Consolidation Roundup
Texas is not the only state to explore the benefits of technology consolidation. Nearly every state responding to a recent NASCIO (National Association of State Chief Information Officers) survey reported either plans for or implementation of IT consolidation and shared services. Thirty-four states responded to the survey, representing 55 percent of the U.S. population and a good cross section of geographies and budgets. These states, large and small, with different populations and political environments, all face similar challenges of using technology effectively to support programs and provide citizen services.
Because it is not the first state to venture down the path of technology consolidation, Texas can learn from the experiences of other states. The following is a brief roundup of the NASCIO survey results and highlights of consolidation activity across the country.
Technology Like Texas, many states have chosen to focus on consolidation of data center, disaster recovery, and e-mail services. These initiatives are either in process or are completed in 69 percent or more of the states who completed the survey. However, these are not the only areas of consolidation. Other common areas for consolidation include application development, enterprise resource planning (financial, and human resources), and network services. Nearly all of the responding states have started or implemented consolidation of tele-communications.
Motivation States offered multiple reasons for considering consolidation. In this era of tight budgets, cost savings is important, but creating a more secure infrastructure, providing better access to new technologies for all agencies, and improving information sharing and data integration are also strong reasons to consolidate. Although nearly three-quarters of the respondents reported their progress on consolidation to be good, very good, or excellent, they also acknowledged obstacles such as resistance to change and the need to address state statutory and regulatory requirements.
Lessons Learned What can Texas learn? Most of the states emphasize the value of communication and statewide participation as instrumental to their success. They note that keeping stakeholders at all levels involved and informed is important and use forums such as regular meetings, cross organizational user groups, and task forces to do so.
They also stress the importance of a good business case and recommend directly addressing workforce concerns by creatively reviewing the impact of changes on employees and adjusting roles, responsibilities, training, and compensation.
Texas Approach Communication and collaboration have been key themes for the Texas data center services project from the beginning. Data gathering, Data Center Services Request for Offer (RFO) development, RFO evaluation, and data center governance have involved and will continue to involve all 27 participating agencies. This collaboration naturally helps improve communication but, more importantly, it gives agencies multiple ways to have input into the process.
Highlights from around the Country
- Virginia has aggressively pursued technology consolidation. In 2003, Virginia created VITA (Virginia Information Technology Agency) and began an 18 month transfer of all IT assets and staff from 90 agencies to the new agency. Facing challenges with funding and capital for their desired transformation, VITA has elected to contract for infrastructure (mainframe, servers, desktops, networks, e-mail, security and help desk services, and data center facilities) and enterprise applications.
- Oregon built a new Tier III data center to serve 12 agencies, representing the majority of computing power for the state. Construction is completed and Oregon recently began migrating agencies to the new facility. State staff who work for legacy agency data center operations have the first opportunity to apply for jobs with the new, state-operated data center.
- Pennsylvania was one of the first states to consolidate data center operations. In 1997, the governor announced the Data PowerHouse project, and in 1998 the state issued a request for proposal for mainframe and midrange computer operations and support. In June 2001, Pennsylvania upgraded their Department of Public Welfare data center to create the Data PowerHouse, a state-of-the-art facility providing data center services for 14 state agencies.
Definitions
The Data Center Services project is developing a language of its own. How fluent are you? Test yourself with these key terms.
- Contract Execution Date.
- This refers to the date the contract is signed between DIR and the selected service provider.
- Contract Commencement Date.
- This is the date the service provider assumes operational control and begins providing data center services. All employees who accept the service provider’s employment offer will become service provider employees on this date.
- In-Scope Functions.
- These are the IT functions included in the Data Center Services Request for Offer (RFO) that are to be assumed by the service provider on contract commencement.
- Out-of-Scope Functions.
- These are the IT functions to be retained at the agencies. They are not included in the RFO.
- Affected Employees.
- These are the IT employees who perform the in-scope functions and who will receive offers of employment from the service provider. Agencies will determine which employees are designated as affected employees. For example, if two people perform both in-scope and out-of-scope functions and their total in-scope time adds up to one full-time employee, one person will be designated as an affected employee.
- Base Case.
- This is a financial model representing the state’s current cost to provide the in-scope data center services over the term of the proposed contract. The base case defines the financial scope and is used in the evaluation of the service provider's price.
- Business Case.
- The business case compares the total costs of supporting the in-scope services internally (base case) versus the total cost of outsourcing. The total cost of outsourcing includes the service provider fees, retained expenses associated with in-scope services, and additional costs of outsourcing such as expenses related to sourcing management.
Know Your Benefits
What is my retirement eligibility? Do I “lose” my retirement if I leave state employment? What insurance do I have and what does it cost me?
Because of the potential transition from state employment to employment by a private-sector service provider, many employees have questions about retirement and other state benefits. The state employee compensation package includes salary and a variety of benefits such as health insurance, paid leave, and retirement. Package components vary by individual and are affected by factors such as years of service and personal elections during initial and open enrollment. Therefore, the answers to many retirement and benefits questions are highly individualized and may depend on personal goals and family situations.
Data Center Services RFO Exhibit 5, available on the DIR Web site, breaks down the state employee benefits package in the Employee Benefits Comparability Matrix starting on page 28. This provides an excellent reference to state policies for leave accrual, pay, insurance, and other benefits. State employees also have access to two other excellent resources that aid in understanding employment benefits:
- Employees Retirement System (ERS). The ERS website (www.ers.state.tx.us) is an excellent resource for information on retirement and insurance benefits. Additionally, ERS hosts a variety of seminars and provides counselors for more personal consultations.
- Agency HR. Agency HR staff can help explain the state benefits package and assist individual employees understand their unique set of benefits.
Communication Blackout
The Data Center Services RFO is a state procurement, subject to Texas procurement laws and requirements. One of the most important procurement rules relates to confidentiality. All RFO evaluators must sign nondisclosure agreements to highlight the need to keep information about the proposals and the evaluation process confidential. This creates a “communication blackout,” meaning that the evaluators in participating agencies cannot disclose what they are reading, discussing, or scoring except with other individuals with a need to know who have signed a nondisclosure agreement. While this can be frustrating for colleagues, it is vital to maintain the integrity of the open procurement.
Here are some frequently asked questions about the communication blackout period.
- Q. When does the blackout period begin and end?
- A. The communication blackout began with the release of the RFO on March 31, 2006, and will end when the contract is signed.
- Q. I have other contracts with some of the providers who are bidding on this contract. What should I do?
- A. Participating as an evaluator on the Data Center Services RFO should not affect day-to-day management of current contracts. Evaluators can communicate with bidding service providers about issues, change requests, and status for currently contracted services. Evaluators must not communicate about any aspects of the service provider’s response, other service providers’ responses, or the evaluation process and criteria.
- Q. I occasionally see service providers socially, are there any “safe” topics?
- A. Topics outside of work, like family and social activities, are safe topics.
- Q. Can I talk with my coworkers and supervisor about the evaluation?
- A. The communication blackout applies to state staff who are not participating in the evaluation. Evaluators cannot share details of RFO responses or any information about the RFO evaluation process with staff who have not signed nondisclosure agreements, including peers and agency leadership. Technical subject matter experts can sign nondisclosure agreements and assist with specific technical questions. Evaluators should refer to the evaluation training for further instructions.
- Q. Does this mean we shouldn’t talk about the data center services project at all?
- A. No. The RFO evaluation is only one aspect of the data center services project. Agencies should continue to develop their workforce plans and address other organizational changes that result from the project. Project information discussed at data center services meetings and found on the Web site are not subject to the communication blackout.
- Q. I’m not an evaluator. How will I get information?
- A. After the bids are received, the names of the bidding service providers will be made public. Interested staff can review provider Web sites for information about company business practices and culture. DIR will also update its Web site with any data center services information that can be shared publicly.
Data Center Services - What's in a Name?
Savvy readers of the Data Center Download and the RFO may have noticed a change recently. The term “data center services” is replacing “data center consolidation.” For example, the Data Center Consolidation Advisory Committee is the Data Center Services Advisory Council in the new governance structure. This subtle change reflects an important shift from a focus on consolidation to a focus on ongoing services. While consolidation and reduced redundancy are important goals of the project, the future-state vision is not just about consolidation. In fact, some in-scope equipment may be managed remotely and not physically consolidated at all. By using the term data center services, DIR seeks to emphasize that service is the most important focus of all.
