IT investment needs sustainable relationship building and funding models, experts say

For state tech leaders, managing IT investments to fund modernization efforts has become a balancing act of financial, organizational and political priorities that goes beyond product purchasing, speakers said at the National Association of State Chief Information Officers annual conference this week in San Diego.

Modernization success and a state’s funding model are not always correlated, and “wholesale transformation” rarely leads to sustainable change, according to the report, which offers best practices for approaching IT investments that draw upon interviews with state chief information officers, NASCIO’s new CIO survey and additional resources from Forrester Research. 

Instead, “CIOs making meaningful progress are building trust with agencies, connecting technology investments to mission outcomes, strengthening investment governance and finding sustainable ways to fund innovation,” the report reads. 

Today, “everything costs more,” and “gaining buy-in that change has to occur … [can] be a hard topic to broach,” but “being able to communicate … and building a solid case for change usually helps,” Brian Tardiff, CIO for Rhode Island, said during a conference breakout session discussing the report’s findings.

One way for state CIOs to bake buy-in and trust into their IT modernization efforts is to uplift communication about a project’s capabilities and outcomes, according to the report. For instance, CIOs can better engage non-IT partners and customers by recognizing how an IT effort aligns with their interests.

As an example, Tardiff pointed to his organization’s strategy of creating “civic portfolios” of other state entities. 

Tardiff explained that his organization maintains an economic application team, health agency application teams and others to identify “like solutions and [work] with our agency partners to understand what their business outcomes may be that could shape the final solution.” 

Indeed, Delaware CIO Bob Osmond highlighted that there may be times when a tech-based initiative is best left to individual agencies to sort out, which requires an “case by case” analysis. 

But generally, other agencies should be “perceiving us as caring more about the solution that they’re trying to solve,” Osmond said. “This is not a control conversation …. It really is a relationship-building conversation.” 

The report also underscores that funding models remain critical to how modernization efforts receive investments. At the same time, CIOs reported how early or first-time funding opportunities can create roadblocks to longer term investments to scale solutions.

“Enterprise technologies like cloud eventually create broad statewide value, but the initial costs are frequently borne by a single agency pioneering adoption. This discourages agencies from supporting initiatives whose benefits will ultimately extend beyond their own mission,” the report reads.

Rhode Island lawmakers addressed IT funding by creating the state’s large systems initiative fund through the state’s 2023 budget bill, Tardiff said. The large systems initiative fund gets money through certain state revenue surpluses or legislative transfers and remains separate from the state’s general fund, he explained. 

The fund helps “move budget control” to the Division of Enterprise Technology Strategy and Service, which Tardiff oversees, and establishes "a creative way for us to fund our own initiatives.” 

Cutting out wasteful spending is another way for CIO organizations to build innovation funds, Osmond said, adding that, “the best way to get more money in your budget is to save money.”

Such efforts can be as simple as taking an inventory of current software subscriptions, devices and other assets to identify where unnecessary or recurring expenses occur, which Osmond called “asset hygiene” maintenance. 

He explained that agency- or enterprise-wide licenses may seem cost effective upfront, but they can end up going underutilized over time, leading to opportunities for cost savings. The asset hygiene strategy “is not glamorous, it’s not sexy, it’s not AI,” he said, but “it can be a real value.” 

In fact, the report suggests that, rather than jumping to staff reductions to save costs, CIOs can examine “savings opportunities such as duplicate contracts, overlapping tools, fragmented services, unused licenses and underutilized platforms ... It will lead to better, more sustainable cost reduction and modernization outcomes without sacrificing critical capabilities.” 

State CIOs should also consider budget cycles, as many states operate on biennial budget increments while technology projects are often framed as multiyear strategic plans, Jim Weaver, national strategy advisor at Everpure, told Route Fifty in a separate interview. 

“You can put things into tangible phases or stages with a defined funding gate,” he said. “If you're able to clearly articulate what it is you're trying to get done and realistically lay out what you can get done, a lot of times you will get that funding,” Weaver explained. 

A tactful approach to IT projects and investments, he said, can “help you get that traction and credibility to go ahead and do what you need to do.”