Evaluating Information Technology Expenditures in Hard Times
(Thursday, July 24, 2003)
The National Association of Legislative Information Technology and the
National Legislative Program Evaluation Society cosponsored a session on
Evaluating Information Technology Expenditures in Hard Times at the annual
meeting of the National Conference of State Legislatures. This session
was moderated by Mr. Michael P. Adams, Director, Office of Legislative
Information Services, Colorado General Assembly. Presenters were Ms. Mary
Winkley, Partner-in-Charge of the technology planning and assessment practice
for MGT of America, Sacramento, California; Ms. Elaine M. Howle, State
Auditor, and Doug Cordiner, Audit Principal, California Bureau of State
Audits. The following summarizes the discussion on this topic:
Ms. Winkley's presentation was focused on strategic direction, performance
measures and maturity of the information technology organization to be
considered in making funding decisions for information technology projects.
A well defined strategic plan must contain long-term goals and short-term
objectives of the project. Goals must be aligned to objectives and to performance
measures. She spoke on establishing baseline data for measures which should
be benchmarked against internal and external data for best practices. Also,
signs of the matured technology organization are: business (program) people
driving the decisions on use and what technology is supposed to do for
them; written policies and procedures for deploying technology; sufficient
trained and experienced technology staff; and consistent use of project
management and performance measurement methodology to improve technology.
The presentation by the California State Auditor Elaine Howle expanded
on the above concepts further with their approach and practical examples
of evaluating information technology expenditures. She indicated that for
IT project(s) a business case for investing state resources must be prepared
to provide reasons for the project, analysis of its costs and benefits.
For IT projects to be successful common understanding and agreement need
to be established between executive, program and project management. The
IT project management should provide sufficient, accurate and relevant
information to the control agencies and the legislature to assess the merit
of the project. Ms. Howle explained that the IT feasibility study should
include:
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the business problems to be addressed;
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results to be achieved;
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system hardware, software and personnel requirements including system architecture
and integration plan;
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economic analysis of the life cycle costs and benefits, including yearly
operational costs;
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funding sources to finance the project; and
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detailed project plan showing major milestones and deliverables, including
system test and user training plans.
Ms. Howle indicated that the California State University Common Management
System development project as an example of failed projects with an estimated
cost of $662 million. The agencies involved did not follow the essential
feasibility study requirements.
Mr. Doug Cordiner, Audit Principal, California Bureau of State Audits,
provided their study of the Oracle Corporation Enterprise Licensing Agreement
(ELA) as another example. The State of California contracted with the Oracle
Corporation for 270,000 state employees and consultants to use the Oracle
database software and committed $94.6 million for six years and an option
of four additional years of maintenance at a total cost of $122.6 million.
The State executed the contract despite limited need and the control agencies
approved the agreement without validating the consultant-prepared cost
savings. The state entered the ELA without a formal business case, needs
assessment and valid cost savings. According to the California State Auditor
the state will spend $41 million more over the first six years with ELA
than without it. This report resulted in rescinding the ELA contract and
issuance of an Executive Order for tighter purchasing rules and prohibiting
departments from using noncompetitive bidding in large IT projects. Also,
California allowed their Department of Information Technology to sunset
on July 1, 2002. The reforms for California IT governance required the
Information Technology Board to review IT strategic plans, review operational
implementation, review IT control agency program and provide coordination
and oversight. The state Chief Information Officer is responsible for strategic
planning and leadership.
The main question from the audience was what could be done in terms
of including criminal and civil penalty against state official for mismanagement
of IT projects and misuse of the public funds. However, it appeared that
such penalty provisions were included in the revised IT governance. (Note
of Interest - New Mexico revised its Information technology Act to included
such penalties and the governor signed both HB 67 (Section 15-1C-8C) and
SB 244 into law).
- Manu Patel, New Mexico
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