Report 2002-111 Summary - February 2003

Information Technology:

Control Structures Are Only Part of Successful Governance

HIGHLIGHTS

Although the Department of Information Technology (DOIT) ceased operations on July 1, 2002, the need for what it was chartered to do continues to exist. Our review of California's and other states' information technology (IT) governance structures revealed the following:

  • DOIT faced many challenges, including its composition and organizational placement, an all-encompassing charter to be both an advocate and a control organization, and the inability of state IT stakeholders to collaborate.
  • Effective IT governance at the state level can be achieved under widely varying structural and procedural arrangements.
  • Successful IT governance models tend to have the support of executive leaders, a participative leadership style, and an incremental approach to development and implementation of IT initiatives.
  • Regardless of their approach to IT governance, states face common challenges that lack universal solutions, including the degree of centralization of IT functions and standardization of IT systems, turnover in administrations, lengthy budget cycles, and an aging workforce.

RESULTS IN BRIEF

In 1995 the Legislature created the Department of Information Technology (DOIT) to provide leadership, guidance, and oversight for information technology (IT) initiatives and projects throughout the State. In July 2002, DOIT ceased operation, but the need for what it was chartered to do continues to exist.

California is governed by a multitude of agencies and departments, each with a focus to support the business of the State by supplying a myriad of goods and services. The complexity of the State's governance and other circumstances created challenges for DOIT as it attempted to achieve its mission. Some of these challenges can be traced to the composition and organizational placement of the department, others stem from the all-encompassing charter of being both an advocate and a control organization, and still others are a result of the inability of state IT stakeholders to effectively collaborate.

To determine what lessons can be learned from states with exemplary practices in IT governance, our consultant conducted case studies in New York, Virginia, Pennsylvania, and Illinois. The studies revealed three models for achieving effective IT governance. They varied substantially in the extent to which formal authority is concentrated in the state's highest-level IT office as well as where that office is located in the governance structure and how it interacts with other stakeholders in IT initiatives.

Analyses of case studies plus a review of relevant research literature enabled our consultant to identify a number of common factors likely to account for successful IT programs under any of the different governance models observed. Successful models tend to have executive leaders who are champions of IT and emphasize its value for achieving state missions, a participative and collaborative management style that emphasizes "carrots" over "sticks" and that evidences a commitment to employees during periods of change, and a modular, incremental approach to development and implementation of IT initiatives. These factors typically did not characterize California's approach to IT governance.

A number of common challenges also face states, regardless of their approach to IT governance. Most of these challenges involve making decisions about tradeoffs among competing interests and approaches, with no glaringly right or wrong answers. Among the most critical is the need to determine the appropriate amount of consolidation and centralization of state IT functions such as data center services and the degree of standardization of IT systems. A related challenge is ensuring equity through competitive procurement when deciding on the degree of standardization. The decision whether to outsource IT operations poses another challenge for state government, which must weigh the benefits of the flexibility gained from contractor-provided services against developing an over dependence on such services. States face a challenge in developing a strategic plan focused on IT or developing a business strategy in which IT plays a supporting role. Another issue faced by state governments is the establishment of an IT inventory and regular replacement of obsolete IT office equipment, and lessening the burden of the approval and procurement process requirements for such routine purposes.

Operating in the public sector poses some unique challenges that state governments must face in carrying out their IT operations. One such challenge is the effect of administration turnover on the continuity of the statewide IT vision. The lengthy budget cycle also causes major problems for IT development, as does the impending retirement of a significant number of older workers because of government's limited ability to hire enough personnel with the needed IT skills to replace those who retire.

RECOMMENDATIONS

The success of a new IT governance structure depends on the support and cooperation of many stakeholders, including the governor's office, the Legislature, control entities, client entities1, and technical entities that will be affected by the IT program. The selection, adoption, and development of a governance structure should, therefore, be a collaborative effort involving stakeholders at all levels.

Regardless of the governance model California adopts for its IT program, it should make sure the program includes common success factors and other vital elements by taking the following steps:

  • Select a chief information officer (CIO) to direct and coordinate the State's efforts to use IT in better providing services to residents and businesses. The CIO should be a knowledgeable champion of IT and emphasize its value for effectively achieving the State's mission. (The governor recently appointed a new state CIO.) To ensure no disruption occurs in the planning and implementation of the goals and objectives of its IT program, the state CIO should be a permanent position, reporting to the governor.
  • Adopt a participative management approach that stresses collaboration and communication between public and private stakeholders and builds teams to facilitate information sharing and decision making. Additionally, the CIO should develop regular, collegial relationships among IT stakeholders and meet regularly with public and private sector advisory boards.
  • Provide incentives for agencies and departments that develop effective statewide IT initiatives.
  • Make a commitment to employees during periods of change, particularly in the treatment of IT employees as new systems and skills are required.
  • Adopt an evolutionary strategy for IT initiatives stressing modular development and early successes that involve stakeholders in the planning and implementation.
  • Develop a statewide inventory of IT equipment and systems. This inventory would serve as the baseline for understanding yearly costs for installed IT-related systems and services, and for establishing standard cycles and their associated costs and savings for replacing outdated equipment.

California will also have to make decisions regarding governance structure issues that are common to any statewide IT program, but for which no universal solutions exist. Some of the more critical challenges that will need to be considered and addressed include the following:

  • Determine the role and responsibilities of the state CIO and the amount of authority to vest in that position. Decisions with respect to policy making, project approval and oversight, IT procurement, and operations, will drive the size and nature of the IT governance structure required to accomplish the CIO's purpose.
  • Determine the appropriate degree of centralization and consolidation of IT services.
  • Determine the appropriate degree of standardization that should take place in statewide IT applications.
  • Establish the proper level of outsourcing for IT activities.
  • Develop a strategy to mitigate the interruptions and distractions from statewide IT initiatives caused by the periodic turnover of state administrations.
  • Develop a strategy to mitigate the delays and negative effects caused by the length of the budget cycle on the approval and implementation of IT projects.
  • Determine the proper balance between the creation of ITspecific plans with agencies' desires for integrated business plans.
  • Develop a strategy to minimize the disruption that will be caused by the large number of IT employees with expertise concerning older IT systems and applications that are scheduled to retire in the near future.

AGENCY COMMENTS

The state CIO found our report to be comprehensive and useful in listing many of the challenges the State confronts in effectively and efficiently managing its IT resources. He agreed with several of our recommendations, but needed further discussion before agreeing with others.

The director for the Department of Finance agrees that successful use of technology is important to the State, and values having a strong IT governance structure in place to develop appropriate strategies for the future. Toward that end, he will thoughtfully consider the ideas proposed in our report.


Report type

Report type
















© 2013, California State Auditor | Privacy Policy | Conditions of Use | Download Adobe PDF Reader