As reported by Information Week, the Governor of California Arnold Schwarzenegger has signed a law to improve the state’s IT infrastructure and make it less expensive. the law aims at stronger project oversight, increased transparency in spending, greater cost savings, energy usage reduction and further services consolidation. It strengthens the former Department of Technology Services, now transformed into Office of Technology Services under the California Technology Agency.
Among the provisions of the law:
- consolidation of data center space by 50% by July 2011
- cut energy usage from IT operations 20% by July 2011 and 30% by July 2012.
- standardization of IT governance under the Office of the State CIO
- hosting all mission-critical public-facing applications and server refreshes in a Tier III data center, closing all existing data centers and server rooms that house non-network equipment by June 2013.
- migrating from existing network services to the new California Government Network no later than July 2011, and begin migrating to a state-shared email solution no later than June 2011.
- development and maintenance of enterprise architecture plans to comply with statewide enterprise architecture policies and standards as established by the California CIO,
At first sight, the list above makes a lot of sense. Reducing duplication, increasing compliance, better utilizing resources, further consolidating and centralizing are all important steps that need to be taken in order to reduce costs in a sustainable way. A great advocate of centralization has been the State CIO Teri Takai, who has been selected for a federal role at the Department of Defense, but may not leave as soon as expected (see NextGov latest news).
On the other hand, is centralization the only option to achieve savings, or should a better balance be found between state-wide decisions and the ability of individual agencies to find better and cheaper solutions? For instance, in areas where the market is commoditizing, wouldn’t it make sense to let agencies make their choices, and focus on controlling how they procure services rather that necessarily provide services from an internal organization? Excessive centralization can lead to tension, slower than planned deployments, and the constant pressure for the central organization to be better than anybody else. The common wisdom says that consolidating the buying power and service all agencies permits the achievement of economies of scale that would not be otherwise possible.
However, does a single data center work better than a hybrid solution where agencies have the autonomy of buying – for certain categories of applications – infrastructure as a service straight from the market?
Does the focus on enterprise architecture encourage or rather prevent different agencies from exploring innovative solutions that may slash the cost of their operations?
Isn’t there a risk that all this centralization makes agencies feel that IT is really a commodity, take a compliance attitude to meet the requirements of this law, and lose countless opportunities for transformation?
While I do understand the background that led to this decision, and I know that many of my own colleagues always applaud to more centralization, I wonder whether this is not going too far, reducing the ability of exploring those radical (and innovative) cost cutting options that a jurisdiction like California may have to face earlier rather than later.