Members of the state’s panel that oversees technology policy are challenging changes recommended by Gov. Mike Easley’s budget director, saying his ideas would overly centralize information technology and eliminate agency accountability.

The Information Resources Management Commission’s 23 members consist of many of the state’s top elected and agency officials, in addition to appointees of the governor, the speaker of the House, and the president pro tem of the Senate. They are statutorily charged to exercise oversight of the state’s strategic information technology planning and management.

Recommendations by State Budget Director David McCoy would downsize the IRMC to 12 members and downgrade its role to advisory status.

According to drafted meeting minutes of the IRMC’s meeting June 1, member Rufus Edmisten said that he had served on more than 42 advisory boards, and that none of them amounted to “a hill of beans.” He also said, according to the meeting record, that such panels “were considered a nuisance to most of the people they advised.”

Last week, the state House approved legislation that contained most of the recommendations from McCoy’s report. The changes will become permanent if approved by the Senate, as Easley has been pushing for the bill’s passage.

OSBM required to review, advise

In the state budget legislation passed by the 2003 General Assembly, lawmakers called upon the Office of State Budget and Management to study information technology expenditures across all of state government. In part, the provision reflected concern about cost overruns in recent IT contracts within North Carolina government agencies, such as the troubled NC WISE system for the state’s public schools (see related article).The budget office, which reports directly to Easley, was to identify duplicate IT expenditures and functions, and recommend potential cost savings. The legislature expected McCoy to answer two questions by April 1:

1. Is state government’s IT budgeting and organizational structure the most efficient approach?

2. What alternative IT budgeting and organizational structures could help North Carolina realize cost savings?

Lawmakers wanted McCoy to produce at least three options for alternative budget plans for the state Office of Information Technology Services and IRMC. Both are currently funded by service charges to state agencies for IT services.

Lawmakers wanted to know about the feasibility of making portions or all of the ITS and IRMC budgets part of General Fund appropriations, which might include funding from a nontax revenue source. Another option legislators wanted explored was whether to keep the current service compensation arrangement, but to transfer budget approval authority for the two technology agencies from the IRMC to OSBM and the General Assembly.

According to the OSBM report, the state’s ITS budget for fiscal 2004 was $146.1 million, and the proposed budget for 2005 as of late June was $141.25 million. Of that, the proposed IRMC budget was about $618,000.

McCoy’s recommendations

In his report to the General Assembly, McCoy recommended that IRMC be virtually stripped of all its power, with much of the responsibility and authority statutorily provided to it to transfer to the state chief information officer — a post that is filled by Easley appointee George Bakolia. McCoy said that the CIO should work with the state budget officer and the state controller on all technology financing issues. He said the transition should be completed by June 30, 2005, in time for the next budget cycle.

“Currently the IRMC has a policymaking or approval role in program management and budget areas that are the responsibility of the executive branch and appropriately should be managed by the state CIO,” McCoy wrote in the report. “For whatever reason, the management structure of IT in state government has become excessively bureaucratic. When problems arise, the assignment of accountability is extremely difficult to determine.”

Because of the burdensome “bureaucracy,” McCoy advised that the IRMC be reduced to an advisory board. He also would eliminate the budget for the IRMC.

Saying that all his recommendations should be implemented as a package, McCoy suggested seven total changes that would further centralize the state’s IT management. Among those, he called for the state CIO, the state budget officer, and the state controller to develop a plan to consolidate all agency IT operations and functions that are common to all agencies into the Office of the CIO. McCoy also recommended that the state convert the full-time equivalent of what it pays technology contractors into state IT employees.

Excluded, IRMC wants explanation

Once McCoy issued his recommendations April 19, IRMC Executive Director Woody Yates scheduled for the OSBM to present the report to the full IRMC at its meeting May 4 . McCoy was not pleased, as he expressed in a letter to IRMC Acting Chairwoman Janet Smith dated April 27:

“Let me begin by saying how frustrated I am that I am having to take precious time away from preparing the Governor’s recommended budget to write this letter and deal with this matter,” McCoy wrote. “…My office and I must remain focused on preparing appropriate recommendations for the Governor’s consideration and cannot take time away to deal with other matters.

“I called Mr. Yates and asked who from this office agreed to make this presentation (to IRMC). He responded, ‘no one.’ I made it clear to Mr. Yates that I expected him to take the appropriate steps to correct this matter. OSBM is proud of the IT report and stands by its findings and recommendations; someone from this office will be available to present its findings and recommendations to the IRMC at a time when this office is not otherwise committed. I encourage the IRMC members to read the IT report; it stands on its own.”

McCoy is one of the IRMC members.

In her response, Smith acknowledged that she requested the presentation’s placement on the agenda May 4, and asked McCoy for a presentation “at your earliest convenience.”

“This will aid the (IRMC) in its understanding of the report,” Smith wrote. She informed McCoy that his report remained on the agenda “given its potential significant impact on the IRMC, our state agencies, and current IT processes.”

IRMC discusses OSBM report

In the view of many IRMC members, McCoy forgot one important requirement as he put together his report to the legislature: to consult with them. The budget statute stipulated that “OSBM shall work in conjunction with (ITS) and the (IRMC) to study the ITS and IRMC budget structures.” At the meeting May 4 IRMC members asked each other whether OSBM had been consulted for the report.

“Was anybody on the IRMC contacted by the [OSBM] to have input in this report?” asked state Insurance Commissioner Jim Long. “I was not… was anybody?”

“I think a number of us got an opportunity to fill out a questionnaire that was put out by [OSBM],” said Lee Mandell, director of information technology and research for the N.C. League of Municipalities. “I don’t know how many people actually did that, but I did. The questionnaire didn’t cover all the things that are actually in the report.”

Smith told her fellow IRMC members that she received three or four specific questions about how the commission budgets IT. Both she and Long briefly mentioned a short meeting two months before about understanding what OSBM was doing. “I wouldn’t call it an input-gathering meeting at all,” Smith said.

Long then brought up McCoy’s letter to Smith, and told the IRMC that he was “personally embarrassed” about the “tone of this letter,” and apologized for it. Smith is a volunteer for the IRMC and has her own consulting firm.

Other commission members expressed reservations about McCoy’s report.

“I feel like I need to go on record in objecting to a lot of aspects of this report,” said Secretary of State Elaine Marshall, who referred to unspecified “inaccuracies” in the report. “I have a certain measure of accountability that is due to the user community and the public, and believe that if this… proposal were to be implemented, that the accountability would be removed from me as the CEO of one of the state’s vital agencies.”

Long, and others, had stronger feelings about McCoy’s findings. “The elimination of the control of the IRMC does not represent good business practices,” he said. “This steps towards centralized control and mandated systems… I do not believe this serves enterprise well.”

“I have the utmost respect for [Bakolia] as the State CIO, but… this is headed toward a czar situation, and we don’t need a czar,” said state Revenue Secretary Norris Tolson. “Now that may put me at odds with my own administration colleagues, and if it does, so be it.

“In all due respect, Mr. CIO, I do believe that this committee needs to be consulted a bit more than it has been so far.”

“The report… with my background from IT… seems to be written by someone who really doesn’t understand IT very well,” said John McCann, professor emeritus at the Fuqua School of Business at Duke University. “There seems to be…the feeling that central IT is good. I think if anything in the history of the last 40 years has told us… is that that’s not necessarily true.”

Some members of the IRMC said McCoy produced several ideas without providing details about how they would be accomplished.

“A lot of us around the table have talked for a long time about the need to transition from being too contractor-dependent,” said Mandell about one of McCoy’s points. “The trouble is that this recommendation doesn’t deal with the issue of the reform in the state personnel system that would be necessary to accomplish that — to be able to recruit and retain the quality of North Carolina government IT workers to take the place of these contractors.”

The IRMC members also wondered, without getting an answer except to discuss rumors, whether the legislature would take up the changes in the current short session. Bakolia said it would be impossible to meet McCoy’s timetable. The group decided to ask OSBM not to request any legislative action on its report.

On May 5, Smith again wrote McCoy asking for a presentation as soon as possible because “many expressed concern and numerous questions were raised about information in the report that no one could answer.”

“IRMC respectfully requests that no statutory changes or actions be submitted to the General Assembly for its consideration until the IRMC has had an opportunity to receive a full report presentation,” Smith wrote.

IRMC writes response and votes

Because of IRMC members’ concern that the legislature would act quickly on McCoy’s report, the group composed a response before OSBM could make a formal presentation. The response May 13 was sent to Senate President Pro Tem Marc Basnight and the Co-Speakers of the House, Jim Black and Richard Morgan.

The IRMC response, which appeared to hold back little of the criticism discussed in the meeting May 4 , requested that both chambers of the legislature appoint a task force to study the OSBM report and the IRMC response, and to consider options in the longer 2005 session.

“The issues brought up in the OSBM report are important; so important that a ‘rush to judgment’ should be avoided,” the IRMC response read. “The IRMC members… are very concerned that the absence of standards, accountability, compliance, and IT governance in any of the recommendations will serve to produce many undesirable and damaging outcomes. Further, a number of the recommendations violate ‘good practice’ and will fail to achieve their directives.”

In its response, IRMC objected to the idea of a stronger state CIO with responsibility for operational support services in addition to authority over all state government IT.

IRMC also opposed the removal from its power the approval of the state’s IT budget.

“The IRMC independent IT policy review and approval process works,” the response said. “Over its existence, the IRMC has modified and improved most (over 50) of the draft policies submitted to it by the state CIO.”

IRMC argued in its response that removal of its authority would diminish IT accountability.

“It appears (under McCoy’s recommendations) that many of the IT policy and budgetary decisions that are now made in a public forum… will now be made away from public scrutiny,” the panel wrote. “The sunshine in which significant IT policy and budgetary decisions are now made would be replaced by private meetings of three powerful members of the executive branch. Important checks and balances will be eliminated.”

IRMC denied that the current system, as McCoy claimed, is excessively bureaucratic.

“By decreasing the authority of the IRMC at a time when it should be increased, the independent evaluation and oversight of IT decisions is diminished.”

McCoy’s recommendation to centralize all IT operations that are common to all state agencies was also criticized. “Simply put, this is not a good idea,” the IRMC said. “It removes accountability for IT services from the agency heads. This recommendation reflects a belief in the long-discredited philosophical approach of total centralization of IT.”

The IRMC also said the quality of McCoy’s report was lacking:

“All the recommendations suffer from a lack of detail and specificity that makes it very difficult to fully judge them on their merits… Many assertions appear in the findings without evidence or supporting documentation. This makes it very difficult to test the accuracy of the finding and the validity of any inference made from it.”

McCoy, in his report, cited an article published by the Gartner Group that warned that advisory boards should not make decisions “that are the purview of a central IT organization or CIO.”

However IRMC, arguing that it is not an advisory board, cited another Gartner document that claimed “North Carolina has developed the [IRMC], an enterprise-wide governance structure whose policies and procedures have successfully helped to manage IT resources in the state government.”

The contentious nature of the response led to a divided vote by IRMC members over support for it. Seven voting members — including Long, Edmisten, Marshall, and Martin Lancaster, president of the state community college system — supported the response’s content. Five members, most of them close to the Easley administration, voted against the response.

As many as six members, some of whom owe their jobs to Easley, abstained from a vote that could have killed the IRMC response.

Perusse presents report to IRMC

After IRMC submitted its response to the legislature, Deputy Budget Director Charles Perusse presented the agency’s report at the IRMC meeting on June 1 .

Lancaster told Perusse that OSBM’s reasons for IT change were similar to those given when the state consolidated its mail service.

Lancaster complained that it now takes one or two weeks for him to send or receive letters through state government, and according to meeting minutes, “he shudder(ed) at the thought of what that will do to IT in state government.”

Marshall said she thought OSBM wanted to “eliminate checks and balances that the IRMC affords,” but Perusse said OSBM “didn’t see it that way.” He said the state CIO would still be required to consult with IRMC in its advisory capacity. Marshall, and others, disputed that an advisory status equated to a legitimate “check and balance.”

“So, you’re going back to the good ole’ days when the techies run the show and not the business crowd, right?” Long told Perusse. “That’s exactly what you’re doing.”

Edmisten said IRMC members would have no incentive to be put in an advisory capacity, and called it “foolishness.” “Nobody is going to pay attention to an advisory board,” he said.

Addressing Perusse directly, Edmisten said, “What you are talking about is efficiency… and that’s what everybody argues when they don’t want to pay attention to the little steps along the way to have accountability.”

Chesser is associate editor at Carolina Journal.