First 16 projects cost $471 million but deliver only $382 million in short-term financial benefits

San Francisco – The California state government has taken important steps to improving the management of public information technology assets, but a new study from the San Francisco-based Pacific Research Institute concludes that tougher policy reforms are needed to protect taxpayer dollars and personal privacy.

California Disconnect, written by Vince Vasquez, senior policy analyst at the National University System Institute, and Hance Haney, senior fellow at the Discovery Institute, assesses the state’s recent IT reorganization plan and its progress to date in reducing financial waste and promoting economic growth. The authors conclude that critical programs and legal safeguards to ensure cost reduction and maximum transparency are alarmingly absent from the IT reorganization plan. According to the study, the first 16 IT projects approved under the new Capital Plan include more than $471 million in spending but expected to deliver only $382 million in “financial benefits” over five years, making these projects net losers in the short term.

The projects also exacerbate the burden state government places on the economic viability of Silicon Valley, the hotbed of IT innovation in California. “Arbitrarily forcing policies like product uniformity and technology standards are bad public policy,” said Mr. Vasquez. He added that such interference from Sacramento can stifle innovation and throw up unnecessary road blocks to job creation and economic productivity.

The authors conclude that California taxpayers have few guarantees in the Capital and Strategic IT Plans that cost savings will be a priority. They offer the following policy recommendations to reform the strategic planning process:

1. Outsourcing – the strategic planning process should include a study to evaluate whether greater outsourcing of IT services to private contractors could eliminate costly investments while still meeting the needs of state agencies.
2. Transparency - The state should mandate agencies to identify data and information that could be delivered to the public through improved IT systems.
3. Performance Measures – The Office of the Chief Information Officer (OCIO) should consult the Department of Finance and other state CIOs to identify best practices and the most useful performance measures for IT functions.
4. Cost Reductions – Include the requirements to minimize overlap, redundancy, and costs not just at the last step of the process when capital projects are approved, but at every state of the strategic planning process, ensuring that efficiency and cost-reduction principles guide in the establishment or approval of strategic concepts, strategies, goals, actions, and capital projects.
5. Open Source Software – The OCIO should consider a ban of agency preferences for Open Source Software. Mandates or biases for particular brand, vendor, or development model are anathema to an open public process and should be avoided by rooting strategic planning and procurement in the full use of cost-benefit analysis and transparency.

“In order to take full advantage of technological innovation, government must move away from a culture that is focused on parochial interests to one that is more customer-focused, service-based, and open to partnering with private industry,” said co-author Hance Haney. The strategic planning process will have repercussions that extend far beyond the limits of government; the success of Silicon Valley and all of California’s IT vendors is based in part on a strong economic climate and favorable regulatory conditions. “All eyes will be on California IT officials to see whether market forces and innovation win the day in Sacramento,” said Mr. Vasquez.

 

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For 30 years, the Pacific Research Institute (PRI) has championed freedom, opportunity, and individual responsibility through free-market policy solutions. PRI is a non-profit, non-partisan organization. For more information please visit our web site at http://www.pacificreseach.org