Perils of Privatization

The Texas program and others like it are rekindling an old technology policy debate:

Is it right to spend the shrinking human-services tax dollar on information technology? To the information systems professional, it's nearly impossible to look at Texas's short list of requirements- consolidation, error reduction, increased efficiency and reduced overhead costs-and not envision an IT-based solution. But the average citizen and policy-maker may not see it that way.

"Technology is not a foregone conclusion," warned Bob Greeves, a Vienna, Va.-based consultant on state and local government IT policies. "Technologists would like you to believe that, and the people fueling the market for technology would like you to believe there is no other solution, but governors and their policy staffs are resisting the idea of spending program money for IT just to meet reporting standards." For a system to truly succeed, Greeves says, it must promise and then deliver measurable, short-range service-delivery improvements.

The perception that states are taking cash out of people's pockets to spend on computers is a potent but misleading image, says Jerry Mechling, director of Harvard University's Program on Strategic Computing. "There is always an administrative cost to giving people money. It costs money for heat, lights, application verification [and] distribution. Any system will cost less and leave more of the total pie [for clients] if you're more efficient." Mechling says it falls on the shoulders of state and local IT managers to present their cases to the public in understandable, justifiable ways.

Despite strong opposition to privatization in most states, both private IT professionals and public-policy analysts agree that some form of private/public partnership is all but inevitable. "State organizations have not achieved flexibility to move into new business practices," said Robert Carlson, director of health and human services at the Bethesda, Md., office of IBM Corporation of America. Among the inhibitors, Carlson said, are "a combination of procurement practices, business strategies, leadership and the structure of delivery of services."

Procurement practices, in particular, are a hindrance to the quick roll-out of new technology. "Technology has a lifeline of less than nine months, but state procurements are two years at minimum," Carlson said. Holli Ploog, senior vice president of business development in the Washington, D.C., office of Lockheed Martin IMS, seconded his opinion: "When we see a need within our operation to add more personnel or more PCs, we make a business decision, and we move forward. We don't have to go after competitive bids, go through the legislature and board of supervisors or get an appropriation."

Bidders and analysts agree that hiring, rewarding and keeping talented IT people also is difficult for state governments. Some believe there has been a brain drain in state IT, with the best and the brightest moving into the private sector. "Today when we look at the profile of the IT shop on a state level, we see older Cobol programmers, very few of whom are conversant in C or wide-area network management," said Robert Tyre, global managing partner for human services at Andersen Consulting Inc. "You are not going to see a lot of 21- to 30-year-old IT professionals entering government-service IT."

Others say it is nearly impossible for states to hang onto good people once they've found them. "It's hard to manage the employee work force in the public sector," said Louis Matrone, vice president for state and local government at Electronic Data Systems Corp. "There are agencies in Texas that haven't had a raise for five or six years. We can pay for performance rather than just paying for a job."

But all this pessimism doesn't mean state IT management simply should step aside and let corporations take over. "Almost all large systems are now built as collaborations between private companies and the government," Harvard's Mechling said. "What the government has is a lot of knowledge of how processes work or should work. State workers have to be able to manage systems and to tell good systems from the bad."

Technology managers on the state level also should take seriously their role as evangelists. Teamed with program experts, IT specialists can help fashion clear, simple business cases that justify the use of public money for technology. Analysts such as Greeves say this is essential to the outcome of projects like the one in Texas. "Unless the combination - and I emphasize the word combination - of program people and IT people can make a business case for what they're going to do to improve service delivery, policy people won't buy into any of this."

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