Lessons learned from Georgia’s IT outsourcing efforts

It’s been a little more than four years since Georgia outsourced almost all of its information technology infrastructure and telecommunications in a bold move aimed at reducing risk and modernizing technology for the state’s IT enterprise.

The question today is where does the state stand when it comes to outsourcing?

In an interview with StateScoop, Georgia Chief Information Officer Calvin Rhodes and Chief Technology Officer Steve Nichols said there remains both good and bad from contracts totaling a combined $1.3 billion to IBM and AT&T.

“A modern, secure, reliable and cost-effective technology infrastructure is essential to enabling state government to meet its service obligations,” Rhodes said. “Several years ago, it became evident that serious deficiencies in Georgia’s IT enterprise had to be addressed. The state was carrying too much risk, and IT problems were too great to solve on our own.”

PCs were old and running out-of-date systems, service interruptions occurred because of inadequate backup power for critical IT systems, and disaster recovery and security were underfunded.

“We knew this would be a tough road,” Nichols said. “Agencies were very involved in developing the approach and the contracts, and we all knew we’d have hurdles to overcome. Agencies have had some legitimate complaints about service delivery and a new model to adjust to. We’ve all had a steep learning curve.”

Rhodes said the culture shift has been difficult for customers as well as those managing the program.

“Agency employees who were accustomed to calling their IT team down the hall anytime, they had a problem, had to get used to calling the consolidated service desk for help,” he said. “It’s a very different mindset.”

Despite these challenges, Nichols said things are improving. He commended IBM and AT&T, saying they continue to “up their game” and the organization as a whole is “millions of miles” ahead of where it’s been in the past with hopes that the future will be smoother.

“We’re on track to save $181 million over the life of the contracts, and we now have a sustainable business model,” Nichols said, noting that the Georgia Technology Authority has about 175 employees, 75 of whom work exclusively with the outsourcing partners while the rest focus on issues like managing the state’s web portal, enterprise services and functions associated with the U.S. General Services Administration.

“We’re more mature than we were when we started and the problems we are having today are different from the problems we had last year and are different from the problems we had the year before that,” Nichols said.

Although Rhodes said that much work still lies ahead, he expects the state’s IT transformation to be complete in September 2014.

Major outsourcing projects like Georgia’s are still relatively rare in state government. Texas and Virginia are the only two other states to take a similar approach, both facing challenges along the way.

In 2006, Texas outsourced its data center operations, but the state and contracting vendor had a very public falling out last year over the $863 million contract that Texas eventually re-awarded the work to a team consisting of Xerox and CapGemini.

Virginia took a similar path, outsourcing its IT to Northrop Grumman, but that deal has also been fraught with challenges, most notably a services outage in 2010 that garnered national attention.

For Georgia, the choice to outsource came out of necessity.

“GTA was in a position of subsidizing IT services for state agencies, and that model that was not financially sustainable.” Nichols said. “Outsourcing was the best alternative for modernizing IT and reducing risk in an affordable way. The choice did not come easily.”

The state’s contract with AT&T runs out next year, while the contract with IBM still has three more years at their base, although each has options that can be exercised.

While outsourcing is a big part of Georgia’s state technology landscape, there are a number of projects being handled in-house. For example, Nichols said the state web portal, Georgia.gov, was redesigned in 2012 to improve usability for the 4.5 million people who visit the site every year.

It is the first state portal to use responsive design technology, which automatically adapts the portal to the screen size of a visitor’s mobile device. It is also the first state portal to use Drupal, an open source content management system hosted in Amazon Web Services’ cloud.

They’ve already used Drupal to overhaul approximately 75 state agency websites.