State CIOs, Emerging Trends and the Forces of Change

xChange SLED Conference May 25, 2016

Doug Robinson, Executive DirectorNational Association of State Chief Information Officers (NASCIO)

§ National association representing state chief information officers and information technology executives from the states, territories and D.C.

§ Founded in 1969

§ NASCIO's mission is to foster government excellence through quality business practices, information management, and technology policy.

About NASCIO

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States fiscally stable; budgets to grow slowly at roughly 4% in 2016. CIOs still seeking IT operational cost savings, driving consolidation

Cybersecurity risks! New threats, organizing for success, funding not commensurate with risk, talent crisis

Ongoing Transition: Changing the owner-operator business model -systems-centric to technology as a service.

Continuing IT workforce retirements, skills gap, recruiting challenges, talent management

Investments in cloud services, mobile, data analytics

Alternative sourcing options, IT procurement challenges, agile approaches

State CIO transitions: 24 in 2015; 14 elections in 2016

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§ Fiscal 2016 marks the 6th consecutive annual increase in general fund spending and revenues

§ Budget environment for most states indicates continued stability and modest growth

§ States vary in their fiscal health

§ Some states are facing difficult fiscal challenges, notably energy states

§ Fiscal improvements over the last several years have not yet returned many states to pre-recession spending and revenue levels

Source: NASBO, May 2016 Fly-In Briefing

State Fiscal Overview

Slow Budget Growth Continues

-8

-6

-4

-2

0

2

4

6

8

10

12

%

General Fund Expenditure Growth (%)

*Average

*38-year historical average annual rate of growth is 5.5 percent Fiscal 2016 numbers are enacted

Source: NASBO Fall 2015 Fiscal Survey of States

Fiscal 2016 Spending Projected to Increase by 4.1%

$687

$661

$623$645

$667

$695

$726

$759

$790$789*

$500

$550

$600

$650

$700

$750

$800

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

(in b

illion

s)

General Fund Spending: FY 2008 – FY 2016

*

www.nasbo.org

Source: NASBO Fall 2015 Fiscal Survey of States; Fiscal 2016 figure is based on enacted budgets.*Aggregate spending levels would need to total $789 billion in fiscal 2015 to be equivalent with real 2008 spending levels.

Total State Expenditures by FunctionEstimated Fiscal 2015

Elementary & Secondary Education

19.3%

Higher Education

10.3%

Public Assistance

1.3%

All Other30.9%

Corrections3.1%

Transportation7.7%

Medicaid27.4%

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Source: NASBO State Expenditure Report

1. Security2. Cloud Services3. Consolidation/Optimization4. Business Intelligence & Data Analytics5. Legacy Modernization6. Enterprise Vision and Roadmap for IT7. Budget and Cost Control8. Human Resources/Talent Management9. Agile and Incremental Software Delivery10. Disaster Recovery/Business Continuity

Top Ten: State CIO Priorities for 2016

Source: NASCIO State CIO Ballot, November 2015 8

B. Top Ten: Priority Technologies, Applications and Tools for 2016

1. Security Enhancement Tools: continuous diagnostic monitoring (CDM), digital forensics

2. Cloud Solutions: software as a service 3. Legacy Application Modernization/Renovation 4. Data Management: master client index/master data management, information

exchanges 5. Business Intelligence (BI), Business Analytics (BA): applications, big data 6. Identity and Access Management: technologies and solutions 7. Mobile Workforce: technologies and solutions 8. Virtualization: servers, desktop, storage, applications, data center9. Networking: voice and data communications, unified 10. Document/Content/Records/E-mail Management

Source: NASCIO State CIO Ballot, November 2015 9

11. Which technology initiative does your organization find most important? (ALL)

18%

3%

21%

57% A. Cybersecurity B. Cloud services C. Collaboration / VideoD. Mobility

1. Service models and sourcing options

2. Adoption of cloud services

3. Power of data

4. Changing state IT workforce

The Forces of Change

How are State CIOs Organized to Meet Demands?

Complete decentralization

Decentralization with

consolidated infrastructure

Decentralized with centralized

planning

Federated –agency decision

making

State IT Authority full consolidation

States approach IT governance with different strategies, business drivers and models. There are variations on these themes depending on state finances, political will and the ability to absorb change.

Business Models and Sourcing are ChangingWhat business models and sourcing strategies does your state CIO organization currently use?

2010 Responses 2015 Responses

Owns and operates all state IT assets and operations

32% 30%Owns and operates multiple data centers 58% 53%Owns and operates a consolidated data center

55% 64%Outsources some of its IT infrastructure operations

58% 58%Outsources some of its IT applications and services

42% 79%Uses a managed services model for some or all IT operations

50% 55%Uses an IT shared services model for some or all IT operations 66% 83%

Source: The Value Equation, 2015 State CIO Survey 13

How does your state CIO organization plan to deliver or obtain IT services over the next three years?

Percent

Expand existing IT shared services model 62%

Outsource business applications through a Software-as-a-Service model 55%

Expand existing managed services model 53%

Downsize state-owned-and-operated data center(s) 49%

Expand outsourcing 43%

Introduce a managed services model 26%

In-source some operations that currently are outsourced 17%

Introduce outsourcing as a new service model 15%

Maintain the status quo 13%

Introduce an IT shared services model 6%

Build new data centers 2%

Increase state IT staff 2%

Service Delivery in the Next Three Years?

Source: The Value Equation, 2015 State CIO Survey 14

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7. Which business model will drive your investments in the next 5 years? (state members only)

10%

43%17%

29% A. On-Premise, Centralized/Enterprise ModelB. On-Premise, Distributed/Federated ModelC. Off-Premise, Centralized/Enterprise ModelD. Off-Premise, Distributed/Federated Model

Source: The Value Equation, 2015 State CIO Survey 16

Source: The Value Equation, 2015 State CIO Survey

Agile and Incremental Software Delivery

Source: The Value Equation, 2015 State CIO Survey 18

Remove unlimited liability clauses in state terms and conditions

Introduce more flexible terms and conditions

Don’t require performance bonds from vendors

Leverage enterprise architecture for improved IT procurement

Improve the negotiations process

NASCIO Call to Action: Recommendations for Improved State IT Procurement

Source: NASCIO Call to Action, Feb 25, 2016. www.nascio.org/procurement 19

Source: The Value Equation, 2015 State CIO Survey 20

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6. Which technology will drive your investments in the next 5 years? (state members only)

6%6%21%52%15%0% A. Virtualization

B. Software defined data centerC. CloudD. Hybrid ITE. Hyperconverged infrastructureF. Other

Source: NASCIO State IT Workforce: Facing Reality with Innovation, April 2015

§ Retirement§ Recruitment§ Retention§ Reform

Forces of Change: State IT Workforce

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What skills and disciplines present the greatest challenges in

attracting and retaining IT employees?

Source: NASCIO State IT Workforce: Facing Reality with Innovation, April 2015 23

Engaging with State CIOs…

Be prepared

Anticipate and understand states’ problems

Know the best methods for securing and having meetings

Be a partner…educate the state…develop trust

Help build the case for IT investment

Know how and when to use lobbyists

“If a vendor wants to be successful selling to the state, then vendors should spend more time listening and understanding the client’s issues, then talk about solutions you have to help rather than products.” -State CIO

“If a vendor wants to be successful selling to the state, then vendors should spend more time listening and understanding the client’s issues, then talk about solutions you have to help rather than products.” -State CIO

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Looking Forward…

Sourcing of public cloud, X-as-a-Service

Data governance, data as enterprise asset, power of analytics

Digital government – a new experience for citizens

Risk management, enterprise IT portfolio

Growth in mobile services, apps, devices

Growing cross-jurisdictional services for local governments

Cross-agency applications, service integration

Emerging IT, policy and data: IoT, UAS, BWCs, What’s next?