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NASCIO 2015: CIOs Explore Alternate Sourcing Models

Annual survey reveals a rise in managed services and outsourcing.

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As government IT departments continue to shutter state-owned and operated data centers, shared services and managed services are on the rise. If this trend continues, in the future states will run shared services organizations that take advantage of managed services and application outsourcing to deliver the bulk of the service portfolio.

That finding comes from the 2015 State CIO Survey conducted by CompTIA, Grant Thornton and NASCIO. The report, “The Value Equation: Agility in Sourcing, Software and Services,” is based on responses from state CIOs from 47 states and territories.

Today, four out of five states, or 80 percent, outsource at least some IT applications and services, compared with 42 percent in 2010. A full 62 percent of state CIOs intend to expand an existing IT shared services model; 55 percent plan to outsource business applications through Software as a Service; and 53 percent aim to expand an existing managed services model. Not surprisingly, only two percent plan to build new data centers and increase state IT staff.

Speaking at the NASCIO 2015 Annual Conference in Salt Lake City this week, Florida CIO Jason Allison said his state is exploring alternate sourcing strategies. “We’re actively shrinking our data center footprint and moving out of the business of potentially providing the services,” he said. “It’s prudent to put it in the hands of an efficient, productive provider.”

Connecticut CIO Mark Raymond says cloud computing resonates with him. “There’s a recognition that we can’t do it all ourselves.”

In the aftermath of the school shooting in Newtown, Conn., the state had to make 9 gigabytes of data available to the public. “We put it on Amazon and were seeing 20 gigabits per second,” Raymond said. “Two days later it was a nonevent and cost $6,000 in total.”

He also cited election reporting as an example of a traffic spike best accommodated through outsourcing. “You don’t need the infrastructure sitting around for that.”

Although Florida has many legacy applications, Allison sees the value in outsourcing. “SaaS makes sense, especially for anything the agency intends to do on a net-new level,” he said.

Over time, Allison intends to guide his state toward a broker model. “We want agencies and customers to come to us with what they need, not with how to do it,” he said. “Obviously, the marketplace moves quickly. It’s our job to know their business well.”

Find all of our NASCIO 2015 coverage here.

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