When I was named chief information officer for the state of Connecticut, every state agency handled its own information technology. There was no statewide strategy, no central operation.
Working with then-Gov. John Rowland in 1998, we proposed to contract out the state’s information-technology operations. Success of the “outsourcing” arrangement wouldn’t be measured by milliseconds of transaction speed. Instead, we wanted to measure business outcomes such as reducing lines at the Department of Motor Vehicles by enabling motorists to renew their licenses online.
We got great proposals from the three big domestic outsourcing companies: EDS, IBM and CSC. We focused on EDS because its proposal would transform government—linking thousands of computers at dozens of state agencies to let Connecticut’s citizens access services online even if they weren’t sure which agency delivered what service.
The plan ignited a firestorm. A union that represented 1,000 state information workers didn’t want those jobs transferred to EDS. Even though plans called for giving the workers a two-year guarantee of employment at EDS, union opposition never subsided.
The state’s executive branch and EDS agreed on most provisions of a $1.4 billion, seven-year contract. A big sticking point, though, involved the state’s payments to the company in the contract’s latter years.
EDS wanted us to project how much computing power and storage space we’d use for seven years, from the contract’s start. Let’s say we planned to use 20 terabytes of storage in year two and 40 in year seven, but instead used 80 terabytes in the seventh year. Under the contract, we would have to pay a penalty for using twice as much storage as the baseline.
We wanted the baseline to be re-evaluated every 18 months. Under that formula, we might project that by year seven we’d be using 70 terabytes. If we actually used 80, we’d pay the adjustment fee for 10 additional terabytes, not 40.
This stymied negotiations. EDS’ main negotiator set up a telephone conference between EDS chairman Dick Brown and Governor Rowland. I was in the governor’s office during that call. At one point, Rowland said, “$900 million,” repeating Brown. The governor then whispered to me: “What’s $900 million?”
I had no idea. The governor didn’t press for an answer, but he and Brown agreed to let negotiations continue two more weeks.
Minutes later, the phone rang. Brown said he’d been briefed on the wrong deal. He was referring to a deal for New Zealand—not Connecticut. That shattered our confidence in EDS. This was a billion-dollar-plus deal; they had confused us with another customer.
At that point, the deal with EDS essentially died. We couldn’t defend the contract before the General Assembly without hesitation. You must have complete confidence in your business partners. That’s critical when your decisions come under scrutiny of legislators, citizens, employees and the media.
From there, we took what we had learned from EDS, IBM and CSC and created a central agency to handle information technology and standardize some technologies we already used, such as storage. We got rid of 100 financial and human-resources systems and replaced them with an enterprise resource planning system from PeopleSoft.
We brought one-half of the state’s I.T. workers under the central agency, but the other half remain dispersed among more than 60 state agencies. That’s because some managers and workers opposed the move.
It’s more difficult to work in government than a private company. In government, you might be ordered to defend your proposal before a legislative committee, deal with grievances from union workers who contend their work rules have been changed, or fight opposition from department managers who want to maintain the status quo.
While every organization is political, politics is most difficult when it’s a profession.
