State of Texas
Department of Information Resources
Leadership for Texas Government Technology

Making Technology Deliver

2004 Biennial Performance Report

November 1, 2004

Letter from the State Chief Technology Officer

Technology has the power to make government more accessible, enhance our ability to reach our constituents, and increase the efficiency of our operations. When investing in technology, however, the complexity of the technology solution can quickly overshadow the business needs. For technology to deliver the expected benefits, we must emphasize strong planning and a commitment that business needs will drive technology.

Over the last five months, the Department of Information Resources has worked hard with many state agencies to complete the deliverables DIR defined in its Foundation for Change report, delivered to the Legislature in May. These collaborative efforts have helped set a clearer focus for DIR's future direction.

This focus is reflected in the new DIR's commitment to the state, which is simple and direct.
We will:

• Reduce government costs;
• Support effective technology contracting and execution;
• Consolidate technology operations for increased effectiveness; and
• Promote innovative use of technology that adds value to government services.

Building on A Foundation for Change, DIR's commitment will help make technology deliver on its potential in Texas. We stand ready to work with all facets of state government to more effectively leverage statewide investments in technology.

Thank you for your continued support and I look forward to working with you in the future.

Larry A Olson
Executive Director
Department of Information Resources

Contents

Introduction
Critical Issues
Agency Alignment
Key State Successes
Guide to Appendices
Appendix A. Foundation Deliverables
Appendix B. State IT Expenditures
Appendix C. Texas Project Delivery Framework
Appendix D. Legislative Trends in Technology
Appendix E. Buyer Alert Program

Introduction

The Department of Information Resources (DIR) is strongly committed to providing agencies with information technology (IT) services in an efficient and cost-effective manner, with emphasis on:

• Reducing government costs;
• Supporting effective technology contracting and execution;
• Consolidating technology operations for increased efficiencies; and
• Promoting innovative use of technology that adds value to government services.

Before the state can fully leverage the benefits of this new statewide vision, there are four critical policy issues that must be addressed together to ensure that technology delivers value.

1. Create an effective framework for contracting and implementing technology-based solutions. The lack of consistent IT project and contract management processes prevents the application of best practices at the statewide level. Texas needs clear accountability, logical checkpoints, and a common vocabulary to express project health.

2. Maximize the state's effectiveness in volume purchasing. Most of the state's technology commodity purchases are made on an agency-by-agency basis. This limits the state's ability to leverage its buying power and drive down costs by eliminating duplicated purchasing efforts.

3. Establish a cost-effective approach to providing a statewide IT infrastructure. In the current statewide IT environment, there is limited use of a shared statewide infrastructure to support common agency needs. Without a statewide technology infrastructure, agencies develop individual and often redundant solutions.

4. Ensure the secure and effective use of the state's IT assets. Unified planning for deployment and securing of IT assets enables the state to better manage risk and readily adapt to changing needs.

As the state's technology office, DIR is responsible for delivering a policy framework to meet these challenges. This Biennial Performance Report offers recommendations to address these issues, describes how DIR has aligned itself internally to focus on delivering the results that are expected by the state's leadership, and presents key successes of state agencies in the use of technology.

Critical Issues

DIR has identified and described today's most pressing challenges to delivering the maximum benefit from dollars invested in technology. This section provides an overview of each challenge and offers several recommendations that the Legislature may wish to consider.

1. Create an effective framework for contracting and implementing technology-based solutions.

An effective framework for project and contract management would help agencies reduce risks inherent in complex technology-based initiatives. Implementing effective best practices-beginning at project formation and extending through contract management to project completion-are critical to managing these risks.

A framework with clear phases and gates allows for agency control to be coupled with accountability. To successfully deliver on contracted services the range of responsibilities include problem definition, requirements and specification development, solicitation and source selection, contract negotiation, project execution, performance monitoring, and closeout.

RECOMMENDATIONS

1.1 Implement the Texas Project Delivery Framework

Texas needs a performance-based framework that ensures outcomes and clear accountability of major technology projects through five phases: initiation, planning, contracting, execution and control, and closeout. The framework will establish a common and consistent understanding of how agency projects should be managed and measured. DIR has developed and published draft components and tools for the proposed framework that are consistent with national standards for project management, but localized to the needs of Texas state government.

A structured process to review, evaluate, and document outcomes in each project phase ensures that agency heads and state leadership have the tools and information to guide technology deployment towards the right business outcome.

DIR is currently developing enhanced contract management guidelines consistent with this vision. As a member of the Contract Advisory Team, DIR is developing a specific technology contracting addendum for the Contract Management Guide that will be integrated into the Texas Project Delivery Framework.

1.1.1 Support the implementation of the Texas Project Delivery Framework and guidelines for IT contracting to establish consistent accountability measures across agencies for technology-based initiatives. Specific changes that support this are:

• Direct agencies to complete a Business Case and a Statewide Impact Analysis for proposed major information resources projects in a manner consistent with DIR guidelines and concurrent with the Legislative Budget Board’s (LBB’s) requirements for Legislative Appropriations Request submissions. Business Cases should be made available to the Legislature for use in evaluating funding priorities. The Statewide Impact Analysis should be made available to DIR to ensure that the solution does not unnecessarily duplicate existing statewide IT resources.

• Direct agencies to develop and file Project Plans for major information resources projects in a manner consistent with DIR guidelines. Project Plans should be filed with the Quality Assurance Team prior to expenditure of more than ten percent of allocated funds for the project or prior to issuing vendor solicitations for the project. Projects that incorporate vendor solicitations should include a procurement plan with anticipated service levels and performance standards as a component of the Project Plan.

• Require agencies with major information resource projects to budget for and incorporate an independent validation and verification (IV&V) plan in a manner consistent with DIR guidelines. Require DIR to establish standards for both vendor-provided validation services and certification of agency-provided validation services. If agencies choose to perform internal validation services, the providers of the services must operate independently from the project delivery teams. Require agencies to submit IV&V reports to the agency head and DIR.

• Direct agencies to complete a Post-Implementation Review for major information resources projects in a manner consistent with DIR guidelines upon project completion. Require agencies to submit the Post-Implementation Review to the agency head and DIR to ensure improvement.

• Direct the designated project manager, the information security officer, and the agency head to sign off on completion of key framework deliverables described in this recommendation. Direct DIR to work with agencies in development of the templates for framework deliverables.

1.1.2 Agency reporting loads can be reduced by re-adopting or retiring existing reporting requirements to align with the Texas Project Delivery Framework. Entities that currently require reports with technology information include DIR, the LBB, the State Auditor’s Office (SAO), the Comptroller’s Office, and the Texas Building and Procurement Commission (TBPC), among others.

2. Maximize the state's effectiveness in volume purchasing.

Individual agency purchases fragment the state's purchasing power and increase the cost and complexity of procurement. As the hardware and software markets become more commodity driven, there are substantial opportunities for savings from consolidating the purchase of specific commodity hardware (laptops, computers, printers, monitors, routers, switches, hubs, etc.) and commodity IT services (primarily staff augmentation).

RECOMMENDATIONS

2.1 Standardize technology configurations

Many of the benefits of volume purchasing of IT commodities cannot be fully realized without standardizing equipment configurations. Many state agencies have already standardized configurations and DIR has been working to reconcile these configurations on a statewide level. Standardizing selected commodity hardware configurations strengthens the state's negotiating power and minimizes long-term support costs. DIR currently has responsibility for commodity software, but not commodity hardware or commodity IT services.

2.1.1 Establish DIR as the agency responsible for procuring not only commodity software but also commodity hardware and commodity IT services for state agencies. Direct DIR to work with agencies in establishing definitions and classifications for commodity hardware and commodity IT services via DIR guidelines.

2.1.2 Direct state agencies to use DIR contracts for commodity hardware and commodity IT services unless DIR determines that the agency requirements cannot be met at comparable cost through a consolidated contract. Direct agencies to utilize standard commodity hardware configurations as defined by DIR as a component of agency infrastructure planning.

2.1.3 Direct agencies to provide planned procurement schedules of commodity hardware to DIR prior to approval of their Biennial Operating Plans to allow for statewide planning of future vendor solicitations. Require agencies to notify DIR and the LBB when there are substantive changes to their planned procurement schedules.

2.1.4 Authorize DIR to determine when statewide vendor solicitations would reduce purchase prices and require agency participation.

2.1.5 Clarify that other state governments can purchase through DIR contracts to extend Texas' purchasing power.

3. Establish a cost-effective approach to providing a statewide IT infrastructure.

Statewide IT infrastructure services needed by the majority of agencies, such as data center operations and statewide networks, should be managed as a shared statewide service to increase cost effectiveness and limit the duplication of resources. Through past legislation such as Senate Bill 1701 (78th Leg., R.S.), the Legislature has determined that functions needed by many agencies that are not specific to individual agencies can be managed as part of a shared technology infrastructure. A true shared technology infrastructure can extend the value of needed services without redundant deployments.

RECOMMENDATIONS

3.1 Ensure a comprehensive State Data Center System

Individual agency data centers require support staff, hardware and software, security, building customization, environmental controls, emergency power, and disaster recovery. Texas has been in the process of data center consolidation on an agency-by-agency basis since 1994. While the current system has demonstrated overall cost savings, reviewing data centers one by one results in slow, protracted negotiations, preventing the state from realizing the benefits of true statewide consolidation.

To move forward, DIR plans to conduct in-depth reviews of statewide data center expenditures and facilities to gather the most current and accurate information on data center operating costs. The results of these reviews will serve to improve existing data center contracting practices and provide a basis for an improved sourcing strategy for future state data center services.

3.1.1 Require agencies to participate in consolidated data center environments when DIR can demonstrate that the consolidation is the best value for the state and meets the agency's documented service levels and budget requirements.

3.1.2 Define the State Data Center System as all state data centers including consolidated facilities (such as the Texas State Data Center in San Angelo) and unconsolidated facilities (centers under agency operations). Direct DIR to establish appropriate definitions and categories of data centers via DIR rule.

3.1.3 Direct DIR to perform a comprehensive review of the State Data Center System, to develop a consolidation plan and sourcing strategy for future data center services, and authorize DIR to act on this plan.

3.1.4 Review statute and rider language to fully align the process for obtaining state data center services with the processes described in the Service Delivery Guide recently published by DIR.

3.2 Move toward a true statewide network

A consolidated network provides improved administration and reduces costs by leveraging a single network architecture. Centralizing agency operations provides efficiencies and cost savings through reductions in operational expenses, equipment maintenance costs, and staffing levels. Moreover, it allows application of a comprehensive statewide security policy and may reduce the number of individual access points that can be subject to cyber attack.

The recent transfer of the management of the Health and Human Services Commission's (HHSC's) wide area network (WAN) to DIR serves as a model for future network consolidation efforts. DIR has performed an initial review of other statewide networks, including operations at the Comptroller's Office, the Office of Attorney General Child Support Division, and the Texas Department of Transportation. The transfer of the HHSC network and the state agency reviews have enabled DIR to document anticipated cost savings from statewide network management. The transfer and the reviews will serve to improve existing telecommunications contracting practices and provide a preliminary analysis of customer needs for the state's re-procurement of telecommunications services in 2006.

3.2.1 Require agencies to participate in statewide network operations when DIR can demonstrate that the operations provide the best value for the state and meet the agency's documented service levels and budget requirements.

3.2.2 Direct DIR to perform a comprehensive review of the cost of network operations for state and regional entities to develop a consolidation plan and sourcing strategy for future telecommunications services and centralized support, and authorize DIR to act on this plan.

4. Ensure the secure and effective use of the state's IT assets.

Varying standards and changing environments among agencies are major barriers to effective and coordinated development of technology assets. The state needs a consistent governance model to ensure interoperability, streamline security monitoring, and consolidate IT assets.

RECOMMENDATIONS

4.1 Further the state's technology security preparedness

A consistently secure infrastructure is best achieved through steady application of standards and best practices. DIR routinely scans state resources for vulnerabilities and works with agencies to harden critical IT assets. However, security costs and adherence to security standards must be measured to further the state's IT security preparedness.

4.1.1 Direct DIR to complete a statewide assessment of agency IT security resources and practices. Provide a confidential report to the Governor, Lieutenant Governor, and Speaker of the House.

4.2 Align Texas IT management
The alignment of DIR with agency leadership ensures consistent planning, reporting, and consideration of statewide technology investments.

4.2.1 Direct DIR, in conjunction with the LBB, the TBPC, and the Comptroller's Office, to analyze how current automated systems could be combined to more effectively synchronize strategic planning, budgeting, and reporting of technology expenditures, assets, and projects and report on findings.

4.2.2 Allow agencies to consolidate information resources managers and the reports required of them when such consolidation is cost effective and approved by DIR. For example, many small agencies may be more effective when pooling resources and expertise.

Conclusion

Considered together, these recommendations advance DIR's vision for effectively managing statewide IT in a more consolidated and strategic manner, allowing agencies to refocus their efforts on providing their core services to constituents and not on the development of commodity technology infrastructure.

Agency Alignment

In June 2004, DIR underwent a substantial reorganization to streamline and focus its operations on the core challenges described in this document. This reorganization has been strengthened by the recent appointment of an executive director with substantial contracting and consolidation experience, and has set the stage for DIR to provide a new level of leadership in technology policy and operations.

Since the reorganization DIR has already achieved new outcomes in the four critical issue areas described in this report.

1. Create an effective framework for contracting and implementing technology-based solutions.

CO-AUTHORED CONTRACT MANAGEMENT GUIDE

DIR is a member of the Contract Advisory Team that developed a Contract Management Guide, which was published in October 2004. The purpose of the guide is to offer state agency contract managers recommendations on improving existing contract management processes and practices. The guide provides a structure that agencies should use to make contracting decisions that are in the best interests of the state. As a follow-up to the guide, DIR is also developing more specialized procedures for securing technology-based services.

DEVELOPED NEW PROJECT MANAGEMENT TOOLS

DIR has developed new tools, consistent with the proposed Texas Project Delivery Framework, to assist agencies with the consistent tracking and oversight of technology-based projects. These tools include a Business Case template with a Return on Investment model. The template will help agencies analyze the business case of each project to ensure that projects providing the most substantial value will be prioritized.

2. Maximize the state's effectiveness in volume purchasing.

IMPROVED MANAGEMENT OF COOPERATIVE CONTRACTS PROGRAM

DIR has consolidated the management of all IT contracts for hardware, software, and services into a single division and has standardized contract management policies and procedures. The consolidation resulted in the creation of a single customer support section to assist users of all IT commodity contracts.

In managing the Cooperative Contracts Program, DIR has lowered its average recovery rate to less than one cent (or .0077) on every dollar of goods and services sold. The growth of the customer base to more than 3,000 public sector entities demonstrates the increasing value of the program.

NEGOTIATED VOLUME PURCHASING OF COMMODITY IT CONTRACTS

As part of its reorganization, DIR has focused on directly managing strategic volume purchasing in its commodity IT contract negotiations. Specifically, DIR worked with customers to establish target configurations for desktop and notebook personal computers and is aggressively negotiating significant price reductions for these commodity items. As a result of these efforts, the two largest suppliers of personal computers to Texas government, Dell and Hewlett-Packard, have reduced their maximum price for standardized personal computers by an average of 28 percent. This will result in an estimated statewide savings of more than $39 million for the two-year contract period. (See Appendix E for recent Buyer Alerts.)

3. Establish a cost-effective approach to providing a statewide IT infrastructure.

TRANSFERRED HEALTH AND HUMAN SERVICE COMMISSION WIDE AREA NETWORK

DIR entered into an interagency contract with the HHSC to transfer responsibility for management of the commission's wide area network from the Department of Human Services (DHS) to DIR. The transfer allowed the HHSC to redirect resources to its core mission and will result in savings estimated at $3.5 million over the next five years. With the transfer of DHS staff, DIR enhanced its technical expertise and experience in managing a large-scale wide area networks. This expertise and experience will further enable DIR to offer enterprise management services for telecommunications across the state, thus providing cost savings statewide.

REVISED THE STATE DATA CENTER CONTRACTING PROCESS

DIR facilitated an independent review of the current contracting practices of the Texas State Data Center Master Service Agreement. This review identified 14 findings and presented 20 recommendations to DIR on how to effectively manage IT service delivery through the Texas State Data Center.

Concurrent with the publication of the Biennial Performance Report, DIR is publishing a Service Delivery Guide to define a clear review process for comparative analysis between an agency's statement of work requirements and the proposal and costs of the Texas State Data Center service provider. The guide will improve the efficiency of the process for procuring data center services by providing agencies with scope of work templates and minimum performance standards for service level requirements.

DEVELOPED MESSAGING AND COLLABORATION SOLICITATIONS

In response to interest in defining a new method for delivering email services in the state, DIR issued a request for information (RFI) that included a statewide messaging and collaboration platform that may be leveraged by multiple state agencies. In coordination with the HHSC and other agencies, DIR examined information needed to develop a cost-effective pricing model, which will result in costs savings to small, medium, and large agencies. DIR has convened a working group of interested agency partners to review responses to the RFI to determine the value of potential messaging and collaboration solicitations and determine the value of securing a new solution.

4. Ensure the secure and effective use of the state's IT assets.

DEVELOPED AND IMPLEMENTED NEW SECURITY GUIDELINES

DIR worked with state agencies and the Governor's Office of Homeland Security to protect the resources that store, process, and transport critical IT information. To this end, DIR has conducted extensive initiatives related to security in the state, including the following:

• DIR upgraded its Web-based security incident reporting system to streamline reporting for agencies.
• DIR developed an emergency alert process to proactively inform agencies of cyber threats as they are disseminated. This process will lessen the potential for cyber attacks across state networks.

In response to the Department of Emergency Management's request to assist and train first responders, DIR developed a framework of reusable cyber terrorism desktop exercises, some focusing on critical infrastructure sectors, that will prepare first responders for cyber attacks.

INITIATED ARCHITECTURAL COMPONENTS FOR THE ENTERPRISE

DIR initiated the Architecture Components for the Enterprise (ACE), an interagency effort to develop an architecture for a standard IT infrastructure and fundamental IT services based on the business needs of state government. Together with state agencies, DIR is producing a body of rules and guidelines that agencies can use to develop their internal architectures.

REVIEWED DIR RULES RELATING TO HIGHER EDUCATION

DIR worked closely with the Information Technology Council for Higher Education in a review and re-adoption of DIR rules in consideration of the unique challenges facing higher education as recognized by the 78th Legislature (Senate Bill 1652, 78th Leg., R.S.). In addition to reviewing DIR rules related to higher education, DIR forged a closer relationship with the universities on issues of consolidated infrastructure, project planning, and methods of improving DIR's volume purchasing offerings for the educational community.

DELIVERED ON FOUNDATION INITIATIVES

In its Foundation for Change report, DIR established a series of planning initiatives consistent with the key objectives outlined in this report. A Foundation for Change presented 14 specific deliverables to be completed in conjunction with this Biennial Performance Report. A complete review of results from the planning initiatives can be found in Appendix A.

Key State Successes

Since 2002, several state agencies and universities have received statewide and national recognition for outstanding technology projects and DIR applauds their success. The awards and examples of multi-agency collaborations described here are models of innovative and judicious use of IT in the state.

Office of the Secretary of State

2003 MERIT AWARD

Presented by the International Association of Commercial Administrators in the Technological Advances Category, June 2003.

The Office of the Secretary of State implemented the Business Entity and Secured Transactions (BEST) System on August 6, 2001. The BEST System provides 24/7 access to corporations, Uniform Commercial Code (UCC), and trademark records through its Web interface, SOSDirect. The system provides 24/7 electronic access to submit three types of UCC filings and a long list of business entity filings.

The BEST System automatically processes Web orders, eliminating the need for staff to pull documents from microfilm and significantly improving customer service. The UCC section now processes an average of 99.9 percent of all work in two days or less and has reduced staff by 13 FTEs since September 1, 2002.

Department of Family and Protective Services

CIO ENTERPRISE VALUE AWARD

Government Category Finalist, presented by CIO Magazine.

TASSCC EXCELLENCE AWARD

For the Innovative Use of Technology, presented by the Texas Association of State Systems for Computing and Communications, August 10, 2004.

The IMPACT (Information Management Protecting Adults and Children in Texas) System is an enhancement of the Child and Adult Protective Services system. IMPACT is a browser-based child and adult welfare information system used by direct-delivery staff to document case activities. IMPACT includes multiple interfaces with other agencies and programs, including Temporary Assistance for Needy Families, the Department of Public Safety, and Medicaid.

IMPACT provides increased usability, enhanced collaboration with private partners, and lower remote access and maintenance costs. It also furnishes critical data used to gauge the agency's performance in meeting the goals of protecting the state's vulnerable citizens.

Texas Higher Education Coordinating Board

BEST OF TEXAS AWARD

For Best IT Collaboration among Organizations, presented by the Government Technology Center for Digital Government, September 29, 2003.

The Texas Pre-kindergarten-16 Public Education Information Resource (TPEIR) is a multi-agency data repository managed by three state agencies: the Texas Education Agency, the Texas Higher Education Coordinating Board, and the State Board for Educator Certification. The TPEIR project was implemented to ensure that the entire system of public education, extending from early childhood education through postgraduate study, is coordinated to provide public education stakeholders-including citizens (students, parents), administrators, educators, state leadership, researchers, and professional organizations-with efficient, effective, and high quality educational services and activities. It provides all education stakeholders with ready access to integrated public primary, secondary, higher education, and educator credential information for purposes of research, planning, policy, and decision making.

The University of Texas Medical Branch at Galveston

RECOGNITION

For an article featured in the July 28, 2004, issue of the Journal of the American Medical Association on "Health Care Delivery in the Texas Prison System," written by Ben G. Raimer, M.D., Vice President for Community Outreach, and John D. Stobo, M.D., President, UTMB, Galveston.

This article highlights the ongoing success of the correctional managed care program in providing quality health care to more than 145,000 incarcerated offenders in the Texas Prison System via clinicians at the University of Texas Medical Branch (UTMB) and the Texas Tech University Health Science Center. This program is recognized worldwide as an industry leader.

Over the past decade, the correctional managed care program, with the introduction of telemedicine technology in 1994, has saved an estimated $750 million in taxpayer money. The cutting-edge technology allows physicians in Galveston to see and treat patients via videoconferencing at remote prison clinics. Immediate access to medical histories (via an electronic medical record) and proven medical techniques ensure the best and most cost- effective outcomes.

AWARD OF MERIT

Presented by World Wide Web Health Awards, Spring 2004.

UTMB's e-Mini Medical School was awarded an award of merit in the Patient Education/Information category by the World Wide Web Health Awards. The World Wide Web Health Awards recognizes-twice annually-the top health care-related Web sites for both consumers and medical professionals. UTMB, partnered with Pfizer, Inc., presents the program to educate and inform the public via online activities. The e-Mini Medical School courses are open to any interested party with a valid email address and Internet access.

Texas Connection Consortium

ACHIEVEMENT

The Texas Connection Consortium (TCC) was created in 1995 by an agreement among DIR, SCT, and 30-plus universities and community colleges that use SCT software applications. An elected board of directors oversees the operation and direction of TCC.

During the life of the initial contract, TCC saved members more than $12 million in license fees while providing enhancements to members at no cost. The lower maintenance escalation factor (3 percent rather than 10 percent) continues to increase the value of member's initial savings. The contract renewal in 2002 offered members an option for SCT's newer products without additional license fees or an increase in maintenance for like products for the first 18 months of the contract.

Texas Parks and Wildlife Department

BEST SOLUTIONS AWARD

Presented by GTC Southwest 2004.

The Texas Parks and Wildlife Department and MCI Corporation received the Best Solutions Award for the automated Texas Licensing Connection system used for the sales of all Texas hunting and fishing licenses. The system accommodates more than three million transactions each year for the sale of 200-plus types of licenses by 2,000 independent sales agents. The system has demonstrated major improvements over the earlier licensing system in performance, function, reliability, and user acceptance.

Judicial Committee on Information Technology and the Office of Court Administration

ELECTRONIC COURT FILING PROJECT

The electronic court filing project (eFiling for Courts), hosted by TexasOnline, alleviates the burden of paper processing in the court document filing process. For courts, the project provides secure filer and court authentication so document privacy is protected. It allows court clerks to review submissions online and return a file-stamped copy to the filer. Clerks are also able to provide attorneys with a listing of document types accepted, as well as fee and filing information online.

All fees paid by the filer are automatically processed by TexasOnline and deposited in the clerk's account. BearingPoint, TexasOnline's private vendor partner, guarantees all funds to the county, so the clerk need not worry about insufficient funds and bad credit card transactions. eFiling for Courts allows attorneys to pay via credit card or automatic check handling, reducing the need to estimate fees in advance. The project saves attorneys' time and money by allowing files to be submitted anytime from any location without paper copies or mail and courier fees. The service is available in Fort Bend County, Bexar District, Dallas County, El Paso District and County, Upton District and County, and Tarrant County Courts. More than 40 other Texas counties have expressed an interest in implementing eFiling.

The University of Texas at Austin iTOUR Project Team

2004 TEXAS INTERACTIVE MEDIA ACHIEVEMENT AWARDS

Outstanding Achievement in Technical/Creative Innovation presented by Austin Area Multimedia Alliance, March 2004.

The Blanton Museum of Art, in collaboration with the University of Texas at Austin's Information Technology Services, developed, implemented, and evaluated an interactive handheld museum guide as part of a larger study on art interpretation. The iTour study made handheld computers available to visitors during a three-month study on interpretive technology. The computers provided rich content including video of artists, audio of curators, textual information, and creative play components. Research focused on two main areas, visitor engagement with the exhibit (with and without the iTour), as well as comparison of three different types of handheld computers.

Guide to Appendices

The following appendices are presented with the 2004 Biennial Performance Report:
Appendix A. Foundation Deliverables
Appendix B. State IT Expenditures
Appendix C. Texas Project Delivery Framework
Appendix D. Legislative Trends in Technology
Appendix E. Buyer Alert Program

APPENDIX A. Foundation Deliverables

In May 2004, DIR published a report entitled A Foundation for Change: Leveraging a Statewide Technology Infrastructure, outlining DIR's plan of action for developing a shared statewide technology infrastructure. This report was presented as an addendum to the 2003 State Strategic Plan for Information Resources Management (2003 Strategic Plan) and laid out 14 deliverables to be reviewed in six months as part of a proactive effort to bring new value to leadership and agencies prior to the 2005 Legislative Session.

This appendix addresses progress on each Foundation for Change deliverable, reviewing the commitment expressed by DIR and the impact of the deliverable on the management of the state's IT resources.

Action Roadmap

Action Roadmap Results

Work products generated for each of the Foundation for Change deliverables are listed below. Most of these products are being published on DIR's Web site in conjunction with this Biennial Performance Report.

State Data Center System

INDEPENDENT REVIEW

RESULT

During the fourth quarter of fiscal 2004, DIR assembled an independent team to review contracting processes at the Texas State Data Center in San Angelo. The review team compiled findings and recommendations pertaining to the management and business processes involved in contracting for services at the data center.

The actions in response to the findings and recommendations are summarized as follows:

• DIR will take a more proactive role in managing IT service delivery through the state data centers.
• DIR is working with agencies to improve and streamline the documentation and business processes associated with evaluating outsourcing opportunities and negotiating IT services contracts. DIR is also working with agencies to improve the documentation and business processes associated with managing existing and future IT services contracts.
• DIR will seek a comprehensive audit (SAS70) of require the state data centers in fiscal 2005 to judge the adequacy of internal controls, including change management.
• DIR will develop rules and the process to implement a statewide strategy to provide consolidated data services to the state. Recommendation 3.1 of this report describes the changes needed to deliver these consolidated services.

The team's report, Independent Review: Texas State Data Center, will be posted for review on DIR's Web site.

BENEFITS

The results of the review will:

• Provide a more effective approach to identifying contracting issues within the current process and aid in analyzing the cost effectiveness of outsourcing data center services and contracting for those services; and
• Enable DIR to determine specific improvements that should be made to contracting methodology, processes, and procedures.

State Data Center System

SOURCING STRATEGY

RESULT

DIR has identified three tiers of computing facilities: (1) data centers, (2) centralized computing facilities, and (3) server closets. The factors that are weighted in these definitions include facility budget dedicated staff, square footage, level of modifications, presence of a mainframe, and number of servers. The primary focus of future infrastructure reviews will be on Tier 1, which comprises the 20 largest agency computing facilities, the Texas State Data Center in San Angelo, and the Austin Disaster Recovery Operations Center.

To validate the data collected through survey responses, DIR has finalized a request for offer (RFO) that will result in more accurately defined baseline costs. DIR is in the process of performing an assessment of baseline costs and savings opportunities for all tiers.

BENEFITS

The development of a comprehensive, enterprise-wide IT sourcing plan is expected to provide cost savings to the state beginning in fiscal 2007 and improve the long-term delivery of data center services.

State Data Center System

SERVICE DELIVERY GUIDE

RESULT

DIR, with input from representatives of the LBB and the SAO, released a new Service Delivery Guide for procuring and contracting services from the Texas State Data Center in San Angelo. The guide is based on the existing master contract between DIR and Northrop Grumman.

The new guide identifies, defines, and clarifies the procedures a state agency follows as part of the procurement process. The guide incorporates the adoption and standardization of service level requirements between state agencies and the service provider that were previously left to the discretion of each individual agency. DIR has also worked through the guide to resolve issues associated with the waiver process.

The guide reflects findings and recommendations of the Independent Review and defines a clear process for comparative analysis between the agency's statement of work requirements and the service provider's proposal and costs. DIR is taking a more proactive role and will assist agencies with this analysis and participate as an advocate for the state during negotiations.

The Service Delivery Guide will be posted for review on DIR's Web site.

BENEFITS

The Service Delivery Guide will:

• Provide a minimum standard for service level requirements, statements of work, agency cost documentation, and pricing models; and
• Improve the efficiency of the State Data Center System procurement process.

Statewide Network

HHSC NETWORK TRANSFER

RESULT

The responsibility for managing the Health and Human Services Commission's wide area network was transferred from the Department of Human Services to DIR via interagency contract effective September 1, 2004. The contract included the transfer of DHS staff to DIR. The transfer facilitates the development of the enterprise network solution by providing DIR with the resources essential for managing a statewide network.

The enterprise network solution will integrate statewide telecommunications operations in a cost-effective manner. This enterprise will offer centralized network management, full-scale customer support and service, and efficient technologies across an intelligent, converged network.

BENEFITS

The transfer of the HHSC wide area network to DIR:

• Allows the HHSC to focus on its core mission;
• Provides DIR with additional technical expertise, knowledge base, and skill sets in managing large-scale statewide networks;
• Enables DIR to create a scope of services for statewide network management that it can offer to other agencies at substantial savings;
• Provides DIR with valuable lessons in developing an enterprise management model for the expansion of the network consolidation effort; and
• Is expected to realize $3.5 million in savings to the state over five years.

Statewide Network

VOIP PILOTS

RESULT

In October 2004, DIR released a request for offer to deploy Voice over Internet Protocol (VoIP) on the Capitol Complex Telephone System. The RFO included a proof of concept deployment of VoIP to desktops within DIR. DIR's chosen business solution for VoIP in the Capitol Complex may serve as the platform for the statewide implementation of VoIP.

During this period, DIR has also presented the HHSC with options to manage the 2-1-1 Network, including VoIP-based platforms and future installations.

Through the ACE effort, DIR is developing best practices for VoIP implementations and methods for coordinating statewide VoIP deployment.

BENEFITS

Convergence technologies, such as VoIP, promote integration of separate voice, video, and data services across a common network. The reduction in circuits and supporting equipment and staffing will result in cost savings for the state. An enterprise-wide approach to VoIP deployment will further allow for bulk procurement of VoIP equipment, such as IP telephones.

Statewide Network

NETWORK CONSOLIDATION STUDY

RESULT

To determine the potential operational and financial benefits of consolidating state agency wide area networks, DIR examined the WAN management operations of the Comptroller's Office, the Office of the Attorney General Child Support Division, and the Texas Department of Transportation. The analysis began by reviewing the Statewide IT Asset Report (SITAR) data for each of these agencies. Follow-up interviews with agency staff clarified and augmented the SITAR data. Financial data from the agencies was compared to DIR management costs derived from DIR WAN service charges for Site Circuit and Router Management.

Preliminary analysis offers evidence of cost savings if enterprise WAN management is implemented. The Network Consolidation Study, a summary of the results, will be posted for review on DIR's Web site.

BENEFITS

Enterprise WAN management will provide savings and benefits to agencies through the consolidation of administrative functions, staffing, and contracts for network monitoring tools and equipment maintenance.
Previous research also indicates a potential for enhanced services and cost savings to counties from consolidating state agency network resources within county facilities. The Texas Association of Counties has continually expressed an interest in leveraging state IT resources to improve intergovernmental collaboration. Eighteen state agencies currently have, or plan to have, network connections within county facilities. A statewide network enhances the opportunities for consolidating state agency network resources and may facilitate local and state government collaboration.

Enterprise Applications

MESSAGING AND COLLABORATION

RESULT

In June 2004, DIR issued a request for information that included enterprise messaging and collaboration services for a scalable statewide messaging platform that could be leveraged by multiple state agencies. Upon receipt of more than fifty responses to the RFI, DIR, in collaboration with the HHSC and other agencies, launched an RFI review process. The interagency review team examined pertinent information to develop a flexible, cost-effective pricing model. Substantial progress has already been made toward a business case for a statewide messaging and collaboration service that will benefit small, medium, and large agencies.

The anticipated voluntary service offering will range from the minimum requirements of a deskless worker to a full-featured executive tier offering of email, calendaring/scheduling, address book/management, document routing/approval, Web conferencing, videoconferencing, Web broadcasting, and instant messaging.

BENEFITS

Consolidating email services will:

• Provide a cost-effective messaging platform that will enhance collaboration across agencies;
• Allow the state to leverage its buying power, reducing the overall costs to users;
• Provide most agencies with expanded functionality; and
• Allow agencies to reduce system administration and training costs.

Enterprise Applications

PEOPLESOFT MAINTENANCE RENEGOTIATION

RESULT

In October 2004, DIR coordinated negotiations of the statewide maintenance agreement for agencies using PeopleSoft. After securing a preliminary price estimate from PeopleSoft, DIR developed and distributed a maintenance cost allocation model to each of the participating agencies. The model reflects a pro rata share of the overall estimated maintenance cost across agencies based on their financial and/or FTE metrics.

DIR will conduct a competitive bid and negotiate the terms and conditions of future maintenance support based on provisions and input received from agencies that participate under the agreement.

BENEFITS

The state, through DIR, can reduce redundancy in renegotiating maintenance agreements that would otherwise be negotiated, executed, and managed by individual state agencies.

Enterprise Applications

ERP GOVERNANCE MODEL

RESULT

DIR has examined methods in which the state can reduce the total cost of ownership for PeopleSoft financial systems implemented across several state agencies. An upgrade to Release 8.8 of the financial software is currently in progress that will enable Integrated Statewide Administrative System (ISAS) agencies to migrate to a fully Web-enabled version of the application. The Comptroller's Office has worked with agencies to consolidate requirements with a focus on removing customized modules to reduce the maintenance and development costs.

DIR developed a briefing document that examines the pros and cons of several statewide ERP options and includes recommendations for agencies to look first to adapt their business processes in lieu of expensive customization of software products. This would reinforce the trend towards statewide ERP.

The briefing document, Current ERP Environment and Statewide Options, will be posted for review on DIR's Web site.

BENEFITS

• A consolidated model would enable the state to examine a shared service approach to delivering an integrated financial system to small- and mid-size agencies that currently operate their own financial systems or are internal users of the Uniform Statewide Accounting System (USAS).
• Internal USAS users, which comprise more than 100 agencies, could potentially be converted to this shared service model. When in place, this consolidated model would improve the state's position to implement and leverage enterprise-wide collaboration systems, such as e-procurement.

IT Support Services

CAMPUS IT SUPPORT SERVICES

RESULT

DIR worked with the Hobby Building Steering Committee and its IT Consolidation Working Group to identify several potential opportunities for consolidation. The opportunities were documented in the Hobby Building Case Study, which included in-sourced as well as outsourced options for consolidation and co-location of equipment and services. A draft of the study was provided to the IT Consolidation Working Group and the final document will be sent to the Hobby Building Steering Committee for review.

DIR documented the process used in its review of the Hobby Building to serve as a guide to facilitate the examination of other potential opportunities to consolidate campus-level IT services. The guide documents the steps that should be taken to support a comprehensive analysis and provides a list of state-owned buildings where consolidation of IT support services might be an option.

Conducting Campus-Based IT Consolidation Studies will be posted for review on DIR's Web site.

BENEFITS

Consolidating IT support services will:

• Facilitate agencies' participation in statewide infrastructure initiatives, such as messaging and collaboration;
• Improve the physical security of support services by co-locating IT equipment in a single limited-access facility; and
• Enable agencies to rededicate their staff to core business functions.

IT Support Services

ENTERPRISE IT SUPPORT SERVICES

RESULT

DIR solicited information from vendors in a request for information on new options and approaches to providing enterprise IT support. Through a comparison of these responses with existing DIR seat management contracts, DIR has developed a preliminary review of alternatives for implementing an enterprise seat management strategy. The results of this review will form the basis for taking a more statewide approach to enterprise seat management in the future. This will lead to new guidelines for seat management that will be published in 2005.
The Preliminary Review of Alternatives will be posted for review on DIR's Web site.

BENEFITS

Cost savings can be realized through volume purchasing and reducing redundant IT operations because:

• Agencies can dedicate more of their staff time to core business functions;
• Help desk support and IT training can be delivered more efficiently; and
• Expenditures for equipment and facility upgrades can be significantly reduced.

Governance Development

BUSINESS CASE

RESULT

Through the review of best practices and in consultation with state agencies, DIR has developed a Business Case template that includes a Return on Investment (ROI) model. The template is intended as a tool to help agencies determine the business impact of proposed IT investments. The ROI model helps to quantify the potential savings, benefits, risks, and impacts of the IT project.

This approach will guide agencies in determining the extent to which proposed projects provide value to their agencies, to the state, and to citizens. Additionally, the approach establishes a standard means for agencies and state leadership to evaluate, prioritize, and fund IT projects across agencies.

The Business Case Template will be posted for review on DIR's Web site.

BENEFITS

By requiring a comprehensive business case before project initiation, the state can better prioritize funding as well as avoid the disruption and costs associated with midstream cancellation of projects that are found to not meet the needs of the agency or the state.

Governance Development

PROJECT MANAGEMENT METHODOLOGY

RESULT

DIR and state agencies have developed processes, tools, and techniques as components of a Texas Project Delivery Framework through which agencies can improve delivery of successful IT projects. The framework describes the work processes, products, and deliverables associated with each project phase.

The framework will be deployed through a Web-based toolkit that provides methodologies, templates, and additional resources to accelerate effective project management. The first deliverables will include guidance on the Initiation Phase and templates for the Business Case, Statewide Impact Analysis, and Project Charter. (See Appendix C for more information.)

The proposed Texas Project Delivery Framework may impact statute upon which the current Quality Assurance rule is based, therefore DIR has not yet replaced the existing rule.

BENEFITS

Sound project management practices provide a foundation for accurately measuring project performance and establishing effective project control processes. A consistent methodology aids in the measurement of success for IT projects and helps achieve the following objectives:

• Establishes a consistent method for managing IT projects;
• Provides processes that support and enhance managerial capabilities in the planning, coordinating, communicating, delivering, and tracking of IT projects;
• Provides standards, guidelines, and re-usable templates to assist organizations with achieving success on all IT projects; and
• Provides the foundation for an oversight process to help ensure success for large-scale and high-risk projects.

Governance Development

STATEWIDE IT GOVERNANCE MODEL

RESULT

Throughout this report, DIR has identified and described many ways to develop an enterprise approach to IT governance. All recommendations describe ways that, working together, state agencies can maximize the state's ability to manage technology resources. By setting standards and implementing processes that maximize the value of IT assets, DIR will strive to oversee the effective management of IT resources in the state.

BENEFITS

A statewide IT governance model:

• Aligns agency goals with the effective management of IT resources; and
• Develops the state's technology assets, thus achieving cost savings and gaining efficiency.
  

APPENDIX B. State IT Expenditures

Summary

In May 2004, DIR reported approximately $2 billion annual expenditures on information technology in Texas government. From fiscal 2000 through 2004, the spending trend has not varied significantly. In a recent review of information from the Uniform Statewide Accounting System, the amount attributed to IT expenditures, not including salaries, is slightly less than $1.4 billion in fiscal 2004. Expenditures of approximately $440 million in IT staff salaries increases the total to more than $1.8 billion.

The total IT expenditures DIR reviewed represents approximately three percent of total agency expenditures in fiscal 2004, which is slightly lower than other states' average technology expenditures.¹ This expenditure level, however, does not fully depict IT spending in the state. For example, some IT spending-such as certain funds for institutions of higher education- is not reported in USAS.²

IT EXPENDITURES BY CATEGORY FOR FISCAL 2000-2004

Sources: Uniform Statewide Accounting System; Texas Statewide Planning Information Resources System (actual and projected data).

SELECTED IT EXPENDITURE CATEGORIES AS A PERCENTAGE OF TOTAL IT EXPENDITURES FOR FISCAL 2000-2004

Source: Uniform Statewide Accounting System.

Recognizing that the state's IT spending patterns are difficult to pinpoint, DIR worked with staff from the LBB and the Comptroller's Office to consider and implement certain options to further align the data sources that track and report IT costs. From this effort, some early successes in reconciliation have been implemented and are reflected in the IT expenditures reported.

Improving the Methodology

DIR has proactively taken several steps to reconcile disparate data sources and improve segments of reporting for IT spending. This section describes ongoing efforts that are improving DIR's ability to accurately report technology spending to state leadership for use in their decision making.

STATEWIDE IT ASSET REPORTING

In January 2004, DIR implemented a survey instrument to request more detailed IT information than afforded by USAS. Through SITAR (Statewide IT Asset Reporting) agencies reported on their fiscal 2004 IT staff, assets, and expenditures. Spending was reported across nine service delivery categories:

1. Email services;
2. Web hosting;
3. Local area network infrastructure;
4. Wide area network infrastructure;
5. Financial, accounting, human resources;
6. Application support;
7. Security services;
8. User services; and
9. Operations, other.

SITAR has proven exceptionally helpful as an analytical tool to review current IT spending patterns relative to specific initiatives. However, it cannot be used to calculate the state's total IT spending because it excludes institutions of higher education and relies on self-reported data from agencies. For example, IT expenditures reported in USAS represent nearly twice the comparable expenditure information that was self-reported by agencies in SITAR.

Although significant differences exist between the fiscal 2004 IT expenditure information reported in USAS and the information reported in SITAR, there are also similarities. Both systems reported similar proportions of hardware and software expenditures (21 to 23 percent) in relation to total IT expenditures. The percent of total IT expenditures reported for contract services (33 to 34 percent) were also similar across the two systems.

DIR will continue to refine SITAR to collect information to improve the quality and accuracy of IT-related data available to the state.

INFORMATION TECHNOLOGY DETAIL REPORTING

In 2004, the LBB added a new section to the Legislative Appropriations Request. The Information Technology Detail (ITD) collects specific budget information about agencies' current and planned IT activities. In reporting these costs, agencies were required to use the same nine service delivery categories that DIR developed for SITAR. These common categories promise to provide valuable data to reconcile reporting between SITAR and the ITD.

UNIFORM STATEWIDE ACCOUNTING SYSTEM

DIR worked with the Comptroller's Office to review certain expenditure object codes contained in the Comptroller's Manual of Accounts. The result of this effort was to clarify the use of several IT-related object codes. The revisions, effective September 1, 2004, will improve the accuracy of IT expenditure tracking and reporting in future years. Some of the revisions are described below.

RFO FOR DETAILED IT EXPENDITURE DATA

As DIR moves forward with the consolidation initiatives cited in the Foundation for Change report, it must gather more detailed IT data than what is currently available through the data sources described above. Therefore, DIR is issuing a request for offer to reconcile existing state expenditure data and to provide deeper analysis in two major areas:

• Data Centers: Conduct an inventory of all agency and state data center servers and mainframes, including the location, types, platforms, applications, and the age and capacity of servers and mainframes, along with related costs and staffing needs.
• Telecommunications Networks: Identify agency telecommunications network activities and the opportunities for consolidating them under DIR's wide area network to determine the extent to which enterprise management will provide additional savings and benefits to telecommunications customers at state agencies.

The additional detail provided by the assessment will help establish better accountability for managing IT assets throughout the state and provide direction on how best to manage and consolidate the state's IT resources.

APPENDIX C. Texas Project Delivery Framework

Improved IT project delivery is one of DIR's top priorities. To accomplish this, a standard approach for initiating, planning, and deploying projects-coupled with clear accountability for outcomes-must be established and communicated consistently throughout the state.

Risks in IT projects are numerous. The complexity in understanding, eliciting, documenting, and quantifying the business need can quickly result in a focus on technology rather than on business objectives. Lines of accountability become obscured when decision-making errors are made in developing and implementing a project.

Senate Bill 1701 (78th Leg., R.S.) required DIR to provide standards to help state agencies improve their ability to deliver projects that meet schedule, budget, scope, and quality requirements and realize the projected return on investment.

To this effect, DIR has developed a comprehensive project delivery framework, tailored to the needs of Texas state government, to ensure successful business outcomes. The framework establishes a structure through which agencies can deliver, review, evaluate, and document outcomes throughout a project's life cycle. The framework provides the methods, tools and best practices to strengthen agency accountability while reducing inefficiency and non-value- added bureaucratic processes.

A key part of the framework is an agency-accountable gate review of specific deliverables by project phase that gives agency heads and state leadership the tools and information to guide technology deployment toward the right business outcome. The gate review process generates answers to the following questions, among others:

• How does this project align with the agency's mission, goals, and objectives?
• What are the critical success factors for the project?
• What is the common understanding and agreement of stakeholder requirements?
• Does the business case specify business outcomes and methods to gauge success?
• Have sufficient staff and budget been allocated to the project?
• Does the project budget include an allowance for risk management and independent validation of the project's performance?
• Are there adequate approaches in place for estimating, monitoring, and controlling the total expenditures on the project?
  • Is there an effective system in place for measuring, tracking, and reporting benefits in the business case?
  • Is there a clear project plan that covers project, product, and process performance throughout the project life cycle?
  • Does the project management structure ensure that "bad news" is not filtered out of project status reported to agency management?
  • Are the lessons learned from relevant previous projects being applied.

The Framework

The Texas Project Delivery Framework establishes consistent expectations and builds a structure for measuring accountability throughout a project's life cycle. Key elements of the framework include a phase-based structure and the key questions and critical gate deliverables associated with the advancement of a project.

• A phase-based structure:
  • Provides a means to organize the project into logical, defined activities;
  • Establishes a common understanding of a project's state; and
  • Builds in measures of accountability throughout a project.
• Key questions enable agency heads and other stake holders to:
  • Determine if business objectives remain the central focus;
  • Ensure expected outcomes are going to be delivered as expected; and
  • Evaluate whether the project is on time, on budget, and within defined scope and quality.
• Critical Gate Deliverables:
  • Provide a method of validating that project phases have been completed;
  • Ensure agency heads and state leadership have reports that document adherence of the project the business outcomes at any given point within the project life cycle; and
  • Provide history of project process that is consistent across agencies.

The Texas Project Delivery Framework will facilitate effective use of state resources for managing and monitoring IT projects. Implementing this framework will enable the state to improve success in project delivery. Ultimately, the framework will provide a project methodology, instructions, templates, and additional resources that will ensure project accountability from initiation to delivery.

Texas Project Delivery Framework

Deploying the Framework

DIR is deploying the framework as a Web-based toolkit. The framework will be deployed in phases starting with the Initiation phase. Once fully implemented, the Initiation phase will offer the tools to complete the following key gate deliverables: Business Case, Statewide Impact Analysis, and Project Charter.

• Business Case: The Business Case provides agency management and state leadership with information necessary to determine whether to prioritize and fund the project. The Business Case examines the business objectives in a strategic context to support investment decisions on an IT project. It provides an analysis of the benefits and risks associated with a proposed investment, and examines initial and ongoing costs of the project, and its impact on both the technology and business environments of the organization.
• Statewide Impact Analysis: The Statewide Impact Analysis provides agency heads and the state Chief Technology Officer with the information needed to determine the project's alignment with statewide goals and strategies, and whether it conforms with state and industry IT standards. The analysis describes how the project will leverage statewide infrastructure, share statewide resources, and implement enterprise architecture standards, guidelines, and best practices.
• Project Charter: The Project Charter initiates a new project. Issued at the end of the Initiation phase, it marks the beginning of a project's Planning Phase. The charter also serves as the basis for the Project Plan and outlines administrative roles and responsibilities.

Additional components of the framework will be deployed in the coming months.

APPENDIX D. Legislative Trends in Technology

The following information demonstrates legislative interest across the nation on key technology issues. The descriptions for the items under "Broadband/Digital Divide" were compiled from Broadband Internet Access and the Digital Divide: Federal Assistance Programs, Congressional Research Service Report RL30719 (September 22, 2003), which is available at http://usinfo.state.gov/usa/infousa/tech/tech/rl30719.pdf. The remaining items were compiled with permission of the National Conference of State Legislatures from its Web site at http://www.ncsl.org. The status of all items has been updated for this report.