IN February, legislators were told that consolidation of information technology services at about 50 of 132 state agencies was generating roughly $42 million in annual savings. Yet IT consolidation has generated increased costs, potential security breaches and poorer service for the Oklahoma Nursing Board, according to a performance audit released by state Auditor and Inspector Gary Jones.
The two claims appear contradictory — mass savings that drive up taxpayer costs.
At the Board of Nursing, auditors found IT expenses increased by 14 percent after consolidation. The audit also found the Office of Management and Enterprise Services (OMES), which oversees IT consolidation, breached security by granting employees unapproved access to files, and concluded OMES failed to meet targets for timely responses and resolutions to computer system complaints. If OMES were a private vendor, “the substandard service level provided to OBN quite possibly would result in termination of the IT service agreement,” auditors said.
Officials at other agencies have raised similar issues. After the Senate Committee on Select Agencies met with the leaders of 42 non-appropriated state agencies this year, they concluded that IT consolidation wasn't necessarily reducing costs or improving service.
“The mandated IT consolidation for all state agencies has either been cost-neutral or usually a cost burden for the agencies, with some agencies expressing much frustration with slowed service or lost data due to the conversion,” the Senate committee's report said.
On a separate but related note, the Oklahoma Policy Institute has noted that OMES, the product of consolidating three appropriated agencies, received $5 million more in this year's state budget than what was previously appropriated to those three agencies combined.
One possible problem with the system is that OMES financially benefits from IT consolidation regardless of performance. In 2012, lawmakers voted to allow the Office of State Finance (since renamed the Office of Management and Enterprise Services) to charge other agencies for consolidated IT services. At that time, OMES was expected to reap $3.6 million annually from the new fees.
An ugly secret of state government is that agencies make money off other agencies. This accounting practice can obscure the true cost of individual government agencies while financially rewarding service agencies for poor performance.
Officials with OMES say unusual factors forced higher spending at the Oklahoma Nursing Board. An OMES spokesman said savings were “never projected” for IT consolidation at the nursing board because the group's previous IT services were subpar, and did not include even basic security measures. Bringing the board's IT up to modern standards required increased spending.
To his credit, state Finance Secretary Preston L. Doerflinger, who heads OMES, acknowledges problems with the IT initiative, particularly on the service side. He's working to change the culture of the agency to eliminate those shortcomings. Overall, OMES officials say the consolidation is still saving taxpayer money.
Undoubtedly, some problems are unavoidable when making a change this size in multiple entrenched bureaucracies. But state officials must not allow a cost-cutting effort to turn into an expensive boondoggle that embeds inefficiency throughout state government.
We've supported IT consolidation. Ideally, it should reduce duplication in state government and lower costs. We're fans of Doerflinger and don't doubt his competence. We hope he succeeds in this effort, because much work clearly remains to make this initiative a success.