1. 1 expect the best www.vita.virginia.gov Lemuel C. Stewart, Jr. Chief Information Officer of the Commonwealth Council on Technology Services August 25, 2005 Transforming Information Technology in the Commonwealth

2. 2 expect the best www.vita.virginia.gov Objectives What is Transformation? PPEA as the best vehicle for Transformation PPEA history and timeline Infrastructure PPEA Goals How will Transformation affect you? Conclusions

3. 3 expect the best www.vita.virginia.gov Transformation & PPEA Common themes about current state of IT –IT investments are managed effectively—we are doing things the right way –Agency-centric approach is OK—we don’t need to change the way we do business –Consolidation means large, immediate cost savings Extensive due diligence results support the need to change the way we do business

4. 4 expect the best www.vita.virginia.gov Current State—Infrastructure Capacity “Dashboard” 0 1000 20 40 60 80 20 40 60 80 100 20 40 60 80 0 0 100 20 40 60 80 3,000 Servers <20%160,000 Network Connections <60% Website compliance with Sec. 508 23% Desktop Computing Capacity <10% (vs. Grid Computing)

5. 5 expect the best www.vita.virginia.gov What Does Transformation Look Like? IT InvestmentPresent StateFuture State SecurityInadequateAdequate NetworkFragmentedIntegrated ServersNumerous locations, excess capacity (3,000+) Consolidated (<1,000) Computing environment InconsistentStandardized Help desk supportMultiple (70+)Combined (1) Service levelsUndefined performance, varying costs Defined performance, predictable costs PCsIncompatible, outdatedCompatible platforms, scheduled replacement

6. 6 expect the best www.vita.virginia.gov What is Transformation? Long term re-engineering effort –7 to 10 years Requires significant investment –$200 to $250 million to re-engineer the IT infrastructure and business processes Challenges –Self-funded model = invest save re-invest –Behavioral and cultural changes –No major, immediate cost savings –Re-engineering existing business processes

7. 7 expect the best www.vita.virginia.gov How do we get to the future state? PPEA Is Best Vehicle for Transformation Innovative funding: PPEA provides access beyond biennial budget to substantial dollars required to recapitalize and revitalize Virginia’s IT infrastructure Flexible Approach: PPEA encourages private sector to bring innovative ideas and considerable expertise to benefit the Commonwealth Unique Partner: PPEA allows VITA to team with a partner who: –Will share the risk –Is committed to Virginia –Has successfully achieved transformation before –Possesses the capability to manage and serve the technology needs of an organization the size and scope of the COV.

8. 8 expect the best www.vita.virginia.gov PPEA Timeline DateActivity July 2003VITA created Nov 2003 – March 2004 VITA receives 5 unsolicited PPEA proposals April 20044 proposals accepted for Conceptual Review June 2004Conceptual proposals posted for competition Aug 2004Conceptual review of 4 proposals Nov 2004Proposals split into two tracks: (1)Infrastructure IBM and Northrop Grumman (2) Enterprise Applications CGI-AMS and IBM

9. 9 expect the best www.vita.virginia.gov PPEA = Two Tracks Infrastructure The hardware, networks and associated services and staff –Mainframe Computers, Servers and Desktops –Voice and Data Networks –Operating Systems, Email and Security –Help Desk Services –Data Center Facilities Enterprise Applications Those business processes and associated software applications that are used across state government –Human Resources Management –Financial Management –Accounting –Budgeting –Procurement –Others administrative and duplicative business processes

10. 10 expect the best www.vita.virginia.gov Different Tracks, Different Roles Infrastructure Business Owner IT Investment Board Program Management CIO and VITA IT Investment Board As business owner, responsible for project oversight, management, and recommendations Enterprise Applications Business Owners Secretaries of Admin & Finance Program Management Office of the Governor, CIO/VITA support to ensure consistency IT Investment Board Responsible for oversight of IT portion, similar to any other major IT project in the portfolio

11. 11 expect the best www.vita.virginia.gov Infrastructure PPEA Timeline DateActivity Jan 2005Joint Due Diligence initiated March 2005COTS PPEA Review Workgroup created April 2005Proposal packages released to vendors Detailed proposal development June 2005Detailed proposals received by VITA Highly collaborative, detailed review begins Aug 2005Infrastructure PPEA Steering Committee develops recommendation based on input from wide range of stakeholders and subject matter experts Aug 10, 2005 IT Investment Board approves Steering Committee recommendation to commence formal negotiations

12. 12 expect the best www.vita.virginia.gov Infrastructure PPEA—Participation Highly collaborative review –60 individuals representing 14 agencies 1 cabinet Secretary and 2 deputies 2 IT Investment Board members and the CIO –Council on Technology Services Workgroup Chaired by Dave Burhop of DMV 9 members representing 7 agencies, including Judicial and Legislative branches, local government, and higher education –Independent review Gartner Gordon & Glickson PA Consulting

13. 13 expect the best www.vita.virginia.gov Infrastructure Partnership “Musts” Employees MUST be treated fairly and equitably No additional GF or taxpayer dollars No increased cost over our FY05 baseline expense level No impact on our bond rating Must have skin in the game—investment & risks Must provide value to citizens –Economic development component Provide more efficient and modern IT environment that improves services No off-shoring of services

14. 14 expect the best www.vita.virginia.gov Infrastructure Vendor Proposal Summary Continuous Process-based Improvements, supported by a Service Level Approach Technology Refresh Facilities Economic Development Strong Management Commitment Integrated Change Management and Communications Comprehensive Transition Plan Employee Commitment Disentanglement Plan

15. 15 expect the best www.vita.virginia.gov PPEA = Flexibility How do we account for future budget cuts? –Set floor below baseline to provide flexibility –CA subject to budget reductions and appropriations –Baseline not only for executive branch agencies, but also for localities, leading to economies of scale leading to overall rate reduction What happens when the contract ends? –Ability to negotiate disentanglement strategy No balloon payments Addresses people, facilities, equipment, contracts, licenses –Ability to re-compete (San Diego County) –Ability to “take it all back” in-house

16. 16 expect the best www.vita.virginia.gov Business Decisions Lease vs. Own –IT infrastructure is like a utility –Commonwealth decided long ago to lease, not own, utilities like power, water, and gas –Our telecommunications infrastructure is leased –Utility concept is industry trend –Competitive market – not stuck with one vendor Timing of potential agreement –Preparations for more than 8 months –Proposals received in 2003 and 2004 –Overdue from what was envisioned by General Assembly in 2004 –Infrastructure improvements LONG overdue –Commonwealth cannot afford to wait any longer

17. 17 expect the best www.vita.virginia.gov How will Transformation affect you? Predictable, consistent service at predictable, consistent prices Common infrastructure promotes ability to deploy enterprise wide solutions and cross- cutting systems Common infrastructure promotes ability to provide consistent, more integrated services to citizens Increased buying power will drive down costs Ability to shift emphasis from infrastructure to applications development and service delivery

18. 18 expect the best www.vita.virginia.gov Conclusion PPEA is the best vehicle for achieving Transformation We will not sign an agreement unless –Employees are treated fairly and equitably –Potential partnership will improve infrastructure and services –Transformation will not cost any more than FY05 baseline spend –Potential partner invests in Virginia We cannot afford to wait any longer to Transform –Legislative mandate and driver in creating VITA –Incumbent on us to spend taxpayer dollars wisely and invest in better services

19. 19 expect the best www.vita.virginia.gov For More Information on VITA www.vita.virginia.gov Lemuel C. Stewart, Jr CIO of the Commonwealth 804.343.9002 lem.stewart@vita.virginia.gov