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Hidden costs in the cloud

Deltek is pleased to present a guest blog on cloud computing from Microsoft. Over the next year, the General Government Services team will be looking to partner with leading vendors in the fields of cloud computing, enterprise resource planning software, student and teacher information systems, statewide longitudinal educational data systems and other core technologies tracked in the GovWin IQ Opportunities Database. Special thanks to Joel Cherkis and Michele Bedford Thistle for contributing their valuable insight and opinions regarding cloud computing. Click here to view Joel's blog on cloud computing and shared services.  
If you are interested in guest blogging for Deltek in the topics mentioned above, reach out to DerekJohnson@deltek.com for more information! Meanwhile, be sure to follow us on LinkedIn! 
As governments continue to steadily march toward integrating the cloud into their daily IT operations, it is important to try and cut through as much of the hype and hoopla as possible to understand the return on investment IT managers are getting. One of the main alleged benefits of the cloud surrounds the cost savings that governments and businesses can find by shedding IT infrastructure and data center costs through software-as-a-service (SaaS) and infrastructure-as-a-service (IaaS).
At the outset of the cloud phenomenon, this benefit was largely couched in hypothetical terms, such as “moving to the cloud could yield cost savings.” Since then, we have seen thousands of public and private sector organizations execute cloud migration strategies, and their experiences have led to the discovery of some significant caveats and holes in this theory. Cloud computing “allows savings only in the sense that you no longer have to provision servers based on your peak demands,” according to Tech Republic writer Thoran Rodrigues, adding that if your computing resource needs are steady, “there isn’t any real gain.” 
Many veterans of cloud migration compare outsourcing their software or infrastructure to the cloud with leasing a car or hiring a taxi to provide transportation. You can save some real scratch in the short term by shifting the cost burden for commodities such as gas, maintenance and repairs onto a third party. However, since you are paying a higher rate per mile than you would if you owned your own car, these returns tend to diminish over time. After a certain point, hiring a taxi to drive you everywhere will become cost-prohibitive. This is not a perfect analogy, but it helps illustrate why simply assuming you will automatically save money through cloud implementation may get you into trouble.
If you frequent technology conferences where public and private CIOs discuss their experiences with the cloud, you will find that this sort of trepidation around cost savings is beginning to permeate the marketplace. A recent survey commissioned by Symantec on the hidden costs of the cloud yield some fascinating results that should give IT managers pause before they pitch their cloud projects as big-time money savers. 
Depending on how an organization executes its strategy, the overall cost reductions could be diminished or wiped out altogether. Among the biggest mistakes organizations make are rogue cloud deployments where a single department or agency within an organization moves some aspect of its infrastructure to the cloud without coordinating with the rest of IT. Further missteps include costly, decentralized and sluggish disaster recovery operations, and poor cloud storage utilization strategies. Specifically, of the 3,236 organizations that responded to the survey, 68 percent said they experienced a data recovery failure in the cloud, while 79 percent claimed that the frequency of rogue cloud deployments within their organization has either remained steady or is becoming more of a problem.
These are fairly shocking numbers and emphasize the need for a coordinated, enterprise-wide strategic approach to cloud implementation if organizations want to yield any cost savings. Centralizing the procurement and migration process through IT, and bringing in consultants to navigate potential pitfalls and relay best practices is essential to executing a smart cloud strategy. 
To learn more about cloud computing procurement in the state and local marketplace, be sure to check out Deltek’s 2012 report, “Creating the Hybrid Cloud,” by research analyst Derek Johnson (subscription required).

Arizona Releases Statewide Strategic IT Plan For 2013 To Improve Efficiencies

The Arizona Strategic Enterprise Technology (ASET) Office has released a Statewide Strategic IT plan for fiscal 2013 which builds on Governor Janice Brewer’s agenda by leveraging technology to enable a “more innovative, efficient, and sustainable government.”
In July 2011, Arizona’s Government Information Technology Agency merged with the Arizona Department of Administration’s Information Services Division to form the ASET Office, which now develops and executes the statewide IT strategy, while providing capabilities, services and infrastructure to ensure the continuity of mission critical and essential systems for the state.
As part of the Statewide Strategic IT Plan, which was developed in conjunction with the Governor’s Office, eight transformational initiatives were identified, defined and scoped to develop the strategic plan for 2013. These initiatives are expected to have a significant impact on the state as a whole - ensuring the business continuity and security of statewide assets, while providing citizens with the ability to access state services anywhere, any time.
Below, we highlight each of the initiatives which encompass the strategic plan for 2013, and detail how these will help the state moving forward:
1.     Implement a Continuous Improvement Culture - As part of the Governor’s commitment to reform state government, the Government Transformation Office (GTO) was established within the Department of Administration to implement a statewide continuous improvement program focused on education, process improvement projects, and capital impact.
 
Moving forward, Arizona will coordinate with the GTO to adopt improved and efficient policies and procedures. This coordinated effort will result in automating policies and procedures that are free of waste and inefficiency.  With an emphasis on service excellence and customer centricity, Centers of Excellence will be established throughout the state, which will offer recognition and reinforcement to best practices, while providing an opportunity for continued shared learning, as well as a continuous improvement culture.
 
2.     Accelerate Statewide Enterprise Architecture Adoptions and Asset Management - Over the past year, Arizona has made significant progress on the adoption of a statewide Enterprise Architecture (EA) strategy and framework. An EA advisory committee was established, a charter was developed and ratified, and an EA framework was selected. Accelerating this planning methodology throughout the state will result in “a more agile, efficient organization with more effective decision-making capabilities.”
 
As part of the EA expansion, Arizona will start with an assessment of technology contracts, infrastructure and applications. It will also begin to define and adopt a statewide Data Governance Model to improve the quality and accessibility of information. Together, these
capabilities will accelerate the business decision-making process, streamline the planning and procurement of statewide assets, and reduce the overall cost of doing business.
 
3.     Implement A New Statewide Enterprise Resource Planning (ERP) Solution - In January 2012, Governor Brewer addressed her plan for operational reform. The state’s accounting system which is a central operational system for the state’s employees, customers, and vendors is an outdated system with antiquated software and no external support. When the system fails, the consequences will span beyond the state and will ultimately impact our schools, businesses, and community. Therefore, Arizona plans to implement a statewide ERP system that will replace the Arizona Financial Information System (AFIS) and a number of other central and agency-specific administrative systems. It will also provide new administrative system functionality that will benefit the entire state. The benefits from replacing this outdated system will be more efficient and effective business processes, better informed and faster decision making, and improved business continuity.
 
4.     Expand E-government and Mobility Capabilities - In order to fulfill its vision, Arizona will begin to develop a statewide web platform to provide agencies with full content management functionality, mobile compatibility, and user identity management. Ultimately, this will allow agencies to deliver services faster, more consistently and securely, and to any device utilized by its citizens.
 
The state web portal (www.az.gov) is the gateway to Arizona, which contains invaluable information about how citizens work, live, play, and interact with state government. A collaborative approach with key stakeholders will be established to modernize the state web portal by developing a new design, adding new capabilities, and making it easier for citizens to access state services.
 
5.     Implement Critical Business Continuity Improvements at the State Data Center - The State Data Center currently houses technology systems that are mission critical to the continuity of business. There are more than 140 state entities that leverage the data center’s infrastructure, services, and capabilities. Ensuring these systems are operational and secure is absolutely critical to the functions of the state. Arizona will begin initiatives to upgrade critical aspects of the facility itself, ensure redundancy and continuity of critical systems, and increase capacity to support the growing number of agency customers.
 
In addition to upgrading the current environment, Arizona will also facilitate the foundation of a cloud-computing environment by beginning to build a comprehensive virtualization infrastructure. By providing capabilities such as self-provisioning, service monitoring, and capacity management, the state will begin to provide state agencies with a cost-effective model for moving to “the cloud.” This will also allow for an improved way to plan and manage the cost of IT. Moving IT costs from a capital expenditure (CAPEX) to an operational expenditure (OPEX) model will result in a consistent sustainable model that will improve IT cost planning.
 
6.     Implement a New Statewide Infrastructure & Communications Network -The AZNet program was established several years ago to ensure Arizona has a cost effective, efficient and consolidated shared telecommunications infrastructure to meet the needs of government agencies, their employees and the public. The next generation of the program is in progress to refresh the current infrastructure. This refresh will be an expansion of the central ring, which will extend out network capabilities to agencies that are currently unable to receive services on the state network. Ultimately, this program will provide improved business continuity, reduced costs, and improved connectivity.
 
Additionally, the Digital Arizona program is playing an active strategic role in changing the definition of infrastructure and addressing middle-mile issues throughout the state of Arizona. The impact of this program is far reaching and will benefit education, economic development, public safety, and healthcare.
 
7.     Enhance Statewide Security and Privacy Capabilities and Training - Protecting citizen data, as well as the privacy of state employees, are of the highest priority for state agencies. Due to the sensitivity of government data, the state’s environment of diverse technologies and data sources requires adoption of robust and effective operational security and privacy programs.
 
As part of this initiative, Arizona will strengthen cyber security and privacy operations by supporting essential cyber-security technologies and continuing the implementation of a single-sign-on solution for all state employees. In addition, Arizona will optimize incident reporting and deploy an enterprise log aggregation solution for real-time threat detection and notification. Lastly, the state will strengthen cyber-security awareness by providing state employees with training on security and privacy policies, standards, and procedures that are essential to preventing security and privacy incidents.
 
8.     Streamline Project Oversight, Improve Transparency and Strengthen Project Management - To truly transform state government, it’s critical that Arizona clearly defines its project deliverables and executes with precision. This requires a level of maturity in several areas including program and project management, as well as oversight. In addition, Arizona must improve efficiency, increase transparency and escalate accountability in the state’s project oversight process.
 
Leveraging the GTO and lean principles, Arizona plans to simplify the Project Investment Justification (PIJ) document and streamline the process from end to end. Through automation, Arizona will provide agencies with the ability to self-report and provide more accurate, current, historical, and aggregate reporting capabilities.
Our Take:
Overall, Arizona’s Statewide Strategic IT Plan outlines the various steps and investments the state is planning to make for fiscal 2013. As part of this IT transformation, Deltek expects opportunities in the areas of IT refresh, systems integration, communications, cybersecurity and IT services to arise as a result of these strategic initiatives.
Looking ahead, interested contractor’s should use Arizona’s past strategic IT projects to create business development justifications for IT solutions that will allow the state to accomplish its goals of creating greater efficiencies, while providing an innovative, sustainable government.

 

Hawaii Details 12-Year IT Roadmap To Streamline Business Processes While Improving Efficiency

Earlier this month, Hawaii unveiled a plan to overhaul the state’s use of technology to streamline business processes to improve the delivery of government programs and services.
As part of this, the newly-created Office of Information Management and Technology developed a 12-year roadmap which outlines the necessary steps that will drive the decade-long business and technology transformation. The Transformation Plan was developed in consultation with state agencies and after a thorough review of national best practices and lessons learned from other states. The effort is one of the key initiatives under Governor Neil Abercrombie’s New Day Plan, which calls for a transformation focused on jobs and investments in people to “ensure long-term economic prosperity and resilience.”
“A solid foundation must be built that will enable the state to continuously adapt in order to provide services, now and in the future,” said Hawaii CIO Sanjeev “Sonny” Bhagowalia. “This 12-year plan, which includes two years of planning and 10 years of implementation in multiple phases, will revolutionize the way information is managed to improve how programs and services are delivered to the public.”
As reported, Governor Abercrombie appointed Bhagowalia as its first chief information officer in 2011, after recognizing that a large-scale effort was needed. Hawaii said the state has “not significantly invested in technology for more than 30 years,” while noting that “transforming the state’s $11 billion business enterprise with 220 business functions and services across 35 distinct lines of business is an enormous endeavor.”
The Transformation Plan will morph the current paper-based and inefficient business environment into a future environment that is more cost-efficient, digital, and mobile-accessible. It will also consolidate the state’s 743 fragmented legacy systems into fewer, but, integrated, enterprise-wide solutions that facilitate improved information sharing.
Currently, Hawaii spends about 1.4% of its annual budget on technology, while most states invest around 2% to 3%. Industry best practices suggest spending between 3% and 5% of the annual budget on technology to realize the greatest benefits.
  1. Streamlining and improving current business processes and applications to directly benefit the public.
  2. Leveraging the state’s investment in shared support services and technology infrastructure.
  3. Establishing a strong organization-wide management and oversight framework, including policies, processes, performance measures, program management and organizational change management.
As part of the transformation, Hawaii has identified 11 top strategic technology priorities, which include:
  1. Enterprise Resource Planning (ERP) - Hawaii is moving forward with implementation of an enterprise-wide ERP system that will replace the large majority of the current central systems within the Enterprise Support Services band.
  2. Tax Modernization - This involves a strategic initiative to explore ways to streamline and modernize tax processing away from the current Integrated Tax Information Management System (ITIMS). It will expand the overall use of electronic tax filing, electronic payment, improved analytics, and improved case management processing to streamline and decrease cycle times for the citizens of the state.
  3. Health IT - Envisioning a more effective, efficient, patient-focused healthcare system, Hawaii’s Transformation Plan includes a four-point strategy of innovations for Delivery System Improvements, Payment Reforms, Health IT and Healthcare Purchasing. Hawaii is seeking systemic improvements in public health through measuring health status, performing assessments, and the tracking of preventions, promotion, and outcomes. The State will look to use Electronic Health Records and a secure exchange of information to improve care coordination, reduce duplication and waste, empower patient engagement in their health, and enable public health analytics to shape policy decisions that will improve the overall health system.
  4. OneNet/Enterprise Services Network - A single network, OneNet, will look to fulfill the network needs of all state departments and employees and citizens with guaranteed performance levels.
  5. Adaptive Computing Environment (ACE) - Establishes a consistent configuration for computing devices across the State using pre-approved vendors. State employees can order standard systems that are engineered to operate most efficiently in the OneNet environment. Choices are provided based on job classification for mobile/tablet solutions, laptop/desktop, or a strictly virtual environment for certain work. These systems require fewer support resources than non-standard configurations, enhance overall support effectiveness, and reduce total cost of ownership.
  6. Shared Services Center - For the future State vision, the goal will be to have five fully meshed functional shared services centers (SSC) distributed across the islands to provide high availability, redundancy, fault tolerance, data backup and replication, disaster recovery, and always-on services to Hawaii. Connections between shared services centers will be provided with dedicated high-speed fiber optic lines with service providers and State wireless connections acting as redundant and backup links respectively.
  7. Information Assurance & Privacy - Hawaii has a fully integrated Security Operations Center (SOC) and Computer Security Incident Response Centerv (CSIRC) to: provide uninterrupted security services while improving security incident response times; reduce security threats to the State; and enable quicker, well-coordinated notification to all State Departments regarding security threats or issues.
  8. Mobile ComputingHawaii is aiming to establish a standard mobile applications solution pattern and approach with standard methods, skill development, contractor resources, and tools/technologies in conjunction with the adoption of preferred smartphones and tablets. Since mobile application development has a very small footprint in the State at this time, this initiative will need to analyze, pilot, and invest/implement in a standard approach, capabilities, and tools for developing mobile applications.
  9. E-Mail, Collaboration and Geospatial This effort is looking to provide several integrated services in a single environment, including integrated multi-media online communications services; collaboration and conferencing services, and multimedia content and information services.
  10. Open GovernmentSeeks to establish a State of Hawaii data.gov internal and public-facing website to facilitate the sharing of master data sets.
  11. Hawaii Broadband - Hawaii currently has many broadband projects underway as part of the Hawaii Broadband Initiative (HBI) with departmental participation that highlights the importance of the program. An assessment of the current program illuminates the fact that there must be strong unification of these disparate efforts within an established, disciplined program management framework with continual progress reports.
Our Take: Overall, we applaud the actions taken by the new CIO to outline how the State of Hawaii can streamline its operations while improving efficiencies through the use of technology.  With this in mind, Deltek expects opportunities in the areas of IT refresh, systems integration, portal development, broadband, and IT services to arise as a result of these significant IT efforts.
In terms of contracts, Hawaii currently has over 154 active GovWin tracked opportunities. The following is a breakdown of Hawaii’s top 5 opportunities (in terms of value) across all market verticals:
  1. Pharmacy Benefit Management Services and Fiscal Agent Services In Support of Pharmacy Claims Processing; Value: >$30 million; Primary Requirement: IT Professional Services; Award Date: February 2013.
  2. Statewide Telecommunications Equipment; Value: >$30 million; Primary Requirement: LAN/WAN Equipment; Award Date: January 2014.
  3. Hawaii Broadband Initiative; Value: >$30 million; Primary Requirement: Fiber Optic Materials & Components; Award Date: June 2013.
  4. Health Insurance Exchange Services; Value: <$30 million; Primary Requirement: Information Technology; Award Date: November 2012.
  5. Third Party Administrator (TPA); Value: <$30 million; Primary Requirement: Information Technology; Award Date: July 2013.

 

Government 2.0: Government Trends - IT procurement transformation (Part 2)

Continuing from my previous blog on Government  2.0’s effect on the traditional IT procurement process, I wanted to take a look at trends in government’s approach to acquiring Gov 2.0 technology. Part 1 of this blog series highlighted how small Gov 2.0 IT firms have begun to use non-traditional purchasing options to circumvent the traditional procurement process. Gov 2.0 firms are trying to avoid the procurement process because it has historically been more difficult for small IT firms to compete in the government IT market. However, today’s trends in IT procurement hint that times are changing. Since governments continue to face shrinking IT budgets against expanding IT costs and needs, they are now looking for alternative ways to do business as well. For many IT bureaucrats and contracting officers interested in Gov 2.0 technology, that means looking outside of the conventional procurement process, and toward smaller IT firms.

 

Code for America (CFA), an example of Gov 2.0 realized, is an organization that describes itself as “Peace Corps for geeks.” Established in 2009, CFA assigns programmers on year-long fellowships to work with local governments on in-house IT projects, to provide faster and more affordable alternatives to procuring vendor services and solutions. CFA noticed that new IT products, which it calls “civic startups,” were often created once the fellows had completed their assignments – essentially spawning new businesses. However, these civic startups that had created products for governments were having trouble selling their products. Finding the government procurement process difficult to navigate, many fizzled.

 

In response to this issue, CFA is setting up its first civic incubator, where a handful of IT entrepreneurs will participate in a five to six-month-long program that will provide funding and mentoring, while bringing their applications and solutions directly to local governments and school districts. This incubator is something CFA’s leadership hopes will turn the traditional procurement process on its head.

 

Another noticeable trend on the rise is localities across the country sponsoring crowdsourcing events and hackathon competitions as an alternative approach to the traditional solicitation processes for Web development solutions and services. In 2010, after working with CFA, the city of Boston took a one-day hackathon event to the next level by creating a permanent office within local government. The New Urban Mechanics Office was created to hire full-time programmers for in-house IT development projects as well as to conduct outreach to encourage, field, and partner with small IT entrepreneurs.

 

In another CFA spinoff, White House Chief Technology Officer Todd Park created the Presidential Innovation Fellows (PIF) program to  pair “top innovators from the private sector, non-profits, and academia with top innovators in government to collaborate on solutions” using technology. On August 23, 18 innovators from outside of government were selected to work on one of five projects over the course of six months. The PIF program’s goal is to synthesize open data, expand e-government services, and simplify the RFP process by “building a platform that makes it easier for small high-growth businesses to navigate the federal government, and enable agencies to quickly source low-cost, high-impact information technology solutions.” 

 

One of the five projects, RFP-EZ, was born after Sean Green, head of the Small Business Administration’s Investment and Innovation Program, remembered an instance with the Department of Health and Human Services (HHS). The department had a need for an IT project, but the project’s estimated cost was $5 million to implement by a traditional IT vendor. After some research and outreach, HHS partnered with smaller IT companies that were able to complete the project for just more than $400,000.

 

During the PIF announcement, Green gave an open call to developers, contracting officers, and small Web development firms to join the effort and participate through Github.com, which is an open platform where RFP-EZ will be demoed. If successful, many state and local level governments will likely partner with or imitate the RFP-EZ project. Park took to Twitter after the announcement to confirm that the PIF will also be working with both state and local governments, in addition to the federal government, to create these IT solutions.

  

Analyst's Take

 

At all levels of government, innovation and affordability have been contradictory terms. The Code for America debunked the idea that quality Gov 2.0 solutions and services had to come at a premium. CFA seems to have been the catalyst for the future direction of Gov 2.0. Governments willing to take the early leap by circumventing their IT procurement process and engaging with innovators directly can expect some growing pains, but they will likely be dulled by ultimate cost savings.

 

The traditional format of government procurement has been grounded in the 1950’s-style door-to-door salesman. Governments release a solicitation and wait for the salesman to ring their door bell to peddle goods. Now, government agencies with strict budgets have the option to shop around without going through a lengthy and expensive procurement process. Governments want convenience and efficiency without having to sacrifice quality and they are willing to go outside the traditional procurement process to get it. 

 
Subscribers have access to the full article here, including expanded analysis and recommendations for contractors.
Also, be sure to follow Deltek's General Government Team on Twitter @GovWin_GenGov.

Mississippi battles widespread opposition to biometrics software

An effort to reduce fraud and streamline services for Mississippi’s child care centers is being met with great opposition by child care center operators and parents alike. Last year, the Mississippi Department of Human Services (DHS) issued a contract amendment to the existing electronic benefits transfer (EBT) contract with Xerox for the provision of biometric electronic time and attendance software for participants in the state’s Child Care Certificate Program. The final contract totals $12,893,449, and will run through January 31, 2018. Xerox holds a similar contract with Louisiana’s Division of Child Care and Early Childhood Education, valued at approximately $13 million.
 
A handful of child care centers are currently piloting the finger-scanning equipment that is expected to be implemented statewide in the next few months. Opponents say the money used to acquire and use the biometrics equipment would be better spent on children in need of child care services. DHS counters this by saying the scanners allow the state to more accurately reimburse child care workers for their services, and will help to preserve federally-funded program dollars and improve program integrity.
 
Analyst’s Take
 
It is interesting to see such widespread opposition to a technology that ultimately increases the security of child care centers and the integrity of the overall program. While $12 million could surely provide child care services to many additional children, the purchase of this technology should not stop additional children from entering the Child Care Certificate Program. If Mississippi proves a great monetary savings with the use of the technology, it is likely that other states will look into the use of biometrics or related technologies for their child care programs, such as the card swipe systems used in Oklahoma and Indiana.

Deltek Pulse: Health Care and Social Services August Review

While the lazy days of summer came to an end, August remained a busy month in the health care arena. Most notably, the U.S. Department of Health and Human Services (HHS) shelled out additional grant funding, totaling more than $765 million, for the establishment of health insurance exchanges (HIXs). This brings the grand funding total to about $1.6 billion. In this round, four states – California, New York, Iowa and Hawaii – received Level I grants, while another four states -- Connecticut, Maryland, Nevada and Vermont -- were awarded Level II grants.
As funding rolled in, these and other states continued to release solicitations for all things HIX-related. Highlights included:
  • Vermont released a request for information (RFI) for health benefit exchange premium bill processing. Among a myriad of services, the state is particularly interested in collecting information related to premium billing, payment collection and payment reconciliation. 
  • Nevada, which was awarded approximately $50 million in Level II grant funding, issued a request for proposals (RFP) for consulting services related to the Affordable Care Act (ACA). Nevada’s Board of Examiners approved the state’s HIX, which will be implemented by Xerox through an approximately $72 million contract, on August 14, 2012.
  • California awarded its HIX project management and technical supporting services contract to First Data Government Solutions.
  • Colorado’s HIX board was given approval to apply for $43 million in federal grant funding to build its HIX infrastructure. CGI was awarded an HIX services and technology solution contract earlier this summer.
  • Hawaii plans to use the $62.8 million grant funding it received to contract for the design and development of the IT infrastructure and user experience for individuals and small businesses.
Other notable procurement activities included:
  • The South Carolina Department of Health and Human Services (SCDHHS) moved forward with its Dual Eligible Demonstration Project (SC DuE) with the release of an RFI to collect information from coordinated and integrated care organizations (CICOs).
  • SCDHHS issued a statement of no award for its replacement MMIS procurement, initially released in December 2011. The statement proclaimed:
Since the time this solicitation was issued, SCDHHS has continued to move beneficiaries from fee-for-service to managed care models and has gained greater understanding of organizational and system requirements for running a Medicaid program that is nearly 100% managed care. Given these changes, SCDHHS will require some time to evaluate the business processes and systems required to carry out the needs of a primarily managed care Medicaid program and issue a solicitation that is consistent with those needs and is in the best interest of SCDHHS and the State." 
  • The Alabama Medicaid Agency (AMA) released an RFI for health care consultative services to assist in the evaluation of the existing Medicaid program and to make recommendations regarding the option to expand Medicaid eligibility as a result of the ACA.
  • The Utah Department of Health issued an award to CNSI for its Medicaid management information system (MMIS) contract.
August also saw Aetna’s purchase of Coventry Health Care, in a deal valued at $7.3 billion. The acquisition expands Aetna’s footprint in the government-based health plan space, and adds to its well-known position in the commercial health care market. With states’ options to expand Medicaid eligibility, the timing of the acquisition is well suited for Aetna as states increase their Medicaid populations and, subsequently, their need for contracted plan providers.
Deltek also attended two significant industry events in August: the Medicaid Enterprise Systems Conference (MESC) held in Boston, Mass., and the IT Solutions Management (ISM) for Human Services Conference held in Baltimore, Md. Deltek subscribers should be on the lookout for recaps of these events in the coming days. 
Lastly, September 10 kicks off of this year’s National Health IT Week! Be on the lookout for daily blog posts from the Health Care and Human Services team! 

 

Government 2.0: Market Trends - IT procurement transformation (Part 1)

Over the years, the emergence of Gov 2.0 has been theorized by IT bureaucrats, vendors, and techies alike. While Web and mobile-based technology has impacted our everyday lives as consumers, it has been slow to take on our lives as constituents, taxpayers and citizens. Instead, government has been using private sector-focused apps and solutions such as Twitter and YouTube for public sector needs.

Even as larger vendors expand their scope of products and services to try and meet Gov 2.0 needs, government entities are hesitant to procure these big-dollar solutions. State and Local governments lack assurance due in large part to limited funds, governance, and market knowledge. So, while big vendors have been cutting back on state and local government business, smaller Gov 2.0 start-ups have been steadily luring in business by offering services and solutions for low or no upfront cost by using a modular plug-and-play format. These affordable and easy-to-implement Web applications are a stark change from enterprise solutions and services offered by the standard IT systems integrator. Now that Gov 2.0 is growing in popularity, the next question centers on how it will change the state and local IT market and procurement process.

Soon after civic-minded programmers formed Gov 2.0 start-ups, it was clear that their business model was adversely fit for the traditional IT procurement process. The Gov 2.0 market has rapidly become a grassroots movement disproportionately occupied by tech savvy community advocates, who have bucked the rules of procurement by offering their products and services at a fraction of what conventional government contracts would cost to implement.

The fact is that government IT spending is on the rise. On a whole, an estimated $140 billion a year is spent on IT needs, and that amount is expected to increase to $174 billion by 2014. State and local governments, which are running out of creative ways to cut their budget, are all too willing to look at low-cost alternatives to replace antiquated systems and satisfy their growing IT needs.

Two prominent examples of Gov 2.0 firms include Granicus, Inc., which provides cloud-based transparency solutions, and SeeClickFix, which uses mobile and Web-based technology as a management tool for government 311 systems. Both firms start their pricing for services at a mere $300 a month. Lesser known Gov 2.0 firms are willing to circumvent the procurement process altogether by offering their products or services at no cost, with the hopes of building a relationship for a potential sale down the road. Still, there are some philanthropic programmers who give away their apps in exchange for bragging rights.

Though many Gov 2.0 apps are based on citizen interaction, apps are not limited to 311-type services. Many innovative programmers have created standalone records management, content management, human resource management, and even data integration apps using open data specifically for internal government use. As this subset of government IT continues to evolve, these Gov 2.0 firms will gain technical growth and market knowledge, and those standalone apps could easily integrate into more robust mainstream applications before Gov 3.0 rolls around.

Analyst’s Take

The main take away is that the presence of these grassroots-minded IT firms is growing. They are being led by skillful, agile, humanitarian-minded innovators who are looking to improve government by sharing pioneering solutions. They lure IT decision-makers by offering beta or free versions upfront, which creates a warm environment to foster a full procurement later on.

If this emerging procurement format proves to be advantageous for state and local governments, it could become the new standard. So, how does a traditional IT firm compete with free IT solutions from these emerging Gov 2.0 firms? The answer is simple: adapt. By blending Gov 2.0’s creative purchasing options such as free trials offers, tiered service subscriptions, and modular solutions, alongside years of experience and quality services and products, a traditional IT firm is easily given the advantage.

Part 2 of this blog series will take a look at how state and local governments have adopted Gov 2.0 by bypassing their own IT procurement processes. In the meantime, be sure to follow Deltek's General Government Team on Twitter @GovWin_GenGov

Lastly, check out this article in Deltek State and Local Analyst Perspective.

 

When updates no longer cut it: The Sunshine State replaces outdated IT infrastructure

Florida’s Department of Children and Families (DCF) is in the midst of a procurement to replace its Florida Online Recipient Integrated Data Access system (FLORIDA), a 20-year-old legacy mainframe that provides core functionality for DCF’s public assistance eligibility system, the Automated Community Connection to Economic Self Sufficiency (ACCESS) Florida system.

With multiple upgrades performed in the past to improve the functionality of FLORIDA, DCF determined that the existing mainframe architecture was no longer adequate to serve the needs of the overall ACCESS Florida system and that a replacement was the most viable option. The new FLORIDA system will be based on Medicaid Information Technology Architecture (MITA) 2.0 standards and will meet federal standards for the Centers for Medicare and Medicaid Services (CMS) Enhanced Funding Requirements: Seven Conditions and Standards, as well as enable system access through mobile technologies for both internal and external users. Meeting CMS’ Seven Conditions and Standards is required for Florida’s human services programs to piggyback on limited-time enhanced 90/10 federal funding for updating state IT systems, available until December 31, 2015 through the A-87 Cost Allocation Waiver. 

The replacement solution will first focus on overhauling eligibility determination for medical assistance programs, based on the October 2013 deadline set by the Affordable Care Act (ACA), with plans to phase in eligibility for cash and food assistance programs to include the Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), and the Women, Infants and Children (WIC) Program. At an estimated cost of $250 million, the state anticipates the replacement system will save $340 million over the first five years of implementation, and $170 million in the years thereafter. 
Florida is one of many states taking advantage of the A-87 Cost Allocation Waiver to work toward implementation of integrated eligibility systems (IES) for health and human services benefit programs. With the Supreme Court’s decision to uphold ACA, states are forging on with implementation of health insurance exchanges (HIXs) that play directly into IES. Perhaps never was there a better time for vendors to jump on the opportunity to work with states on planning for an HIX and IES, particularly with those states that were waiting out the court’s decision to proceed with HIX implementation and now must hustle to meet the January 2014 deadline.
Deltek recently released an Analyst Recap examining HIX implementation progress levels, and a report on statewide integrated eligibility systems. Both pieces provide invaluable insight on upcoming contracting opportunities and an analysis of systems architecture, requirements, and estimated costs.

 

Not going anywhere soon: Social media for state and local government

This guest blog is the first in a series by analysts at Market Connections Inc., Cynthia Poole, Director of Research Services, and Melissa Burgess, Research Analyst. In an effort to bring our customers the best current market intelligence available, Deltek and Market Connections Inc. collaborated on data sharing and analysis for our recent social media in state and local government report. Be sure to check out Market Connections Inc. for more information on their services and their own social media report.
According to Malcolm Gladwell, key trends in society reach a “tipping point” when ideas, behaviors, messages and products behave just like outbreaks of infectious diseases. When these societal epidemics take hold, these concepts can reach a level of near ubiquity. 
The use of social media by government agencies has reached a similar tipping point, and unlike examples cited in Gladwell’s “The Tipping Point” (i.e. the rise and fall of Airwalk shoes), social media is here to stay.
From a state and local perspective, social media use has reached astronomical proportions. In addition, social media is being used in new and innovative ways – beyond citizen communications -- for obtaining crowdsourced data to inform smarter decision making. 
According to a recent GovWin study called “Social Media in State & Local Government, a New Paradigm for Engagement and Innovation, 2012,” the increase of social media use allows state and local governments to:  
·         Add value to existing vendor solutions through IT integration
·         Add social media integration to existing state and local government IT systems, including at the enterprise level
·         Aggregate the big data of social media for government innovation
·         Create purpose-built mobile solutions that integrate social media to improve government service delivery
Last year, Market Connections launched its “Social Media in the Public Sector 2011” study and many of the findings underscore what was uncovered by the GovWin study. In fact, GovWin included many of Market Connections’ data points in the new state and local social media report, including:
·         Social media in general saw noteworthy increases in both public sector and contractor use.
·         State and local governments used social media for both informed decision making (100%) and to communicate externally with citizens and other agencies/organizations (96%).
·         State and local governments used social media for research (86% compared to the federal government at 64%). In addition, they were more apt to use social media for promotional purposes (80%). 
Social media will continue to increase by both state and local governments and federal agencies. In fact, the Market Connections study found that 84 percent of state and local agencies and 81 percent of federal agencies expected to increase their use of social media in the next 12-18 months.
As the Market Connections study was released November 2011, we can already see this prediction coming to life based on the findings of the new GovWin study.  While having social media reach near ubiquity is certainly notable, it is more important to note how social media can transform citizen engagement and data mining. 
Federal agencies like FEMA are leading the charge on the federal side when it comes to data crowdsourcing – especially during natural disasters like Hurricane Irene last year. However, FEMA may be the exception, as opposed to the rule, when it comes to agencies effectively obtaining, and acting upon, crowdsourced data. The state and local government sector is clearly ahead of the curve when it comes to this next-generation approach.
Please stay tuned for future posts, where we will be discussing how federal agencies could benefit from using this crowdsourced social media approach, as well as highlighting some key state and local government social media case studies.
Follow Market Connections, Inc. on Twitter, @mkt_connections.
Follow Chris Cotner on Twitter, @GovWinCCotner.
Subscribers have access to this article, here, also. 

Social media business opportunity growth in state and local government: The story in stats

Deltek recently published a report on social media use in state and local government (subscribers click here for free report download; non subscribers download for a fee). In that report, Deltek identifies several trends related to social media use in state and local government:
·         Social media and mobile application use are growing in society.
·         State and local government had significant growth in social media use from 2010 to present (Mossberger and Wu, 2012)
·         80 percent of State and local government employees see their agencies increasing social media use in the next 12-18 months (Market Connections, 2011)
Most notably, social media-related business opportunities have been increasing since 2008.

·         2012 has a robust number of social media business opportunities
·         Initially, it looks like a drop off of 28.6 percent from 2011 to 2012.
·         However, we only half way through 2012.
Since we are only half way through 2012, analyzing opportunities through the first 6 months of each year is a better comparison and illustrates a growth trend. For example, there is a 46 percent growth in opportunities in 2012, compared to the same point in 2011.

Comparing current opportunities (blue line) to January through June opportunities (orange line) demonstrates the continued growth of social media opportunities in 2012. Using the existing data to project future growth (green line) demonstrates the future projected strength of the market.

·         Through the first half of 2012, more social media opportunities than first half of 2008, 2009, 2010, or 2011.
·         2012 is projected to have the most state and local government social media opportunities than any previous year.
 
Analyst’s Take
 
·         Social media related business opportunities are projected to continue upward growth for the next several years prior to market saturation.
·         Even after initial market saturation with current social media applications and technologies, implementation will open the door to innovation of new technologies and applications that will make social media functionality an essential component of most IT solutions.
·          The paradigm shift presented by social media use in state and local government (see the Deltek report, here), will drive further innovation and social media integration.
·         The combination of technology and government innovation will drive social media functionality in IT systems moving well beyond the initial market saturation and well into the foreseeable future.
 
Recommendations 
·         Get in on the ground floor now with developing social media technologies, functionality, and integration that government can use.
·         Collaborate and partner with government to develop social media solutions.
·         Integrate social media functionality into your current solutions.
·         Integrate social media functionality into existing government enterprise systems.
·         Develop mobile applications with social media features as an integrated part of current solutions.
·         Look to integrate social media functionality.
·         Make plans to grow your state and local government-related business.
 
Subscribers have access to the full article, here, including more detailed graphs and figures.
If you haven’t done so already, download the Deltek report on social media in state and local government, here
Read the previous blog on social media, here.
Read the previous blog on crowdsourcing data,here.
Follow me on Twitter @GovWinCCotner.

 

 

 

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