The Dossier: Carolyn Purcell

CIO: Carolyn Purcell (8 years on the job)

Budget Deficit: $9.9 billion shortfall.

What That Means for IT Budget: 7 percent cut for 2003; projected 12.5 percent cut for 2004. The state spends $2 billion total on IT. The Department of Information Resources has an $80 million budget.

Priorities: Texas Online portal (www. texasonline.com), cooperative contracts program, project management office, security, architecture and telecommunications.

Cuts: Administrative expenses such as travel and vacant positions.

Methodology: Managing her project portfolio according to the value each project provides to the state.

The Problem: In his state of the state address last January, Texas Gov. Rick Perry unveiled a spending plan that starts at zero dollars for every agency. “In tough budgetary times, every dollar spent by government must be scrutinized to determine whether it justifies consideration as a priority. We must reject the notion that government must continue to do things just because that’s the way we have always done it,” Perry said.

The Process: Even though her budget did not go to zero, Purcell, executive director of Texas’s Department of Information Resources, still faces substantial reductions. She says deciding what to cut is a matter of zeroing in on the services that her department provides that make “the biggest contribution to the efficiency and effectiveness of state government.” Key to her department’s mission: providing the state’s telecom infrastructure; running the state portal, Texas Online; setting IT standards; and negotiating contracts with vendors.

Improving contract administration is one of Purcell’s top priorities. Her department is also concentrating on negotiating contracts to reduce IT costs, and Purcell says, “Sometimes, we just don’t do a good job of writing and administering contracts.” Likewise, her project management office will continue to receive support because its function is to ensure that projects are completed on time and on budget.

While she doesn’t expect the state to make any new investments in IT, initiatives that offer an immediate payback or that can be done at no cost to the budget may move forward. Texas Online is one such example; it pays for itself through the revenue from convenience fees charged to citizens who use it to renew their car registrations or hunting and fishing licenses.

Once Purcell has identified the initiatives that offer the state the most value, she then cuts items and projects that don’t contribute as much. For instance, she’s cut travel because there just isn’t money in the budget for conferences, training sessions or meetings with vendors. In addition, she has cut vacant positions and is considering layoffs.

She is also working with vendors that are willing to assume the risk she takes when she invests in a new product. She doesn’t pay the vendor until the hardware or software shows a payback. When it does, she pays the vendor out of her savings. For example, in the development of Texas Online, BearingPoint assumed the portal’s up-front capital investment. When the state began generating revenue from convenience fees, Purcell paid BearingPoint for its services with that revenue. She says the comptroller’s office partnered with a company that provides software to detect Medicaid fraud a few years ago and later paid the provider out of money the state collected on fraud cases the software discovered.

Purcell says this model of vendor partnerships could work in the private sector. “The private sector is even better at partnering than we are,” she says. She believes this model is valuable not just because it saves the seller from taking on risk during difficult economic times but also because it focuses the buyer and the vendor on the same goals, which helps make projects run more successfully.

As challenging as these times are, Purcell believes the steps she’s taking to make state IT operations work more efficiently will better position them for the future. “It’s an opportunity for us to say, ’It’s time to consolidate. Let’s make investments and get stronger.’ After we recover some, and if we play our cards right and do our jobs right now, we’ll have a more entrenched position at the executive table,” she says.

An Expert’s View: Improving contract management for IT projects is a key area for attention in Texas, says Sherri Greenberg. Greenberg is a former lawmaker who served on the Texas House Appropriations Committee and studied information systems issues and now lectures at the University of Texas’s Lyndon B. Johnson School of Public Affairs. She says poorly managed contracts can cause state agencies to “hemorrhage money,” especially when contracts for new information systems fail to include the cost of staff training. The agency ends up either paying extra to the contract vendor for training services or hires another company to provide the training. “When I was on the Appropriations Committee in the Texas legislature, I personally saw where the failure to write and administer contracts well has cost the state and state agencies a lot of unnecessary money,” she says.