Cautionary tales

Although there are plenty of benefits to partnerships with the private sector, the decision to do so needs to be made with great care.

Connecticut and San Diego County, Calif., for example, experienced problems after deciding to enter into large information technology outsourcing arrangements, in large part, observers say, because they didn't define their requirements and expectations properly.

Connecticut canceled its contract (reportedly worth $1.5 billion during 10 years) before it even got off the ground because of concerns over whether promised cost-savings and efficiencies could be realized. And San Diego County, which still holds a seven-year, $644 million deal with Computer Sciences Corp. for IT and telecommunications services, applications, networks, and desktop and data center operations, settled a contract dispute this past summer after charging that the company hadn't met agreed-upon milestones and service levels.

"The biggest risk you have with outsourcing or any other private-sector arrangement is for you to define what you need differently than they define what they're offering," said Larry Singer, Georgia's chief information officer.

Other advice for state and local officials trying to decide whether to outsource:

* Ask if this is the best course. Cost savings is a definite plus, but a third-party vendor should offer some value above and beyond what your in-house staff can provide. Other benefits include access to better technology, greater expertise than you have in-house, or the ability to move to a common platform or spread efficiencies across agencies.

* Prepare yourself for the difficult job of administering an outsourced environment. It requires not only technology expertise but also contract expertise — understanding how to properly source an IT project to an external vendor and the ins and outs of measuring vendor performance.

* Determine your goals upfront. Know what your requirements and expectations are and set them out in clearly defined, measurable service-level agreements.

* Be very deliberate when choosing a provider. Gauge candidates by their experience, their knowledge of state and local governments' missions and regulations, their operations and — not to be overlooked in today's shaky business environment — their financial stability.