniCatiOn expenses, like memorandum usage. At minimum, voice mail could reduce trend factor in growth of state government personnel needs.

Methodology. Comparison of State usage against results achieved in private sector, relying primarily upon vendor supplied models. Reliance upon Phone or Voice Mail increased as a consequmce of recent redudions in force (RIF plans), demonstrating abi f i of state agencies to reduce expenses and maintain service levels through Voice Mail.

+ Implementation Issues.

+

Per line cost of phone mail Is $36 per year (=month), no new hardware required as Norstan phone system indudes Volce Mail capability. Increased use of Voice Mail should be targeted at agencies not currently using Voice Mail, not across the board. Some agencies have already realized these savings through switch to Voice Mail while implementing RIF plans.

+ Summary - There are many benefits associated with using Voice Mail, including: +

+

Reduced Occurrence of ''telephone tag." Completion of caller's "mission" on first try. A full 75% of all business calls are not completed on the first attempt. the effect is an incredible amount of wasted time and energy, by using voice mail, an enterprise can reduce call attempts by as much as 40%.

+ Shorter calls. when you leave a message on Voice mail, your calls are inyariabty shorter than a direct conversation. The messenger gets right to the point. Live communicatii almost require "chid chat," with potential for wasted time and money. Reduced problems or conflicts with time zonebusiness hours conflicts. If a taxpayer calls before 8:OO a.m. or after 4:30 p.m., the State's standard work day. the message

+


. can still be taken and the need met through follow-up. This time flexibility also facilitates flex time and other savings methodologies. Reduced labor costs. Instead of answering phones and taking messages, emprOyees are free to do more vital tasks. This was one area that was difficult to assign a dollar value to. The assistance of a consultant, or Norstan, the State's phone system supplier, may be necessary to fully anafyze this savings potential. Fewer callbacks required. According to vendor supplied research, required callbacks can be reduced by as much as 50% because the necessary message can be deliwered, received, and acted upon without a call-back to the original caller.

. - +

+ Reduced use of memos. + Increased secretarial pcoductivity.

CostperMemo

c

+ Current State Utilization of Voice Mail. Number of phones in the state system = 7,227.

+ Number of state phones currently using Voice Mail = 1,165. + Message volume utilitiin for Voice Mail phones in September 1991 = 213,611. + Cost per line per month for Voice Mail = $3. (Nocstan phone system recently adopted by

state has capacity to add voice mail with no change in hardware.) Approximately 16% of all state phones are using Voice Mail. It would be unreasonable to put Voice Mail on all state phones. Some of these phones are located in conference rooms, vestibules, etc. Some staff members are more likely to be away from phones, either traveIing or in meetings, and some staff members are more likely to receive calls. The Task Force believes it is reasonable to believe that extension of Voice Mail to all managerial level staff in agencies not currently using Voice Mail should be a minimum application of available technology to realiie signifiint savings. More stations can be identified by departmental management as appropriate. Departmental management can adjust expenditures for paper, copying, and secretarial FTE's as appropriate to realize savings at least sufficient to pay for Voice Mail.

+

#&Memos Annuai Savinss Annuai Savings

by VoCie Mail Replaced per Week per Person per 25 Users

* Scenario One: Memo Reduction Impact of Voice Mail. + National vendor surveys indicate the cost of a typed memo including writing or dictating,

typing, copying, and distribution (including postage) is between $5 and $9. To be .on the consenratiie side, assume the cost of each memo produced to be $3 and use 50 work weeks per year.

.I

$3.00 $3.00 $7,500

1 $150 2 $300

I 3i450 I $1 1,250 11 I $3.00 I 3

+ If Voice Mail replaces 1 memo per month for each user it has paid for itself, and maybe more.


, * . . .J

IUr8/9I

+ Scenario Two: Secretarial Productivity Impact of Voice Mail. + Assuming 10 calls per person are mc8bd each day and assuming 70% of those calk

are taken by secretaries for message purposes or call screening at two minutes each: 10 calls x 25 people = 250 calls. 250 calkdday x 70% secretarial answer rate = 175 caltslday answered by secretaries. 175 calls x 2 minutes x .10 cost per minute = $35/day W d a y x 235 working days/year = $8,225 Annual Savings.

Rearing these savings on the bottom line is more diffitt. A more likely result in most ciccumstances is increased pmdudivity by diversion of valuable personnel resources to other duties. By having fewer interruptions, State secretaries * should be m e productive at other duties. Those that only awer phones or whose secondary duties do not independently justify the continued personnel expense could be fully rephced by voice mail at even greater savings, given the monthly cost per G n e of phorre mail at $3.00 ($36 annually) and the average pay for secretary I being $14,000 annually.


__----- -- , -c- -- _-_-_-.- - I I1 I

lIAW91

Wallace Technology Transfer Foundation.

+ Background. + Defer investments in technology incubator until after GAAP is filled. + $ Sue - $1.0 - 2.57 MM + Implementation Timing - FY93

Duration of Benefii - Annual while deferred WaltyTech Is a capomtm mated at the rmmmendation 0fGovernorBranstad and by recent action of the General Assembly. Wany Tech Is directed to pursue a long-term vision of Iowa's ecocKwnjc future through kwestments-in basic research, in the hopes that commercial^^ W e apQfications of technology Wnt be d i i e r e d to create jobs in I- Wally Tech is to play a key role in Wengthenlng and diversifying Iowa's ~coc~wny by impming the pdiibiri and global compefifiveness of Iowa business by assisting adoption and dissemination of new technologies and by supporting the formation of new business to utilize schtifii and technO(0gy resources in the state. Ptogram recognizes that: + worldwide industrial campetitron will rewgrd those who can innovate new and better

prod~andservices. 6 Advanced sdence and technology is being appIied to new products at an ever increasing

pace. + Other nations and states have built new relationships between academic research

centers and industry to meet that competiie challenge. Iowa, with an extraordinarily rich capability in research and higher education, is well equipped to participate in the new global economy.

+ Mission: The Wallace Technofogy TransfGr Foundation is a non-pmfii corporation, established in 1989, under Iowa Code Section 28.152. Yvally Tech" is directed to pursue a long-term vision of Iowa's economic future. The Foundation plays a key rde in strengthening and diversifying lowa's

Improving the pmfiiabiri and global competitiveness of Iowa's businesses by assisting their adoption of new technologies. Supporting the formation of new businesses utilizing commercial applications of the advanced scientific and technology resources of the state. Formulating and implementing plans and programs for development of advanced sciences and technologies. Determining the needs of individual Iowa businesses and farms for scientific and technological innovations to improve produds and processes.

-Y by:

+ Iowa's Technolog Transfer Needs.

strengths and weaknesses were as follows: Iowa's future prosperity depends on maintaining and slightly expanding existing employment and, more importantly improving job quality and wage levels. Five key opportunities and challenges confront Iowa in this area:

Major audit findings o Y a Brandon Roberts & Assodates study of Iowa's technology development


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r' t Iowa has an impressive array of tools for technology transfer. Despite fhis, the state lacks an overall vision and guiding body to insure that resources and efforts am used more effectively.

2. Knowledgebase, 3. C o m m e r c i a l i routine, and 4. Technologydeployment,

Iowa has programs and strengths in each of three areas:

Despite these strengths, there is no one organization or body in the state that takes a leadership position in dw-ng and directing Iowa's technotogy transfer efforts. Prqgrams and resources are administered from various agencies and institutions with r i apparent linkage towad a common vision.

Agriculture and relatd products, defined broadly, have been and will remain for the foreseeable futum, the underlying foundation of Iowa's economic prosperity. m technology challercges and international cotnpetbn in this area are great. to keep its woddwide competitive advantage, Iowa needs to actively d n t a i n its wwld dass research expertise in this area and take advantage of the opportunities to -it h n o v m based on current strengths.

tt appears that the Regents' universities are well positioned to cOnfincle their basic research in Mot-. These efforts should be of long-temvalue tothe state and should be recognized for their strategic knportance, patticularly relative to opportunities tobuMnewenteipriseswithinthiisector. Economic anpeWon *. is increadhg wwldwide and.0 place or economic sector can escape. In today's global economy, infwmation, technology and exper&? are mobile resources that often concentrate in areas with critical masses of population and resources., Iowa's continued prosperity in agriculture and biatechnology may well require focused and concerted efforts to maintain current competiive advantages and economic strengths.

Impressive actiins by many have led to the development of new areas of research and expertise, principally in universities. To successfully translate world dass competitiie research strengths in these new areas into commercial success will require a major, okgoing infusion of signifcant financial resources and a selected focus on sectors representing key economic strengths.

Universities have recently undertaken activities to expand their research expertise into new felds of study. Available resources, however, are much more limited and to some degree dependent on non-traditional funding streams. Funding levels will have to increase substantiilly to develop world renown expertise. It is correctly perceived that there is a gap between universities and industry. There are many examples of Iowa academic specialists supporting essential services throughout the state espedally in education and the health pmfess*ms. There are ather examples of new university-based initiatives to develop applied research programs toward commercialization goals, such as the Center for Advanced Technology Development of Iowa State University, the pharmaceutical program and laser center of Iowa City, and the University of Northern Iowa's Applied Technobgy programs. However, at this time there are few direct linkages between academic researdl strengths and Iowa's established manufacturing industries, except for the long standing assocWon in agricultural biitechndogy. without targeting new research effort efforts to match economic match strengths, Iowa universities are likely to develop areas of expertie that are of value primarily to businesses outside of the state. While this may sewe to attract companies to Iowa, it is a strategy with a high risk of failure and with an outlook for success only in the long-term. Failure to link-up with in-state business also reinforces a tendency to train students for jobs only available out of state.

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Potential opportunities exist for Iowa to strengthen its economy through the development of new products or enterprises tinked to existing or newly developing technical -rtise. These opportunities may be with businesses in key economic sectors or in new sectors that could help diversify the economy., Despite the existence of venture capital and other innovate development tools, evidence indicates significant obstacles to successfully commercialiie research. .

Significant attention is presently focused on new firm starts, particularly in areas that would help to diversify lowa's economy. Cow-, few resources are devoted to assisting existing indusbyto develop product innowtiom. WMle opportunities may exist for transforming knowledge into commerdal enterprises, three barriers appear to constrain success. First, significant resources am required to develop world dass centers of expertise and to generatethe critical mass needed to stimulate entaprises development. It is not d e a r thatthoseresourcesarewi. Second, it is not evident that faculty attitudes and the underlying university culture are hospitable to the goal of mmerciaring basic reseanh into forqmfii enterprises. Universities are centers forthe. pursuit of basic Icnowledge. Third, and perhaps most important, lowa does not have a strong base of entrepreneurs or business management talent that can take an M e a and buikl successfully enterprises. While it can and has happened, the base does not appear significant. W m t h e removal of these barriers, current and future commercla * r i e f f o r t s m a y have eliminated success. in addi i , failure to focus on opportunities to help existing businesses expand fhrough Qroduct innovation may not only result in a loss of potential job growth, but may also limit their Competitive a b i i i .

+ Small manufacturing concerns are of growing importance to Iowa's economy. Most have a significant competitive need for access to information and technology to improve produdion and operation processes. Their corporate capacity to do so, however, is limited. While public organizations within the State offer m e of the needed services, those efforts are diffused and deficient in some areas.

Current programs to deploy technology are dispersed throughout the state in a variety of M a n s that seem to be in competitii with one another. It is not dear whettier resources are sufficiently concentrated so that programs can provide effective assistance and it seems problematic whether efforts can be coordinated. There are some gaps in the technology deployment process. Applied product research and access to information market opportunities and technology challenges wOctdwide are missing components. In addition, business is not an integral partner in the process.


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lurW91 /- -*.

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+ Re rt of Wallace Technology Transfer Foundation Accom liihments. WE was wally TWS first year of ~UII operations. . iuring-this year it accomplished the following:

strategic Planning - adopted a Statewide Technology Transfer Strategic Plan to prioritize investments in basic research with the potential to create jobs h Iowa. staffing - recruited full-time staff or adrnidstmtive positions and entered into an employment agreement for an Acting Executive Director for FY92

and received 34 proposals for collaborative techndogy development proleds involving Iowa industry and educational k\stitutions . Approved 4 f m assistance agreements. Federal Programs Support - designated as the nesponsibk state entity for support of applications to the National Science Fwndatbn's Statenndustry University Cooperative Research Centers program, and'provided financial support for entry of an Iowa pmject in that national competition. * .

Institutional Technology Services - adopted polides for operation of Its Technology Services Support Activities program, received 11 proposals for financial assistam from education institutions and other IKM-pTofif sponsors, and entered krto financial assistance agreements to support operations of thd Iowa Plastics Technolosy Center and the techndogy incubators and mearch parlcs at the UIlhrerS~ Of IOwa and Iowa State University. Interagency Coordination - developed and approved a 28E Agreement providing for CoopemWe opemtlons with the Iowa Product Development Corporatiin, and joined with IDED in sponsoring an industry/techno(ogYeting project. Expenditures and Audit - .

Seed capital I~eStment - began operatiorrs of Industrial TechnO(0gy Access Program,

Appropriated $2,729,880 for FY91 of which $1,360,000 was later rescinded. ~xpended $366,480 on operations, muding $95,838 for peer review and dther consultant services. Expended OT obligated $1,051,925 for fi-1 assistance to 8 paecZS.

- I Technology Enhancement - Page 42

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Summary of Wallace Foundation Project Investments Approved in FY91. + Industrial Technology Access Program (ITAP),

RAP murages doser relathships W e e n kwa busmness, industry, and agricuhre and the tech- support potential in the state's instikrtions ofhighereducation, I tmyprovide . f i ~ ~ aSSiStanCe fof a wide Variety of actWes related to the development and C o m ~ l i i i o n of contemporary techndogies by Iowa businesses of all types. RAP was OQeratiOnal for only 5 months of FY91 due to rescission of remaining funds h March. In that brief period, the Foundation received proposal for $3,50o,ooo of techndogy devdopment assistance. The proposals refled a variety of techndogies and business types, but shate the promlseof-- and industrial competitiveness. he applications teffect the unmet level of demand in the fowa m y . Wally Tech approved financial assistance for 4 proieds for a total of $501,925. Each approved p@ect takes a dffecent approach to businesslacademic cdlaboration. Together, they confirm the range of opportunity for cdlaboration between Iowa's innovative businesses and the state's hstitutions of hiiher education.

Tarpon Chemicals Partnershiphwa State UniveMy. col- * Signifiint technology developed thmugh research at ISU is licensed to a new frm organked by the prindpal scientist; commerc ia l i i assistance and financing is provided by an established animal health products firm; university f a d l i i are contracted for animal feeding trials and produd evaluation. Assistance in FY91 was $200,000, with second year funding to be considered in rektion to projed progress. The commercial partners wil w i d e an equal a m b i i . The Foundation will receive a royalty on sales of animal projects within the United states. Administratiin of the investment agreement is under the ISU Office of Grants and Contracts. ElectrobbnicS CorpJoes Moines Area Community College (DMACC). cdlaborat#M * : Young, entrepreneurial firm's maticet insight leads to development of technology-based new product, and is supported by incubator facility and administrative senrices of the community college, with technical assistance arranged through major iocal medical center. Foundation investment was $52,425, matched by equal funding from the company's private investor, and is to be repaid as a royalty on future sales of the new continuous passive motion therapy product. Administration of the assistance agreement is contracted to DMACC, which will share 40% of the royalty payments. OMACC , long a supporter of new business development through its incubator program and other initiatives, will use the anticipated proceeds of the investment to support other activities in economic development.

cdlaborations lnnovatiie technology invented by independent scientist/business person Is refined for commercial use through contract services employing technical staff and equipment available at university research facilii. Pnxessing of the new devices required technical support and equipment upgrades within the Microelectronics Research Center. The Foundation is investing $104,500 in common stock of Silicon Dynamics, Inc. to supplement its federal contract work and to allow additional services to be purchased at the ISU Center. If the development succeeds, as expected, the company and the ISU facility may be contracted to furnish large numbers of the partide detectors for installation in research facilities in this country and throughout the world. Amana/Prima Specialty Beef ProjecUlSU Animal Science. cdlaborafjon: University specialists design complex multiipart research program to achieve commercial objectives defined by established businesses, induding a project

Silicon Dynamics Inc./lSU.

+


i

management system that couM incowrate a variety of future research pq&xts relating to Iowa's animal agricuture industry. Foundation invested $145,000. The animal agriculture industry remains Critical to lowa, and has witnessed rapid technology change over the last decade. Unfortunately for lowa, those changes have been more rapidlyadopted in competitive regions. If Iowa is to maintain its strong presence in a n i d agricufture, new t-logii need to be developed and depioyed in kwa on a continuous basii. Thii proied is a partnership between a wekstabkhed academic research base and a wide range of industrial and producer interests. The Foundation and ISU developed an agreement providing that new research topics and additional commercial interests could be accomModafed in the future. Series of pmjects underthis agreement to be launched in FY92.

+ Institutional Technology Services - Technology Services Support Activities P ram(TSSA). G%dm F 0 U m . s sttategic Phn identified a variety of oppoctunities within ecjucational instffutKMs fordevebpment ofnewsetviceSforindusbial techndogydevelopment and transfer. It determined that many of these opportunilies are not sufficientfy advanced to attrad direct financial contributions from Iowa industry, nor were they likely to generate commerdal techndogy-based produds in the near term. Because of these limitations, the opportunities for h t i t u t i i i n i i e s could not be qualifii within ITAP. The Foundatii, however, rtimgnized that some of lows's most significant ted\nology advances could not be achiied without investment in a companion program designed for support of longer-term initiatives by educatii l irWutmsandothernokproSltsponsors. The Technokgy Setvices Support M i program (T!3SA) was created to provide financial assktance to universities and other IKIIyxOsa entities for development of rrew capacity for tedmlogy commerciatiiion. Four proposals were approved for financial assistance totalling $550,000 in FY91.

Iowa Driving Simulator - entered into National Science Foundation's Cooperative Research Centers competition with grant of$25o,OOO.

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4 Iowa Plastics Technology Center - a non-profit collaboration between Iowa plastics manufacturers, UNI, Wartburg College, and Hawkeye Institute of Technology with grant of $1oo,OOo.

+ ISU technology incubator and research park with grant of $lOO,OOO. University of Iowa technology incubator and research park with grant of $lOO,OOO.

+ Analysis of Foundation Performance. 6 Operating costs during first full year of operatiin were 26% of total budget.. Start-up,

peer review, and consulting services included in this category. Some of the consulting services and other up-front expenses will not be reflected in future budgets. The Wallace Technology Transfer Foundation Board needs to more carefulty define what technology should be funded by State dollars. Should existing programs such as the technology incubators and research parks continue to be supported year after year? Should the technology transfer funds be available to community colleges and other educational institutions or be reserved for research instiiutions such as exist at UNI, ISU and University of Iowa? This program allows businesses to take risks, create new jobs, and generate revenue that would not be possible otherwise. Thii type of a d i i will strengthen and diversity Iowa's economy by improving the profrtabilii and global competitiveness of Iowa's businesses. Currently the Foundation is not showing a return on its investments. it should be noted that "risk investment" typically takes from 5-10 years before any returns will be realized.

+


In some cases the business will not be able to pay back the money contributed, in . Oth8fS the pay back is Only 2-3 YWfS OUt.

+ There is no dear evidence that investments to date are making an impact. There is a need to follow-up with the businesses to analyze the adual outcomes of the various pmjects. Currently there is no standard method for accounting benefii d state technology transfer programs. This pertains to virtualfy all governmental programs that seek to alter long-term economic performance. The benefii to be derived for the state indude:

- Recapture of Foundation investments.

A commercially successful technology-based product, - Job gtUMh in fildS reflecting cOnfempOracy t-ndogy; and

In the second and thid year ofoperation'the Foundation wilt be placing a d d i i emphasis on developing criteria by w h i i to measure the impact and benefii of the overall program.

+ Recommendations on FY93 Funding of Wallace Technology Foundation. From the evidence presented, it appears that the Walty Tech is a very worthy pmject and should be continued. However, until the state budget deficit is under control it is recommended that the Foundation be funded at a level to satisfy current commitments and maintain minimum staffing levels to preserve necessary expertise. The Foundatiin received $2,500,987 dwing FY92. .

FY93 funding of $1,soO,OOO, should preserve staff and allow the Foundation to meet continuing commitments for a one time savings of $1,000,987. This funding level is slightly above what was actually available to the Foundation in FY91, its first year of operation.

4 The budget of the Wallace Technology Transfer Foundation should be downsized until the state is able to more adequately provide proper funding of long-term, and speculative, but potentially high return investments.

PRO Immediate FY93 savings. PRO Anticipated benefits are long-run and speculative. PRO Program couM be deferred until GAAP is filled. CON Federal matching funds for m e Iowa mpanies may not be available without the state

funding. CON Potential loss of personnel expertise. CON There may be gmts that have been partiauy distributed with the rest to be distributed in

-93 or beyond - risk of detrimental reliance by private sector. CON Will deferral dose a special window of opportunw .


0 OPPORTUNITY - international Network of Trade (INTERNET). q ! ' !

I + Eliminate or Defer Internet program and rely upon private sources to

coordinate lowa educational resources available to ass*& Economic Development.

+ $Sue 362 - .5 Milliin + GFfTE's 3 + Implementation Timing FY93

OurationofBenef& one time.

- 1 + Opportunity. I

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+ Summary. International Network of Trade (Internet) was created in 1989 by the Legislature and Governor to meet the lntematlonal trade infomation needs of Iowa's small businesses. - It serves as an intemational trade informatii clearinghouse for Iowa's businesses and

governmental leaders. lntemet also studies the foreign marl<ets and performs research to identify Iowa capabitities to produce or modify produds to meet foreign buyers' peferences. Internet produces several publications to inform lowa businesses and policymakers of intemational market trends, developments and opportunities. Internet distributes monthly newsletters, market intelligence bulletins designed for specific industry sectors, Special boddets summarizing U.S. and lowa trade data.

+

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+ MISSION. : I + To provide lowa business community with needed information to expand exports and to

enhance international trade competitiveness and actiies.

+ Recommendations. At 20% savings level, defer or eliminate IrWnet. Rely upon existing, arguably duplicative, resources in IDED or private sector to provide similar informatiinal and coMdination services. Potential annual General Fund savings, $362,000 (GF FTE's - 3)- Internet does provide material benefii to Iowa businesses and could be central to State's efforts to expand export markets. In te rn is primarily information oriented.

It is not the only source of governmental ass*btance to small business, and its infomation services may compete with some available in the private sector. Significant investments in start-up expenses and staff expertise have already been made, and loss of investment to date or duplication of expenses stKXlM be avoided if possible.

AIternatively, require the collocation of Internet with other state economic development offices to reduce general operating expenses,, and support at maintenance level to preserve staff expertise and research, but reduce variable expenses like printing and mailing. Clients can seek out information through IDED as less expensive distribution means, though admittedly less effective.

+


+ Pros and Cons of defemng Internet PRO Immediate FY93 Savings. PRO Relatively high overhead expenses as Internet is operated as a non-pmfd corporation

capitalized by State Gwemment, but outside of IDED. Internet maintains downtown Des Moines o f f i i , apart from other State business assistance programs.

PRO No immediate, measurable payaff to state government in the way of increased revenue or more jobs. Anticipated benefii in anticipated long-term trade development.

CON No user information Is currently being gathered, so i d e n t i i affected constituency is drncutt.

CON Iowa companies will receive significantly less corrdensed infomatii and instruction on how to enhance their international tfade cx#npetitiveness.

CON Layoffs of personnel sacrifices expeit& and may not be recaptured if program is resumed.

CON Deferral could c&e a special window of opportunity given the pending Mexico free trade pact, and lntemefs current special focus on Mex*m as an almost certain member of the North American Free Trade Zone. Iowa's leading export partner is Canada. Compared to natiinal averages, Iowa exports less than expected to Mexico, SO great potential exists.


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0 OPPORTUNITY - CONSOLIDATION OF STATE PRINTING FACI LIT1 ES.

+ The State of Iowa currently maintains seven major printing facilities to support Executive Branch Agencies. + Department of General Senrices, Printing O i b n (Oes Moines). + Department of Employment Services @es Moines). + Department of Personnel (Oes Mdnes). + Department of Transportation (Ames).

Iowa State Fair Board (Des Moines). + Prison Industries (Miichellville and Anamosa).

+ Other printing facilities operated by the three Regents’ universities to support their mission.

+ Duplication of graphics senfices to support desk top publishing in several agencies. + Department of Revenue and Finance. + Department of Natural Resources. 6 Iowa State Lottery. + Department of Education. + Department of Public Heatth. + Department of Human Services. 6 Department of Agriculture and Land Stewardship.

Desk top publishing offers significant savings at the agency level, and in many cases is indistinguishable from word processing. But graphics support serv-kes are speGialized and potential is evident for savings in personnel costs and avoidance of duplicative efforts.

+ Savings Potential - Range of 5%-10% of approximate $22,500,000 expenditures on printing, photocopying, and graphics services. 6 FTE‘s: Not detemined. + GeneralFund: 5 % of $9 million + OtherFunds: Not determined.

LocalTax$: 0 + Implementation Timeframe: 1-2 years.

+ Analysis.

Rationale - Printing Facilities belong in the technology scope because printing is increasingly integrated in the electronic environment of information systems.

Assumptions. Economies of scale and efficiencies in utilization rate available through coordinated operation of printing facilities. Duration of Benefds - Permanent.


lv18/91

+ Client agency concerns that any consolidated print shop or graphics support services arrangement should address: 4 Consistency in co~ect billing for services rendered. 4 Consistency in prices originally quoted or bid and the actual charges. 4 High degree of qua(@ contml to amid missing or askew pages, poor print quality or

hatftones. High level of professionalism and "art quality?

4 Client oriented communications and courtesy. 4 On-time deliveries.

Ability to handle "rush" robs. Adequate supply of and access to materials necessary to manufacture print products in conformance with state standards.

+ Significant effort already expended by General Services to establish service oriented philosophy supported by objective performance criteria.

+ General Services Printing Division.

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Mission: provide dent agencies with dependaMe and quality printing at least possible cost to support sewice deliiery to the citizens of the State of lowa. Security of confidential material understood and emphasized. 24-hour turn around time standard satisfied n 98% of pmjects. Servloe provided on firstame first-senre basis. (When this rule cannot satim dent agency's need, work is outsourced on bid basis.) Central printing's plant has limitations on sheet size, number of colors and job size. Work not meeting these criteria is automatically vended or outsourced. Only 20% of work is provided in-plant. 80% of work is outsourced for total value outsourced of approximately $8 million annually. ($8 million outsourdng total includes $1 million in graphics and printing services in-sourced to lowa Prison lndustries annually.) Printing work is privatized when economically viable to do to satisfy objectively defined quality and service standards. Good worklng relationship with commercial printers results. Commercial printers frequently review operations to advise on improvements or additional opportunities for outsourcing with performance standards. Recycled paper and soyoil ink used in compliance with Executive Order ##37 and 1990 statutory requirement. (Private vendors not subject to same requirements.) Average commercial printer cost per 'UnpressiOn is approximately $058. Printing Division delivers cost per impression of approximately $.025. (Given 65,907,908 impression ins FY91 at cost of $1,183,752 - cost of performing work in-house reflects approximate savings of $2,000,000 annually over average commercial printing expenses if all work were outsourced.) 16 person staff, in addition to printing services: 1. Picks-up and delivers mail and supplies. 2. Sells and distributes state publications. 3. Performs typesetting work. 4. Provides consultation setvices on desk top publishing to state agencies.

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5. Monitors postal regulations to minimize costs by coordinating printing weights, colors, size and formats.

+ Prisonlndustries:

. employment. + Miion: train inmates to obtain vocational skills and qualifications for gainful

Equipment purchasing for Prison Industries administered and negotiated by General Services Printing Division. Similar assistance provided by General secvices to help prison industries obtain and satisfy statewide photographic reproduction services confracf (valued at $12,000 per month). All packaging type envelopes are sent by General Services to Anamosa for printing (contract services valued at $lOo,OOO annually).

+ 'All paper stock furnished by General Services Printing Division at no charge. 15 million printing imprt3Ssbns produced at MitchelMlle facility under contract from General Services Printing Dvlsion with approximate value of $375,000.

+ Charge to General Services for insourced contracts is, $.025 per impression. (Does not represent fully loaded cost due to services and mate& supplied by General ServrceS.)

+ Extent of existing coordination to capture economies of scale and efficiencies evident in relationship between General Services and Prison Industries. General Services should continue to expand the work outsourced to Prison Industries subject to the same standards applied to all vendors. Prison Industries not currently in positi i to assume lead role in state printing and' graphics operations. Prison industries operates under certain limitations, including problems with extensive training and retraining efforts that are inherent in its mission. Prison Industries' recent contracts due in large part to cooperative leadership and expertise provided by General Services. Insourcing to Prison Industries should continue under the diredm of a consolidated State Print Shop.

Average cost per impression (FY90) was $.029. Cost is not fully loaded in that it does not indude administrative bad.

+ Average cost per impressiotl (FY91) was $.0207. + Cost is not fully loaded in that it does not indude administrative load.

.

+ Department of Employment Services: +

+

+ Department of Transportation:

+ Major Findings include: + The majority of Executive Branch print shops are within the Capitol Complex. They

provide services on a decentraliied basis with lii le coordination among departments. The decentraliied print shops fail to capture available economies of scale.

+ There is no consistency in the pricing of print jobs. + There are no consistent standards of performance amss departments. 4 There is no uniformity in state policy with regards to the acquisition. utilization

justification, and maintenance of high-speed and convenience copiers. Savings may be available through changed acquisition practices and elimination of standard maintenance contracts with conversion to on-call maintenance personnel for the Capitol Complex There is no uniformity in state policy with regard to newsletters, calendars, and generic forms, similar to recent economies achieved through greater uniformity in stationary.

+


ll/lW9I ! + The cooperative relationship between General Services Division and Prison Industries,

under the leadership of General Services d e m & the value of establishing performance standards and incentiies for performance.

+ Organ'mtional Recommendations for printing and graphics operations: + The State of Iowa should consolidate ownership and management of printing facilities to

support BxecufivB branch agencies. + Print facilii.assets are enterprise assets. + An executive oder should be bsued to dearly establish a centralized service authority

to provide the most cust Mint and best managed printing facilities, utiliing both in-house Mnting faidtides and outsourcing when economicay w e , to meet dent agencies' needs. Centralized service authoMy does not necessarlfy mean a single printing fadiii, but at least all printing operations should be under central management. The central service agency should also be responsible for establiishlng enterprise-wide standards to improve the cosf efficiency of ptinting and graphics senrices.


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+ General Recommendations to immediately reduce printing costs in FY93: 4 Require agencies to review printing budgets and procedures with General Services

Printing Division. (How many, who used them, etc.) Many agencies do not know services available or methods available to minimize costs.

4 Require agencies to review duplication of recipients on mailing lists (reduced printing and postage expenses).

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Train agencies to limit number of copies, number of colors of ink, and kind of paper. Adopt new, less expensive publication formats. Review interdepartmental and intra-deparbnmtal publications. Consider how to distribute same information electronically in Mure via State's information system. Review duplication of publications between agencies. (Examples, where duplication of subject matter frequently occurs: DNR and Agriculture; Human Services and Pubiic Health.) Implement a justification process within each agency for printing expenses, and consider combining newsletters. Hold dient agency staff responsible for last-minute changes that incur cosfs by overtime or reprinting larger jobs. Materials should be proof-read before printing, not afterwards. Cooperatiin between the Department of Management and General Services Printing Division to review all professional service contracts that indude art, graphics, printing, advertising and mail services. These services may be available for less within State Government. (Examples of agency.contra& paying a 25% or more premium for graphics services are common.) Printing services should be fully funded through user based fees.


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0 Definition: ICN is the Iowa Communications Network, a proposed state owned and operated fiber optic telecommunications network intended to sewe the voice, data, and video transmission needs of state government, libraries and education.

+ The ICN has been analogized as Iowa's information highway system of the 21st Century-

+ The ICN will also link state and county emergency operation centers, allowing the cost of the net to be paid 12.75% from-Federal moneys through the Federal Emergency Management Admin'ktration (FEMA).

+ At time of installation an expense, but it is an owned asset that increases in value as usage expands and through life cycle of 25 years continues to grow.

+ ICN is divided into 3 Phases of implementation. Phase 1 will provide the backbone linking the ICN Hub, the Capitol Complex, Iowa Pubtic TekvisiOn, the 3 Regents' Universities, and 15 community colleges. (Think - Intestate Highways.)

+ Phase 2 will provide an end point for access in the remaining 84 counties, so that all 99 counties have a point of access. (total endpoints across state from Phases 1 and 2 = 105.) (Think - Primary Highway System.) Phase 3 is the eventual planned connection of local library and school usem. (Think - County Highways.)

+ 1C"s Phase 1 and Phase 2 are under construction under a contract with ffiewit Network Technology.

+ Intended Applications: Secure voice and data communication. High volume, high quality data transmissiotl necessary to facilitate networked data centers and distributed service centers. Two-way interactive distance learning.

+ Intended Benefrts: + Cost-effective telecommunicatiins network for existing voice and data needs and

planned expansions. Virtual proximity through speed and capacity advantages of fiber optics.

Phase 1 & 11 fwed-cost for foreseeable needs of state government's voice and data communications, with added benefrt of video teleconferencing capabilities. Improved educational opportunities at reduced opportunity costs for students and taxpayers at all outlets and levels of education. Owned asset with substantial market value and net return on investment for at least 10 more years at end of 15 year financing period.


0 ICN Description. (1 '..

+ Phase 1 and Phase 2 Under Construction. Phases 1 and 2 are to provide a platform for delivering state services to the citiiens of Iowa. The existence of 105 end points in 99 counties facilitates needed structural changes in the way state and local governments deliver services to Iowa citizens. Fiber optics' increased networking capacity and speed facilitates distributed delivery of services by state agencies through such

. innovations as the Department of Human Sewices "X-PERT" Artificial Intelligence system. ICN will allow the state to provide its own communication services thus avoiding the substantial and increasing costs of commercial service while increasing the overall capacity as compared to existing commercial alternatives. Construction has &gun of Phases 1 and 2, with over 250 miles of fiber optic cable in place (approximately 10% of the total planned 2,600 miles for Phases 1 and 2).

+ Phase 3 Local Option. Phases I and 2 are also preconditions to Phase 3's promise of increased access to quality education regardless of the size of the local community. Phase 2 includes 54 schools as a county's point of presence. As currently modeled, Phase 3 anticipates an additional 276 schools with from 1-3 distance learning classrooms each. The ICN will increase curricula offerings and allow local schools and school districts to share resources through distance learning. Phase 3 implementation is not required to yield significant benefits from Phase 1 and 2. Phase 3 provides for "open architecture", that is not all connections to the 105 points of presence need be fiber optic links to end users. Phase 3 is optional with local school districts and should be implemented when the costs of Phase 3 participation are more attractive or cost effective than the alternatives. The ICN provides a tremendous value added feature for education and other potential user applications. Users will build to the point of presence to capture available benefrts. Debate over the appropriate technology of Phase 3 is not material. Phase 3 users will be able to select from range of options, including copper, microwave and fiber optic. Fiber optics are not required in Phase 3, though the cost models developed in the course of the Task Force's study reviewed three major categories of technological options. The permutations should fall generally within the cost range defined. Fiber optics does have the benefit of lower maintenance costs and greater capacity and flexibility once installed, at the cost of higher installation expense.

1


0 ICN ISSUES:

+ ICN represents a major capital investment. + Phases 1 and 2 contracted for $73 Million. Anticipated add-ons and financing costs will

increase total to estimated $99.8 Million. (State's direct costs equal $92.4 Million. Community Colleges' share $7.4 Million, of which $3.8 Million is for dassroom equipment - analysis of which depends upon utilization patterns of community college senrices.) That $99.8 Million needs to be compared against what would be spent if the ICN is not built in which case data and voice senices would continue to be purchased from the commercial network regardless of any decision on distance learning. Phase 3 is estimated to cosf $50-90 Milran if fully implemented (assuming 13 distance learning dasses in 100-75% of existing 330 high schools). Total maximum cost estimates of Phases 1.2 and 3 including operations mge from $152 Million to $192 Million.

+ Net return on owned asset in out-years yields significant positive returns on investment, rather than a net cost.

+ An obvious question is, "Can the State afford the capital investment in telecommunications and educational capacity given current fiscal constraints and anticipated costs and benefits?"

+ A question just as important, but perhaps less obvious, "Are the cost/benefit justifications for Phases 1 and 2, substantially different from Phase 31"

By the nature of the primary informatiin highway model of Phases 1 and 2, the average u t i l i i i n is likely to be much higher than Phase 3 "county roads."

+ Phase 3 must be examined in light of reasonably anticipated diminishing marginal utilii. ICN perceived by many as solely a channel for "distance learning." Perception is wrong, especially as it regards Phases I & II.

+ A key focus of debate has been mether the lCPd is offers added services (and is therefore an additional cost) or whether the EN'S benefits offer a more cost efficient method of delivering existing services. + How this question is answered seems to be one of two dividing issues between

opponents and supporters. (The difficulty in proving the necessity or cost effectiveness of an $73-160 million addition is obvious.) If it is an alternative to existing modes of service delivery, its cost efficiency is much more likely. In the limited context of "distance learning" (one of the promised benefrts), ICN has been described as a choice between building new classrooms to facilitate consolidation versus distributing learning to existing classrooms. Fiber optic cable is arguably a more flexible capital investment than bricks and mortar.,

+

+ A second dividing issue is whether State ownership of its own telecommunications network is inappropriate competition with the private sector.

The state currently leases telecommunications capacity in the existing Iowa Telecommunications Network (ITN) the ICN would replace this reliance on the


I IUlW9I

i ) commercial net with an Enterprise "Owned" facility. (When the ICN went out for bid, no vendor bid a leased system.) '. '

State currently pays $8 Million annually to the commercial net for telecommun-wins services. The cost of leased capacity and other telecommunications charges paid by the state have been escalating faster than the rate or inflation or increased tax revenues. Part of the financial support for financing the ICN comes from diverting money that would OtheNVise have been paid for leased capacity to purchase owned fiber optics with much greater speed, quality, and capadty. Owned telecommunications networks can be cost effective as evidenced by the number of private nets owned and operated by industry outside ofthe commercial net. Whether Iowa's ICN b cost effective for the State's currently purchased telecommunications needs is a key issue. (Compare current $8 Milliin annual cost for mmerdal services, at 3% inflation over 15 years, to Ic"s fixed-cost of $10 Mi l l i i over 15 years.) Diversion of the public sector's telecommunications volume from the commefcial net could have an impact on the profidofthe commercial net and the sewices offered by the commercial net. Iowa's commercial net is still predominantly "apper", but with increasing numbers of dgibl switches and some "glass" (fiber optic cable). ICN contemplates *shared trench" as revision from earlier versions, with resulting opportunity for commercial net savings when upgrading to fiber optics. How Phase 3. is implemented may materially affect ICN's impact on the future development of the commercial net.

* I .f- \

+ The ICN is being financed, with all of the attendant costs of borrowed money. The present value of the benefits must j u w the added costs of financing.

+ The financing mechanism of the ICN and the authorizing statute lim'& the ability of private entities to use the ICN, so applications are primarily limited to "public purposes."

+ Termination of existing contracts for Phases 1 and 2 would have a substantial cost. 4 Estimates of contractual damages due contradm if the ICN were cancelled.taday range

from $9 million to $22 million. + There would also be lost sunk costs already paid by the state.


) 0 1CNGUlDlNGPHILOSOPHY: .

+ The Technology Enhancement Task Force believes it is imperative that Iowa adopt new technologies:

to capture available efficiencies and economies. + to attract new industries and jobs through both quaMy of We and efficient derkxy of high

quari government services.

+ The ICN will advance lowa's.competitive advantage in the national marketplace while improving access to government services and quality education, especially in rural Iowa.

+ The cost benefits of the. ICN accrue by allowing the delivery of existing services with capacity for reasonably anticipated growth trends at a fixed& with orjright State ownership at end of 15 year financing period.

+ The qualitative benefits of the ICN appear to be particularly beneficial to rural Iowa. i.e., Better access, with reduced travel, to governmental sewkes. Range of improved senrices include education at all levels: K-12, university, professional continuing education, and on-site job training for local employers through Iowa's Community Colleges.

+ The detriments of the ICN involve its impad upon the commercial net, and the users of that commercial net (users and taxpayers being two sides of the same coin). Commercial net objects to the loss of revenue from a large user. The acrimony over the ICN may also be perceived negatively by some segments of the business community. However, primary duty of government is to-deliver cost effective services to taxpayers, and not to assure revenue to private businesses in a changing marketplace.

6 The benefits of each Phase must be balanced against its costs.


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ICN RECOMMENDATIONS - PROCEED WITH PHASES 1 8c 2: t ' 1 + Phases 1 and 2 are demonstrably cost efiective standing alone and should

proceed to completion.

+ Task Force overwhelmingly supports investment in and the long-term savings potential of Phases 1 & 2.

+ Future expansion of the ICN in Phase 3; should proceed with a careful analysis and remain a local option subject to "business judgment." (School districts and other local users will opt to hook up when it is economically viable and not before.)

+ Phase 3 should remain "open", both optionail to (ocal users and flexible In the type of hookkp allowed. Openess encourages local flexibility and growth and modernization of the commercial net..

+ Moneys spent on the ICN are an investmient, not just an expense. The investment produces an asset with significant net worth (approximately $75 million over the 25 year life-cycle of the network) + Even with Phase 111, cost represents less than 1% of annual appropriation for education. 6 By any analysis, there is not a big gap between anticipated costs and benefh.

+ This Task Force tS the result of demands far State government, including its

deliver on this demand, the State must dramatically change its methods of delivering those services. The ICN is one such necessary change, and is a precondition to many other changes advancing the goals of Spending R e f m while maintaining or improving the quality of sewice to Iowans.

+ As a last advantage, the cost of this particular investment is very advantageous. Emst & Young in its review of the ICN described the contract cost of Parts 1 and 2 as, "lower than any similar networks."

educational system, to provide public.senricces with no added tax dollars. To 1

TecForl O.sam dpw/l1/18/91


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c V *

Total State Data Processing Budget (Including Regents' Institutions)

Total Data Processing Budget (Including Regents' Instiiutions)

IT92 Data Processing Budgets for Hardware, Software, and Cornmunications

in State Agencies and Institutions (Including Regents')) TOTAL $35.5 Milliori

- I

I

f FY92 STAFF FOR DATA PROCESSING IN

STATE AGENCIES AND INSTITUTIONS (Including Regents’) \-“A- TOTAL $37.8 Million

((7 FY92 Data Processing FlrE's

I - I in State Agencies and Institutions (Including Regents')

TOTAL 992.6

I Applications

systems

operational

- I I

I

/-

Data Processing Staffs for 3 Major Executive Branch Agencies with Mainframe Data Processing Centers

DES General Services DOT

d c

J

· .- scope of technology enhancement task force the technology en hancernent task force was...

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