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Demonstrating ROI for Technology Investments

Darrel S. Harmer

Chief Capital Planning Officer Information Technology Division

October 21, 2013

Rapid advances in technology are causing fundamental changes to society, resulting in an overwhelming demand for new types of services, particularly ones that are mobile, online and interactive. The first step to getting support for innovative projects is making a compelling case that technology is an enabler, not just an expense. This session looks at successful approaches that can be emulated by or adapted for almost any organization.

Your smart phone has more computing power than landed Neil Armstrong on the moon.

Already, technology has changed some of the most basic ways in which we experience day-to-day life…

Today

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In the moments and days after the Boston Marathon bombings, Boston and the world

turned to social media, making our local experience global in a very real way.

In the aftermath of Superstorm Sandy, impromptu charging stations became vital gathering places in hard-hit areas.

“Simply put, state government can no longer function without IT; we are absolutely and totally dependent on it.

I know that investments we collectively make in the state’s IT infrastructure and services often do not seem as compelling as other investments that directly fund program needs.

But they are.

The fact is that they are one and the same.

• Our IT budgets provide affordable health care to those who need it.

• Our IT budgets provide kids with a world class education.

• Our IT budgets fix our roads and bridges.

• Our IT budgets are making our neighborhoods safer, our environment cleaner, our workforce better trained, and our housing more affordable.”

– Former Secretary of ANF, Jay Gonzalez, testifying in March of 2012

The IT Imperative

3 For policy-making purposes – Confidential

Demand for IT is Increasing Exponentially • All major business reform initiatives require significant technology support

– Everyone needs to be better, faster, cheaper

• Demand for speed, growth, functionality and agility is escalating due to the consumerization of IT (social media, smartphones, internet of things) in society

– Greater capacity, availability and reliability are essential

– Even while cyber security threats and their dangers escalate

• Government must provide greater transparency, performance and accountability

• We need to make sense of the massive amounts of data in our systems to harness its power

– 90% of the world’s data has been created in the past 2 years – Business leaders expect better information and analytical decision-making

capabilities

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Some Business Executive Views of IT • We’re spending too much on IT

• IT is a Black Hole

• Projects fail to deliver

• IT doesn’t have a customer focus

• Should we outsource?

• Huge and unknown risks around IT

• Lack of trust between IT and Business

• My son got our wireless network running at home in 15 minutes. Why do your people take so long?

• Our CIO speaks a foreign language

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“Real Business of IT: How CIOs Create and Communicate Value”, Richard

Hunter and George Westerman, Harvard Business Press, 2009

Some alarming statistics…but there is hope!

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iCORI replaced the state’s 20-year-old Criminal Offender Record Information background check process with an intuitive, publically-accessible Internet-based system.

NewMMIS underpins MassHealth, which provides coverage to 1.4 million residents and processes ~80 million claims per year across a network of 30,000 providers.

• Response times have dropped from weeks to minutes and readability of records is greatly improved.

• iCORI enables employers to hire more quickly, leading to increased opportunities and reduced recidivism for rehabilitated offenders.

• iCORI pays for itself through its fee model.

• HHS employees now manage member plans online, helping to ensure appropriate and timely care.

• Eligibility verification went from an overnight process of one to two-day-old data into a near-real-time one.

• Health care providers now conduct ~90% of their day-to-day business online, enabling real-time coordination.

DYS better meets the needs of at-risk youth in residential- and community-based programs through real-time management of treatment & services thanks to the

Juvenile Justice Enterprise Management System (JJEMS).

UI Online, recently launched by the Executive Office of Labor and Workforce Development, is a modern, web-based system that replaces the state’s outdated and failing unemployment insurance (UI) system.

• JJEMS enabled a one-time federal reimbursement of $7.3M – more than paying for the initial investment.

• On-going annual reimbursements are increased by ~$1M.

• UI Online simplifies access to services for employers & job seekers and streamlines the claims process.

• Our fraud prevention & detection is greatly enhanced.

Mass.gov and Open Checkbook drive citizen engagement through user-friendly public access to services & information.

MassHR modernizes and streamlines time & attendance processes for 40,000+ Executive Department employees.

• Mass.gov now aggregates & organizes 250,000+ pages of information according to constituent needs.

• Our national transparency ranking went from a grade of ‘F’ to an ‘A-’ – the second-highest score in the country.

• 90,000+ employees can now update their address, phone, and emergency contact information 24/7.

• The state can easily maintain accurate and timely data while reducing printing, paper, and mailing costs.

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Recent Commonwealth Business Initiatives

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The Health Insurance Exchange/Integrated Eligibility Services project, known as HIX/IES, is critical to the state’s compliance with the Affordable Care Act of 2010.

MassTax2 will be a secure, flexible, constituent-friendly business service that will significantly improve the efficiency & effectiveness of tax administration processes.

• HIX/IES will – for the first time – fully integrate access to programs offered by MassHealth and the Health Connector for constituents.

• We will be able to expand our existing “one-stop shopping” capabilities to include programs such as SNAP and the Temporary Assistance for Needy Families program.

• Taxpayers, practitioners, municipalities, and the state as a whole will benefit from improved customer service, targeted compliance capabilities, and a transformation in our revenue accounting and reporting capabilities.

• It will allow for the proper accounting and collection of more than $22 billion annually in state tax revenues.

MassNET will lower total spend while expanding access to high-capacity, high-speed networks for state & local government entities across MA.

eProcurement will overhaul and help simplify the state’s procurement processes through a single, transparent statewide system called Commbuys.

• MassNET dovetails with two important federal initiatives:

o Creation of FirstNet, the nation’s first public safety network; and

o ConnectED, a White House initiative to ensure broadband access for all of the nation’s schoolchildren to close educations gaps.

• It is expected to pay for itself through savings.

• It will improve service for state agencies, municipalities, and vendors alike and drive use of statewide contracts.

• Additional revenue generated from the 1% administrative fee applied to all purchases will more than cover the operating cost increase.

The Registry of Motor Vehicle’s Modernization project will dramatically improve the RMV’s business processes while replacing an unsustainable system that is a generation old.

The Environmental Public Access System (EIPAS) will help the Executive Office of Energy and Environmental Affairs achieve significant business improvements.

• The RMV will be able to offer many more services online, which will create significant in-house efficiencies.

• It will also minimize the need for constituents to visit branch offices and improve overall customer satisfaction.

• EIPAS will support economic development by providing regulation at the speed of business.

• It will also increase public participation in setting environmental and public health standards.

On-going Commonwealth Business Initiatives

Coming Soon: the CASE Methodology

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Xerox Services State Enterprise Solutions

Joe Berding CTO

512-797-1436

joe.berding@xerox.com

October 21st 2013

What we do

We’re behind the scenes in unexpected places

Xerox people and technology handle hundreds of processes that make businesses and governments work more smoothly and efficiently:

• $27B disbursed annually via electronic payment cards

• 15,000 fire departments rely on our firehouse software

• $14B in child support payments processed annually

• Serve 1,700 counties/cities with records management and tax solutions

• 9.1M student loan borrowers served

• 570M health program claims annually

• $50B in provider payments annually

• 50% of electronic toll collection processed in the U.S.

• $4B in toll collected annually

• 100M+ public transport tickets processed daily

• 1.5 M calls handed in our call centers every day

October 23, 2013 12

Building a ROI Framework •Engage with the Business / Agencies

– Determine Levers together

– Define in Financial terms

•Sphere of Influence of a Proposed Project

– Cost savings in IT organization

– Value or Strategic Initiatives in IT

– Cost savings in Business Process

– Cost avoidance with Citizens

– Value Creation with Citizens or within the Economy

•Measure and Benchmark Projects

– How did actual results compare with expected results

– Use as feedback to improve Process.

Strategic Investments in Agile IT • Mobile Drives a more engaging Experience with Citizens

– Search and intent

– Location Services, photo and video,

– Personalization of experience

– Social and Crowd Sourcing

• Data Analytics

– Provides deep insights to better serve Citizens

– Multiple Agencies can gain further insights by data sharing

• Cloud and Agile Development

– Consolidation through virtualization: drives up utilization

– Rapid Provisioning to support quicker time to creating business value

• Adoption of Next Generation IT

– Enables Functionality which can not be obtaining using traditional methods

– Changes Culture to be more innovative

Contacts

Lauren Sallata, Vice President, State Enterprise Solutions

Business Development & Marketing

lauren.sallata@xerox.com

202.607.9506

Joe Berding, CTO, State Enterprise Solutions

joe.berding@xerox.com

512.797.1436

October 23, 2013 15

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John Garing

Vice President

Elusive Return

Is There An Alternative?

21st Century Leadership

Change

21st Century Leadership

• Technology is changing at an increasingly rapid pace

• We are seeing fundamental changes in how we live, eat,

travel, work…….

• We are

Not tethered to desk tops

Not tethered to specific data centers

Living our lives on the network

Communicating with the cloud all day

21st Century Leadership

“An army of robot baristas could mean the end of Starbucks as we know it” Quartz news service

• Little or no capital funding

• Continued pressure for

– Reduced total cost of ownership

– Simplicity

– Improved scalability, agility, responsiveness

– Security assurance

• CIOs say I don’t want to handle the muck

– And, muck is……infrastructure

• And….often inertia

What Does the Future Hold?

21st Century Leadership

Box-hugging-itis

And Conventional

Thinking

How do we keep IT infrastructure moving at a

pace to keep up with the capabilities it supports?

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Challenge

21st Century Leadership

• Talk in operational language – not cost or technical

• Treat infrastructure as an operational foundation – and as a

service

• Look at how some others talk

– Enable living: Can new housing be constructed without water,

sewer, power?

– Keep the city moving: do cities own all ‘infrastructure’ services, like

snow plowing, garbage collection, etc. ?

– Enable fire fighting: what good are fire trucks without water supply

and roads?

An Alterative Approach to Infrastructure

21st Century Leadership

• Virginia’s HOT lanes

– A road fee scheme that gives motorists special lanes

reserved for use by those who pay a fee – access to high-

occupancy vehicle lanes

– Operated by a private firm

• Lab-on-demand

• Tires-as-a-service – Defense Logistics Agency

• Data center capacity-on-demand – Defense Information

Systems Agency

Applying Services Thinking

21st Century Leadership But: always have a Plan B!

• Sell it as the plumbing that allows the organization to

operate

– Enable the mission: the organization’s life blood

– Enable finance: pay people, pay bills

– Enable logistics: buy and ship things, maintain things

• Acquire it as services

– No capital – use operating funds

– Highly scalable – capacity equals real time demand

– Tech refresh built in

– Enforceable SLAs

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An Approach to IT Infrastructure

21st Century Leadership Get rid of the muck

21st Century Leadership

Why not IT?

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Registry of Motor Vehicles Modernization

Colleen Ogilvie, Deputy Registrar

MassDOT Registry of Motor Vehicles Division

What Will Modernization Do?

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►Expand service channels to reduce branch

visits and telephone calls

►One & Done -Ensure successful completion of

transaction on first attempt

►Self-Service-Enhance independent transaction

processing across constituent base

►System Architecture-Enable more agile

response to legislative changes, customer

demands & fiscal requirements

Specific Business Examples

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►Difficult transactions made easier and predictable

►Increase in Online Transactions

•Over 3M in 2012

►In the Future…

Change 20-45 day processes to 1-3 days

Offer Customer Accounts

Provide 360 degree customer view

Enable Electronic Traffic Citations

Reduce multiple data entry processes

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Design processes that focus on

business outcomes

rather than administrative procedures

Thank You!

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Demonstrating ROI for Technology Investments

EIPAS – Energy and Environmental

Information and Public Access System

Phil Griffiths

Boston Harbor Island Alliance

October 20, 2013

2013 MA Digital Government Summit -

Demonstrating ROI for Technology

Investments

Demonstrating ROI for EIPAS The business problem

A familiar story… Costly to maintain legacy systems, siloed within programs, information capabilities unable to keep pace with:

• Increasing program administration responsibilities;

• Public demand for easy access to integrated information;

• Stakeholder demand for regulation at the speed of business;

• Incorporation of new technologies, e.g. remote sensing and GIS

First step: With a partnership between business and IT, establish a vision for the solution with goals for all stakeholders

2013 MA Digital Government Summit -

Demonstrating ROI for Technology

Investments

2013 MA Digital Government Summit -

Demonstrating ROI for Technology

Investments

Demonstrating ROI for EIPAS

The Goal – administrative efficiency

EVDP

B RAO

Legend

P

E

D

V

R

W

B

Active MassDEP permit

Reported environmental data

MassDEP permit violation

MassDEP permit enforcement

Wetlands notice of intent

Reported spill or release

Release site with RAO filed (cleanup complete)

Release site with activity use limitation

Brownfields site

RAO

AUL

ABC Waste Combustor, Inc.123 Main Street, Suite 4000North Southland, MA

3 active permits, air quality and industrial wastewater

Permits Reports Violations Enforcements more

Release Site 3-0012345 (notification 1/2/03)100 Main StreetNorth Southland, MA

Reporting category: 2 hours, oil releaseCompliance status: Response Action Outcome filedNo activity use limitation

Notice Correspondence Plans History RAO more

2013 MA Digital Government Summit -

Demonstrating ROI for Technology

Investments

Demonstrating ROI for EIPAS

The Goal – Public Access

2013 MA Digital Government Summit -

Demonstrating ROI for Technology

Investments

Demonstrating ROI for EIPAS The Goal – Regulation at the speed of

business

Demonstrating ROI for EIPAS The ROI process

How do we make the case for investment in upgrading information capabilities? A rigorous and standardized benefits based process

• Identify and size financial and non-financial benefits

• Estimate the lifetime costs of developing and implementing the solution

• Identify key risks and recommend actions to increase likelihood of success

Engaged executive leadership (Commissioners and Secretary) championing the benefits to garner broad stakeholder support

2013 MA Digital Government Summit -

Demonstrating ROI for Technology

Investments

Demonstrating ROI for EIPAS The Headlines

▪ Project generates ~$17-24M in adjusted annual benefits across all Executive Office of Energy and Environmental Affairs agencies and a broad range of constituents

▪ One-time costs estimated at $37-47M over a 5-year timeline

▪ Annual O&M estimated at $5.5-6M

▪ Utility Payback Period is 5 to 6 years, accounting for all financial (direct and indirect) and non-financial benefits to the commonwealth and constituents

▪ Prospects for funding are promising

2013 MA Digital Government Summit -

Demonstrating ROI for Technology

Investments

Demonstrating ROI for EIPAS The Benefits

Non-financial benefits (~$5-7M) are driven by the improved ability to prevent environmental damage ~ 29%

Indirect financial benefits to the Commonwealth (~$3-4.5M) are driven by streamlined administrative activities and more efficient monitoring and compliance practices ~ 18%

Indirect financial benefits to constituents (~$8-11M) are driven by quicker speed to market and reduced costs of compliance activities for regulated entities ~ 45%

Direct financial benefits to the Commonwealth (~$1M) are driven by improved fee collections ~ 6%

2013 MA Digital Government Summit -

Demonstrating ROI for Technology

Investments

Demonstrating ROI for EIPAS The Lessons

2013 MA Digital Government Summit -

Demonstrating ROI for Technology

Investments

Rigorous standardized benefits based ROI analysis

Thorough documentation of financial, non-financial

and indirect financial benefits

Partnership between business and IT

Expertise to identify and evaluate technology

opportunities interacting with expertise to determine

and champion the value of benefits derived to

constituents

Fully engaged Business leadership

Ensuring allocation of necessary resources

Corollary policy and organizational changes