State CIOs Fighting Budget Battles with Technology

By David Hutchins

(Back to article)

State and local agencies are under constant pressure to provide high-quality services to citizens while managing budget reductions. While some economic indicators are improving, agency budgets are not forecasted to recover in the short term. According to an August survey by the National Association of State Chief Information Officers (NASCIO), The 2010 State CIO Survey: Perspectives and Trends from State Government IT Leaders , two-thirds of state CIOs expect even lower IT budgets through 2013. Consequently, budgets and cost control are among the top management priorities for state IT pros across the country in 2011, according to NASCIO’s October survey,State CIO Priorities for 2011 .

The latest Census Bureau figures support the CIOs’ bleak outlook: Total state government revenue was $1.1 trillion in 2009, a decline of 30.8 percent from $1.6 trillion in 2008. At the same time, general state government expenditures rose three percent in 2009 over 2008, topping $1.5 trillion and led by expenditures for education, public welfare as well as health and hospitals.

Perhaps not surprisingly, NASCIO and CDW-G, in separate studies, found that CIOs are responding to budget restrictions by devising solutions that increase IT efficiency and effectiveness. One state CIO remarked to NASCIO, “The size of the IT portfolio increases, but the budget decreases; this has not been easy at all. The budget situation has provided us with a crisis, but because of that we are breaking through barriers that we would have never even been able to approach.”

Historically, one of those barriers has been the sharing of data center resources. Yet in its third annualEnergy Efficient IT Report , published in November 2010, CDW-G found that 77 percent of state and local government respondents have or are developing a specific data center consolidation strategy, with their No. 1 goal being reduced expenditures on data center hardware, software and operations (71 percent), followed by reduced energy consumption (53 percent) and increased use of new and more efficient computing platforms and technologies (46 percent).

While data center consolidation can achieve considerable economies of scale, many government IT executives recognize that it may be a hard sell for IT professionals accustomed to having direct oversight of their agency IT resources. This is where the current budget environment brings out CIOs’ creativity and management savvy. For example, one CIO responding to NASCIO’s survey noted that the state is planning to group agencies into data center virtualization “communities of interest” for public safety, commerce and other agencies that handle similar types of information. The state realizes a better ROI on its technology investment while its agency IT stakeholders have reassurance that the state recognizes -- and is addressing -- their concerns.

The CDW-G and NASCIO studies also found that many state and local IT managers are turning to energy efficiency strategies to keep up with expanding IT portfolios and stay within budget. According to CDW-G's Energy Efficient IT Report, 62 percent of state and local agencies have or are developing programs to manage and reduce energy use in IT. Of those agencies, 52 percent have realized savings of up to 20 percent – and 12 percent achieved even greater savings. CDW-G’s report explores the status, strategies and barriers for government, education and business organizations adopting energy efficient IT. Survey respondents included 150 state and local IT professionals.

NASCIO’s August study found that about one in four CIOs reported having, retrofitting or building “green” data centers and facilities, including using virtualization, and almost all (92%) said their state governments view green technology as a way to save money on energy costs. One CIO remarked, “We can save $20 to $22 million dollars a year with smart facilities technology such as auto shutoffs. Energy should be treated like a commodity, with solid foundations around it, [including] power management, facility management [and] energy efficient purchases.”

Local governments are also realizing substantial savings with energy efficient IT. The City of Chesapeake, Va., for example, reinvested funds designated to replace existing servers to instead consolidate its server count; cutting its IT energy costs by 50 percent. This lead to an annual savings of $36,000 on energy and $200,000 on hardware. Still, while many state and local IT professionals understand that results like those realized in Chesapeake, Va., are possible, they also say their No. 1 barrier to the adoption of energy efficient programs is budget restrictions. Respondents noted that often they have too few budget dollars left for new, more efficient IT systems after meeting internal client demands.

To successfully implement energy efficient programs while managing budget constraints, CDW-G recommends that government IT professionals consider the following:

In addition, Chesapeake CIO Peter Wallace recommends that state and local agencies capture their current costs as a benchmark to compare to the end result. “Proving a reduction in total cost of ownership is the only way to truly show the value of IT in today’s economic climate,” he said.

David Hutchins is director of state and local government sales at CDW Government (CDW-G), a leading source of IT solutions to governments and educators. Hutchins is responsible for leading the team of sales executives and account managers focused on meeting the unique needs of CDW-G state and local customers.