State of Ohio saves millions with enterprise approach to technology
State of Ohio
Not often thought of as a state at the epicenter of technology innovation, the State of Ohio's IT department has been bucking that trend for years. An early adopter of cloud and enterprise shared services, the state has significantly lowered the per capita cost of delivering services while improving the ability of the state's departments to move quickly in adopting new ways of doing business and serving the state's 11.6M residents.
For 10 years, Stuart Davis has been leading these changes. First as Director of Shared Services, then as the department's COO, and now its CIO. We caught up with Stu to find out how they have succeeded in aligning IT with the state's needs.
Let’s dive in with something that you've been doing for quite a long time now; something that separates Ohio's IT from many other states. That's the cloud-first and shared service model. Can you talk about that?
Oh yeah, absolutely. It's been a while. In 2008, I became the assistant chief operating officer and, prior to that, I was the enterprise shared services administrator. So we've been doing enterprise shared services for quite some time.
Are you ahead of the curve compared to other states in how you manage IT?
Yeah, I think we're certainly on the rise. If you look at the Center for Digital Government, maybe two years ago, they came out with their list of states and the best grade you can get is an A. And we're getting an A along with four other states. That's not just the enterprise shared services.
It's more of the direction and the innovation coming forward out of these states and how we've gotten alignment [across departments]. And a big part of that discussion really centers around IT consolidation and optimization and where we're going.
In Ohio, what we did was we built a private cloud and all the state agencies participate in the private cloud. And then we have the State of Ohio Computer Center. And I think if you were to look at our server and storage environments and all the other cloud solutions that we have, we're about, I would say, 93 percent in the cloud with all the things that we have going on in the state, which I think is pretty high. I think most states would have trouble saying that.
What has that done to costs?
Well, from the private cloud standpoint, we've seen a continual decrease in our server rates and our storage rates because of volume. And I think sometimes it's more about the efficiency and the agility that you get by using the cloud and leveraging those solutions than it is about cost savings.
Is it particularly difficult for state governments to adopt the cloud-first, shared services model?
It can be a challenge just because there's a change, right? I mean, culture is culture in pretty much any organization. Trying to get [department level CIOs] to adopt it is somewhat difficult when you have 26 different agencies and they pretty much are autonomous to what you do.
A very good example of that would be our enterprise document management system that we put in place two years ago. Just in DAS [Department of Administrative Services] alone, we had probably six different document management systems. And rather than tell them that they had to abandon what they were doing, we said, "Look, you can run this until its end of life. And then you need to look at the enterprise approach."
And now we're going gangbusters on it. They like it. It's right there and they can just access it. So that's worked out pretty well.
Just sign on the dotted line, right?
Exactly. The more the merrier, right, because we're a chargeback organization. So that works for us.
How much money have you saved the state since fully embracing this model?
So, from 2010 to 2012, we averaged about $40 million worth of purchases for service and storage because we had 26 different agencies doing their own thing. And I think last year, we spent about $1 million in servers and processing because it's all centrally managed, we have consistent patching, consistent management. And that raises the security posture for the state, as well.
That doesn't sound outrageous to me because I know how big the state is, right? Over 11 million people. So that's less than $4 a head, per year, but you've got that down to pennies now.
Yeah. And that's because we virtualized and because we consolidated the servers. I mean, that's exactly what that is. We get more bang for our buck. We're not spending the same dollars 26 different times. And 70 percent of our spend was on infrastructure and infrastructure operations because of 26 different agencies. Now, I think we're spending 60 percent on the applications and 40 percent on the infrastructure and operations. And I'm trying to drive that down to 30 percent. That's where I think the sweet spot is.
What are you working on now? What is top of mind for you as far as technology initiatives that you're looking at or have underway?
Well, the Ohio Business Gateway is always going to be one of those things. We're redesigning the user interface and looking at the business process and re-engineering that and trying to make it more user-friendly as you go through and pay your tax liabilities and make it more of a business one-stop shop where you can either start a business, you can grow the business, or you can maintain the business. And so that's a pretty big one right at the moment.
The other two initiatives I would bring up is our enterprise identity access management effort that we have going on. If I'm going to provide services to the citizens and the businesses of the state, I need to know who you are to be able to understand what applications and what programs would be beneficial for you.
If a citizen is already a Medicaid participant, there are other programs in other departments that you may not know about because you can't navigate the complexity of state government, right? I mean, how many websites do I have to go look at to figure that out? And if you're a Medicaid recipient, you are more than likely eligible for the heating and energy assistance program, which is in the Developmental Services Agency.
So we have a big effort going on there with the citizens, as well as the businesses and even the employees, which we just launched last Monday.
So kind of like a single sign-on that connects citizens and business with all of the services they need without them having to go find them?
Yes. And then we have a lot of activity going around data analytics. We've spent quite a bit of time of time trying to get contracts in place where we weren't necessarily buying tools, we were really buying solutions. So we pre-qualified a bunch of vendors, I think in the neighborhood of about 50 across 14 different disciplines, different areas from life science and public health to waste fraud and abuse, risk management, cybersecurity, workforce, public safety and security, crime corrections, and recidivism and education.
The intent is if we're going to do something to address the infant mortality challenges that we have in the state, it takes more than just Department of Health information. And so with infant mortality, I think we had 5 agencies participate, over 30 some data sets, and we're starting to get really good insight and observations from that.
As we send caregivers out and they're interviewing pregnant mothers, for example, it may give us a whole series of other questions that we've historically never asked. It's programmatic and, to your point, tactical. And there's also this whole strategic piece with policy decisions that we need to look at to make sure that our policies are in sync with the outcomes.
I get pretty excited about it, to be quite honest with you because it's one of the bigger game changers that is going on in the state that will change the way state government does business.
And we just launched Opiates [Governor's Cabinet Opiate Action Team], which is another [data analytics project]. I think there are five agencies involved in that one, too. And we're in the early stages of pulling that data together. We have another one that's set up for the Department of Developmental Disabilities that's really focused internally on just their department and all the data sets they have, and trying to sync those all across so they can have one view of their constituents if you will, and the support that they get.
What's been the challenge to using multiple data sets from disparate organizations in policy making? Is it political or just a technology challenge?
Actually, it's neither. It's more of the legal side of that equation and making sure that all the agencies are on board and sharing the data. That's probably been the biggest challenge we've had through the process. We did pass legislation that said basically, "Data is a state asset. It's not a department asset. It's not a division asset. It's not a program asset." And there are caveats to that, of course, with HIPAA and some of the compliance things that we have to deal with.
When people start to see some of the insights that we got out of the infant mortality piece, I think they'll understand the power of the data and be a little bit more willing to share it, as opposed to saying, "Well, we've never shared this data. We can't share this data."
We’ll say, show me where you can't share this data and, of course, they can't find it in most cases, why they can't share the data. Because it's just always been that way, right? We just never did. So I think when people start to see there is value to what they're doing and to a greater whole, I think we'll see a little bit less noise on the lack of data sharing that we really have.
People used to ask me, 'What's your measure of success for IT optimization?' I told them that we spend less time talking about why we can't do things and more time talking about the things we can do.
CIO, State of Ohio
It reminds me of IT optimization. People used to ask me, "You know, what's your measure of success for IT optimization?" And I told them that we spend less time talking about why we can't do things and more time talking about the things that we can do. I feel like the data analytics and the sharing of data were in that same place several years ago, where we spent a lot of time saying why we couldn’t do things.
Let's start talking about why we can. We crossed that hump with IT optimization and we're doing some pretty cool things. I think the agencies would strongly agree with that comment. I mean, it's not so much why we can't. It's like, "Well, how can we?" And we should. So I like that.
It's a better conversation to have for sure.
That goes back to the first question that you asked me—the evolution of this CIO role. I will tell you that we're moving away from the “boxes and wire” guys to the enablement of the business and innovation, which is a fun place to be. That evolution is partially because we have done the consolidation.
How are you communicating all of this? How do you communicate the value that you provide for the dollars the state has given you?
Well, I think there's a couple of different things. The one focus that we're always on is the enablement of the business. And if we're not engaged in the enablement of business, then we should probably get out of the room.
Enablement of businesses in the state or the business of the state?
Well, it's probably a little bit of both. But, for the most part, it's the business of the state. If we're not supporting our agencies and making sure that they're meeting the needs of their constituents, then we're doing something wrong. And if we can help them along this digital journey, if you will, I think that's really where the IT guys come in.
The challenge has always been inserting IT early enough. I think sometimes the business gets together and comes up with this great idea. They see a couple presentations because they don't know IT, right? Well, we may have some of those tools that can spin that up quicker or we may have contracts that are already in place that will support them. And the earlier we're in, the much better we are about providing value and having them see that value.
Is that one of the ways that your role has evolved, that you are now in these conversations earlier?
Oh, yeah, absolutely. I think with the governor's office, because a lot of that stuff starts there, it's saying, "You know, where is IT on this? Have you talked to OIT, Office of Information Technology? And what are their thoughts on this? Have you talked to them?" To the point where agencies just called us first because they knew they were gonna get the question.
How about funding? How have you managed to move the needle on innovation?
Oh, that's a great question. We are a chargeback agency so, for me to do a pilot or to do some innovative type activities, I have to bill the first guy who comes in the door, which is not only not fair, it's very difficult to find the one guy who's going to fund it all. So we talked about developing what we call the IT Development Fund where they had $13 million that was set aside to do innovative, new applications and enterprise shared services.
That's been in place for quite some time. I think last year, they cut it back to $9 million just because they were a little worried about the budget, but still, that has been a boon. And that's really what has helped fund some of the statements to work on the data analytics piece, as well. We leverage it for those kinds of things.
How do you manage chargebacks?
We have a usage tracker if you will. So we've had software that does sort of the usage tracking, which is really what defines what our chargeback model looks like. Our chargeback model, it's pretty straightforward because it encompasses salaries, benefits, any software, any hardware, any maintenance, any depreciation, and all of those things go in.
If I've got a team of 10 people and they're dedicated to, let's just say, the server environment, all the software, all the hardware, all of their salaries, all that kind of stuff goes in there. That's just what it costs for us to deliver it. So we've got standardization on our server specs. And we just put those things in there. And then these guys bill it out as a service. So the last I saw for FY '19 was like $200 bucks for a server environment [they run for other state agencies or a local government].
Our general intent is to not make money. We want to be even, and that's what we strive for.
Are you able to do that on spreadsheets?
Unfortunately, that's kind of how we've done it forever. We do have an effort right now, we're in the middle of the [IT financial management software] pilot. And I think that should be probably ending in the next month or so. And then we'll go into that and that's how we'll generate our bills. That's how we'll generate our rates and how we'll move forward from that point forward. So anxiously awaiting that to be in place.
Let’s end with this question: what's your biggest challenge? You’ve told me a couple times now it's cultural. Is that still where you're finding the biggest hurdles?
Yeah, I think so. I think change, you know? That's the other piece of it. The CIO ends up being a fairly sizable change agent. You know, everybody hates change. I mean, I don't think anybody likes it, but being in a position to adopt it and embrace it, I think is always going to be a challenge. And you've got your early adopters. And you've got sort of the middle. And then you're going to have the 20 percent that just isn't going to be there.
So what do you do about that?
You just continue to communicate. I mean, you just prove them wrong, right? I think that's where we are with our server rates. You know, we said this is how it was going to work. And everybody said, "Yeah, no way." And here we are, right? We've got over $162 million in documented savings. I mean, I can't imagine anybody coming in and saying, "Oh, this was a bad idea. We should let all the agencies just do whatever they want again," right?
The $162 million in savings is from what time frame?
That would be over the last five years. We saved that through retirement and attrition. So we've lowered the workforce by probably 600 folks through their own retirement and leaving.
And there are negotiations on contracts, as well as the consolidation piece itself. I know we were spending a big bunch of change on servers and storage. And now we're just not buying at that same spend as we used to.
That's great stuff, Stu. Thanks for your time.
About the interviewer: Allen Bernard is a technology journalist, editor and business writer, as well as the contributing editor for the TBM Council's book, "Technology Business Management: The Four Value Conversations CIOs Must Have With Their Businesses."
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