Information Technology. House Appropriations Subcommittee on Information Technology February 14, 2013

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1 Information Technology House Appropriations Subcommittee on Information Technology February 14, 2013

2 Budget Process Budget Subcommittee IT in North Carolina Definition History Legislation Project Management Funding Issues Agenda 2

3 Budget Process 3

4 Governor s Recommended Budget Continuation & Expansion (Aug Mar. 2013) Enroll/Ratify & Send to Governor Joint Subcommittee Presentations (Feb. Mar. 2013) Governor/OSBM Present Recommended Budget (Target: Mar. 18) Joint Subcommittee Review/ Discussion (Target: Mar. 19 Apr. 11) Sent to Senate for Concurrence Conference Committee (Target: Jun. 3-13) Senate Debate/Amendments (Target: Apr. 16 May 2) Publish/Pass House Budget (Target: May 28-30) House Debate/Amendments (Target: May 14 May 23) Publish/Pass Senate Budget (Target: May 7 9) 4

5 New Subcommittee Representation from each Appropriations Subcommittee Allow enterprise approach to IT First paperless Appropriations Subcommittee Presentations Issues Projects Agency perspective Enterprise opportunities Transparency Subcommittee Process Subcommittee website Budget discussed and completed in public 5

6 Roles of Fiscal Research Staff Fiscal Research Division (FRD) staff are non-partisan, professional analysts who serve all members Staff responsibilities (Chapter 120, Article 7A) include: Budget & Policy Analysis Analyzing and producing the budget Fiscal Notes & Fiscal Memoranda Answering confidential member requests Conducting special studies ( Continuation Reviews and interim studies) Guidance & Coordination Appropriations Committees Joint Legislative Oversight Committee on Information Technology Joint Legislative Commission on Governmental Operations (Karlynn O Shaughnessy) 6

7 Roles of Other NCGA Staff Bill Drafting & Research Divisions: Draft legislation and budget provisions ( Special Provisions ) Conduct legal research and policy analysis, focusing on legal and regulatory issues: o Constitutionality, statutory impacts, policies, and regulations Staff Standing, Interim, and Oversight Committees (Counsel to interim Joint Legislative Oversight Committee on Information Technology) Information Systems Division: (Phyllis Pickett) Provide IT support to the General Assembly Provide IT legislative analysis and committee support to the House and Senate (Peter Capriglione) 7

8 Roles of Other NCGA Staff Program Evaluation Division: Conducts formal, longer-term studies of programs Evaluation components include: o Assessing program performance o Developing performance metrics, including activity-based costing o Recommending actions by the General Assembly (Larry Yates) 8

9 Roles of Agency Staff Office of State Budget and Management (OSBM) and Agency Staff: Prepare and present the Governor s Recommended Budget o Justify proposed budgetary actions Provide presentations on agency programs Assist Fiscal staff in obtaining program data Assist in answering specific, or detailed, member questions Review and approve agency IT budgets Review and approve IT Internal Service Fund rates Office of the State Chief Information Officer (SCIO)/Office of Information Technology Services(ITS) Develop budgets for SCIO and ITS Develop rates for IT Internal Service Fund Review agency projects/expansion requests 9

10 Next Steps Tentative Schedule IT Overview Agency Presentations Projects Issues Presentation of Governor s Budget Joint Subcommittee Review and Discussion* Senate Budget House Budget Conference 10

11 IT Overview 11

12 Definition Information technology As defined in G.S (2). (2) "Information technology" means electronic data processing goods and services, telecommunications goods and services, security goods and services, microprocessors, software, information processing, office systems, any services related to the foregoing, and consulting or other services for design or redesign of information technology supporting business processes. 12

13 IT in North Carolina IT responsibility housed in four different organizations since the early 1980s Department of Administration Office of the State Controller Department of Commerce Office of the Governor Policy-making board has evolved Two recurring themes since 1983 Consolidation of IT functions Spending IT funding wisely Senate Bill 991 passed in

14 Why Senate Bill 991 Improve information technology planning Adopt standards Make project development more efficient Reduce cost overruns Provide assistance to State agencies Increase accountability Bottom Line = Structure and Process 14

15 What does Senate Bill 991 do? Updates Chapter 147, Article 3D of the General Statutes Establishes roles, responsibilities, and qualifications of State CIO Defines organization and operation of Office of Information Technology Services (ITS) Establishes project management and approval framework Requires IT procurement procedures Establishes Information Technology Fund Establishes reporting requirements, to include financial reporting Requires business continuity planning and analysis of legacy systems Requires establishment of security standards 15

16 IT Management and Oversight Structure Governor State Chief Information Officer Information Technology Advisory Board General Assembly Joint Legislative Oversight Committee on IT Office of Information Technology Services Appointment of Members 16

17 State Chief Information Officer Appointed by Governor Required to be qualified by education and experience Responsibilities: Develop and administer a comprehensive long-range plan to ensure the proper management of the State's information technology resources. Set technical standards for information technology. Review and approve major information technology projects 17

18 State Chief Information Officer Review and approve State agency information technology budget requests Establish information technology security standards Provide for the procurement of information technology resources Develop a schedule for the replacement or modification of major systems Authorized to adopt rules to implement statutory requirements. 18

19 State Chief Information Officer Project Management Project review and approval Suspension of approval Performance contracting Monetary penalties for projects not completed within specified time period or over cost Performance bond Project manager review and approval Project management assistant designation 19

20 Office of Information Technology Services (ITS) By statute located in the Office of the Governor Chief Deputy Information Officer appointed by SCIO Employees under supervision, direction and control of SCIO Employees subject to State Personnel Act Functions: Procure IT for all State agencies Submit for approval of the Office of State Budget and Management all rates and fees not covered by another fund. Conduct annual assessment of State agencies for compliance with statewide IT policies. 20

21 Office of Information Technology Services (ITS) Develop standards, procedures, and processes to implement policies approved by the State CIO. Review State agency management of State information technology resources for compliance with statutes. Review State agency implementation of statewide information technology management efforts. Develop a project management, quality assurance, and architectural review. Provide geographic information systems services through the Center for Geographic Information and Analysis on a cost recovery basis. Provide support to local governmental entities. 21

22 Exemptions Administrative Office of the Courts Agency of the judicial branch UNC System Department of Justice (Deviation) Can elect not to participate in State information resources centers and services Criminal Information Division of the Department of Justice exempt for telecommunications services Department of Revenue (Deviation) Exempt from any provision requiring departments or agencies to consolidate information processing functions on equipment owned, controlled, or under custody of ITS General Assembly 22

23 Exemptions Exempt agencies. Except as otherwise specifically provided by law, this Article shall not apply to the General Assembly, the Judicial Department, or The University of North Carolina and its constituent institutions. These agencies may elect to participate in the information technology programs, services, or contracts offered by the Office, including information technology procurement, in accordance with the statutes, policies, and rules of the Office. ( , s. 10; , s. 2.) Information resources centers and services. With respect to all executive departments and agencies of State government, except the Department of Justice if they do not elect at their option to participate Telecommunications services; duties of State Chief Information Officer with respect to State agencies. The provisions of this section shall not apply to the Criminal Information Division of the Department of Justice or to the Judicial Information System in the Judicial Department. 23

24 Deviations Deviations authorized for Department of Revenue; agency requests for deviations. (a) The Department of Revenue is authorized to deviate from any provision in G.S (a) that requires departments or agencies to consolidate information processing functions on equipment owned, controlled, or under custody of the Office of Information Technology Services. All deviations by the Department of Revenue pursuant to this section shall be reported in writing within 15 days by the Department of Revenue to the State CIO and shall be consistent with available funding. Any State agency may apply in writing to the State CIO for authority to deviate. If granted, any deviation shall be consistent with available funding and shall be subject to such terms and conditions as may be specified by the State CIO. If the agency's request for deviation is denied by the State CIO, the agency may request a review of the decision pursuant to G.S D. (b) The Department of Revenue is authorized to adopt and shall adopt plans, policies, procedures, requirements, and rules for the acquisition, management, and use of information processing equipment, information processing programs, data communications capabilities, and information systems personnel in the Department of Revenue. If the plans, policies, procedures, requirements, rules, or standards adopted by the Department of Revenue deviate from the policies, procedures, or guidelines adopted by the Office of Information Technology Services, those deviations shall be allowed and shall be reported in writing within 15 days by the Department of Revenue to the State CIO. The Department of Revenue and the Office of Information Technology Services shall develop data communications capabilities between the two computer centers utilizing the North Carolina Integrated Network, subject to a security review by the Secretary of Revenue. 24

25 Deviations (c) (d) The Department of Revenue shall prepare a plan to allow for substantial recovery and operation of major, critical computer applications. The plan shall include the names of the computer programs, databases, and data communications capabilities, identify the maximum amount of outage that can occur prior to the initiation of the plan and resumption of operation. The plan shall be consistent with commonly accepted practices for disaster recovery in the information processing industry. The plan shall be tested as soon as practical, but not later than six months, after the establishment of the Department of Revenue information processing capability. Notwithstanding the provisions of subsections (a) and (b) of this section, the Department of Revenue shall review and evaluate any deviations and shall, in consultation with the Office of Information Technology Services, adopt a plan to phase out any deviations that are not determined to be necessary in carrying out functions and responsibilities unique to the Department. The plan adopted by the Department shall include a strategy to coordinate its general information processing functions with the Office of Information Technology Services in the manner prescribed by G.S (a) and provide for its compliance with policies, procedures, and guidelines adopted by the Office of Information Technology Services. The Department of Revenue shall submit its plan to the Office of State Budget and Management by January 15, (1989, c. 239, s. 5; c. 770, s. 60; 1989 (Reg. Sess., 1990), c. 1024, s. 36; 1991 (Reg. Sess., 1992), c. 900, s. 14(g); c. 1030, s ; , ss. 5, 6; , s. 2; , s. 27; , s. 2; , s. 16.) 25

26 Consolidation Information resources centers and services. (a) With respect to all executive departments and agencies of State government, except the Department of Justice if they do not elect at their option to participate, the Office of Information Technology Services shall have all of the following powers and duties: (1) To establish and operate information resource centers and services to serve two or more departments on a cost-sharing basis, if the State CIO, after consultation with the Office of State Budget and Management, decides it is advisable from the standpoint of efficiency and economy to establish these centers and services. (2) With the approval of the Office of State Budget and Management, to charge each department for which services are performed its proportionate part of the cost of maintaining and operating the shared centers and services. (3) To require any department served to transfer to the Office ownership, custody, or control of information processing equipment, supplies, and positions required by the shared centers and services. (4) To adopt reasonable rules for the efficient and economical management and operation of the shared centers, services, and the integrated State telecommunications network. (5) To adopt plans, policies, procedures, and rules for the acquisition, management, and use of information technology resources in the departments affected by this section to facilitate more efficient and economic use of information technology in these departments. (6) To develop and promote training programs to efficiently implement, use, and manage information technology resources. (7) To provide cities, counties, and other local governmental units with access to the Office of Information Technology Services, information resource centers and services as authorized in this section for State agencies. Access shall be provided on the same cost basis that applies to State agencies. 26

27 IT Requests 143C-3-3. Budget requests from State agencies in the executive branch. (e) Information Technology Request. In addition to any other information requested by the Director, any State agency requesting significant State resources, as defined by the Director, for the purpose of acquiring or maintaining information technology shall accompany that request with all of the following: (1) A statement of its needs for information technology and related resources, including expected improvements to programmatic or business operations, together with a review and evaluation of that statement prepared by the State Chief Information Officer. (2) A statement setting forth the requirements for State resources, together with an evaluation of those requirements by the State Chief Information Officer that takes into consideration the State s current technology, the opportunities for technology sharing, the requirements of Article 3D of Chapter 147 of the General Statutes, and any other factors relevant to the analysis. 27

28 IT Requests (3) A statement by the State Chief Information Officer that sets forth viable alternatives, if any, for meeting the agency needs in an economical and efficient manner. (4) In the case of an acquisition, an explanation of the method by which the acquisition is to be financed. This subsection shall not apply to requests submitted by the General Assembly, the Administrative Office of the Courts, or the University of North Carolina. ( , s. 3; , s. 5(a). Ej (amended 143C-3-3 to delete cash flow requirements).) 28

29 Reversions 143C-1-2. (b) Unless otherwise provided by law, at the end of the fiscal year the unexpended, unencumbered balance of an appropriation reverts to the fund from which the appropriation was made; except that (iii) an appropriation for the implementation of information technology (IT) projects shall not revert until the project is implemented or abandoned. ( , s. 3.) 29

30 State Project Approval Process Project workflow provides checkpoints to allow state approvers to review projects and determine any risks Phase to Phase Approvals (Gates or Checkpoints) Initiation Planning and Design Execution and Build Implement Closeout Approvers of Gates Agency State Approvers Final Approval Agency CFO Agency CIO EPMO OSBM Architecture OSC SCIO Enterprise Project Management Office 30

31 128 Active Projects Total cost = $1,617,997, in Initiation IT Projects Total cost = $112,821,997 Registered 36 Planning & Design 43 5 in Project Closeout Total cost = $16,187,039 Implementation 21 Execution & Build 28 *As of 7 February 2013 Source: Enterprise Project Management Office, Office of the State Chief Information Officer 31

32 IT Funding Agency Funding for Operations/Projects Agency decision/appropriation State CIO reviews/approves/suspends projects IT Fund General Fund appropriation Money may be appropriated to meet statewide requirements May receive transfers and credits as authorized by General Assembly Expenditures made by State CIO Report submitted to Joint Legislative Oversight Committee on Information Technology by October 1 Interest earnings credited to fund Certified budget for SFY was $6,045,034 IT Internal Service Fund Agencies pay the Office of Information Technology Services (ITS) for support ITS determines the rates OSBM approves rates Receipts limited to $175 million for SFY

33 H. Information Technology Fund Special revenue fund The IT Fund May receive transfers, other credits as authorized by the General Assembly Money may be appropriated from the Information Technology Fund to meet statewide requirements, including: - Planning - Electronic Mail - Project Management - State portal operations - Security - Administration of systemwide procurement procedures. Funds appropriated to the Office of Information Technology Services from the IT Fund by the CIO October 1 expenditure report each year from the State CIO Interest earnings on the Information Technology Fund balance credited to the Information Technology Fund. 33

34 Millions IT Fund Appropriations Fiscal Year Appropriation* FY $ 18,950,000 FY $ 18,581,140 FY $ 11,334,718 FY $ 9,067,467 FY $ 5,275,142 FY $ 5,408,142 * May not reflect total budget $20 $18 $16 $14 $12 $10 $8 $6 $4 $2 $- 34

35 IT Internal Service Fund Functions of the Office of Information Technology Services. Submit for approval of the Office of State Budget and Management all rates and fees for common, shared State government-wide technology services provided by the Office on a fee-for-service basis and not covered by another fund Information resources centers and services. To establish and operate information resource centers and services to serve two or more departments on a cost-sharing basis, if the State CIO, after consultation with the Office of State Budget and Management, decides it is advisable from the standpoint of efficiency and economy to establish these centers and services. With the approval of the Office of State Budget and Management, to charge each department for which services are performed its proportionate part of the cost of maintaining and operating the shared centers and services. 35

36 Millions IT Internal Service Fund Fiscal Year Expenditures Receipts $225 FY $ 190,148,330 $ 202,780,752 FY $ 205,780,603 $ 210,002,660 FY $ 192,734,447 $ 192,050,778 FY $ 190,668,767 $ 196,862,461 FY $ 187,256,140 $ 186,486,932 FY $ 190,140,622* $ 175,000,000* $210 $195 $180 $165 * Budgeted amount; others are actuals. $150 Expenditures Receipts 36

37 Included in agency budget Multiple sources Multiple purposes Ongoing requirements Personnel Internal operations and maintenance Payments to vendors Payments to ITS Projects Agency Funding 37

38 Agency IT Funding Expense Total Budgeted Salary Plus Fringe $489,975,420 Personal Computer and Printer $63,422,410 Local Area Network $37,724,476 Wide Area Network $14,422,477 Video Transmission $6,356,789 Server $78,659,749 Mainframe $89,571,450 Applications Development & Other $366,965,830 Applications Development & Other 32% Mainframe 8% Server 7% Budgeted Salary Plus Fringe 43% Telecommunications $135,995,623 Video Transmission 1% Wide Area Network 1% Local Area Network 3% Personal Computer and Printer 5% 38

39 Governance Current Possible Changes Funding Sources/uses of IT funding Establishment of rates Personnel Recruiting Retention Training Issues 39

40 Issues Duplication Consolidation Continuation Priorities Hosting Policy Management Outsourcing Impact Risks 40

41 Sole Sourcing Limits Expansion/extension of current contracts Project Management Standards Execution Security Threats Funding Issues 41

42 Questions Karlynn.O

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