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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.

Today
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 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.
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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 states IT infrastructure and services often do not seem as compelling as other investments that directly fund program needs. But they are.

The IT Imperative

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
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For policy-making purposes Confidential

Demand for IT is Increasing All major business reform initiatives require significant technology support Exponentially Everyone needs to be better, faster, cheaper
Greater capacity, availability and reliability are essential Even while cyber security threats and their dangers escalate

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

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 worlds 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 Were spending too much on IT IT

IT is a Black Hole Projects fail to deliver IT doesnt 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

Real Business of IT: How CIOs Create and Communicate Value, Richard Hunter and George 5 Westerman, Harvard Business Press, 2009

Some alarming statisticsbut there is hope!

iCORI replaced the states 20-year-old Criminal Offender

Record Information background check process with an intuitive, publically-accessible Internet-based system.
Response times have dropped from weeks to minutes and readability of records is greatly improved.

Recent Commonwealth Business Initiatives

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.
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.

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.

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

UI Online, recently launched by the Executive Office of

Labor and Workforce Development, is a modern, web-based system that replaces the states outdated and failing unemployment insurance (UI) system.
UI Online simplifies access to services for employers & job seekers and streamlines the claims process. Our fraud prevention & detection is greatly enhanced.

Juvenile Justice Enterprise Management System (JJEMS).

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.

Mass.gov and Open Checkbook drive citizen

engagement through user-friendly public access to services & information.
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.

MassHR modernizes and streamlines time & attendance

processes for 40,000+ Executive Department employees.
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.

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

On-going Commonwealth Business Initiatives

MassTax2 will be a secure, flexible, constituent-friendly

business service that will significantly improve the efficiency & effectiveness of tax administration processes.
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.
MassNET dovetails with two important federal initiatives:
o Creation of FirstNet, the nations first public safety network; and o ConnectED, a White House initiative to ensure broadband access for all of the nations schoolchildren to close educations gaps.

eProcurement will overhaul and help simplify the

states procurement processes through a single, transparent statewide system called Commbuys.
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.

It is expected to pay for itself through savings.

The Registry of Motor Vehicles Modernization project will dramatically improve the RMVs business processes while replacing an unsustainable system that is a generation old.
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 8 8 and improve overall customer satisfaction.

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

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 Were 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

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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
Provides deep insights to better serve Citizens Multiple Agencies can gain further insights by data sharing Consolidation through virtualization: drives up utilization Rapid Provisioning to support quicker time to creating business value

Data Analytics

Cloud and Agile Development

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

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October 23, 2013

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Elusive Return Is There An Alternative?

John Garing Vice President
21st Century Leadership
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Change
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

21st Century Leadership

What Does the Future Hold?

Box-hugging-itis

Little or no capital funding Continued pressure for

Reduced total cost of ownership Simplicity Improved scalability, agility, responsiveness Security assurance And Conventional Thinking

CIOs say I dont want to handle the muck

And, muck isinfrastructure

And.often inertia
21st Century Leadership

Challenge

How do we keep IT infrastructure moving at a pace to keep up with the capabilities it supports?

21st Century Leadership

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An Alterative Approach to Infrastructure

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?
21st Century Leadership

Applying Services Thinking

Virginias HOT lanes
A road fee scheme that gives motorists special lanes reserved for use by those who pay a fee access to highoccupancy 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 But: always have a Plan B!
21st Century Leadership

An Approach to IT Infrastructure
Sell it as the plumbing that allows the organization to operate
Enable the mission: the organizations 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
21st Century Leadership 24

Get rid of the muck

Why not IT?

21st Century Leadership

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Registry of Motor Vehicles Modernization

Colleen Ogilvie, Deputy Registrar MassDOT Registry of Motor Vehicles Division

What Will Modernization Do?

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

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Specific Business Examples

Difficult

transactions made easier and predictable

Increase

in Online Transactions Over 3M in 2012 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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In

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

Demonstrating ROI for EIPAS The Goal administrative efficiency

2013 MA Digital Government Summit Demonstrating ROI for Technology Investments

Demonstrating ROI for EIPAS The Goal Public Access

Legend P Active MassDEP permit D Reported environmental data V MassDEP permit violation E MassDEP permit enforcement W Wetlands notice of intent B Brownfields site
ABC Waste Combustor, Inc. 123 Main Street, Suite 4000 North 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 Street North Southland, MA Reporting category: 2 hours, oil release Compliance status: Response Action Outcome filed No activity use limitation Notice Correspondence Plans History RAO more

P D V E

RAO

R Reported spill or release

RAO Release site with RAO

filed (cleanup complete)

AUL Release site with

activity use limitation

2013 MA Digital Government Summit Demonstrating ROI for Technology Investments

Demonstrating ROI for EIPAS

The Goal Regulation at the speed of business

2013 MA Digital Government Summit Demonstrating ROI for Technology Investments

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
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 2013 MA Digital Government Summit Demonstrating ROI for Technology Investments