Citing budget deficit, state postpones $150 million technology project

Madison, Wis. - Citing the state's current budget situation, the Department of Administration has decided to postpone the implementation of its integrated business information system project.

Gov. Jim Doyle and Michael Morgan, secretary of the DOA, said in a letter to lawmakers on the Joint Committee on Information Policy and Technology that it would be fiscally irresponsible to implement IBIS at this time. The committee is charged with legislative oversight of state IT projects.

The letter indicated that the project has not been abandoned and that work would resume at some future date.

IBIS, which is the state enterprise resource-planning project, is to replace state government's accounting systems. The project is expensive - a projected $150 million upon completion of all four phases - and is intended to replace 100 types of business system software.

In the letter, Doyle and Morgan noted that DOA has committed to early communication with the Joint Committee on Information Policy and Technology. That commitment came after a critical audit of state IT projects, and is part of a new IT process based on recommendations from the audit.

The audit was conducted by the Legislative Audit Bureau, which reviewed 184 IT projects valued at $291.7 million and attributed some cost overruns and project delays to a lack of oversight by DOA.

State IT projects were part of Gov. Jim Doyle's now defunct Accountability, Consolidation and Efficiency (ACE) initiative, which was supposed to leverage technology to bring more efficiency to state operations. Instead, several of the IT implementations have far exceeded their original cost estimates, projected taxpayer savings have not been realized, and the ACE initiative itself will be the subject of a state audit.

Budget blues

This time, however, the state said the project delay is due to its worsening fiscal situation, which is linked to lower tax receipts from a slowing economy. The state is wrestling with an estimated budget deficit of $652 million, and the letter alluded to cuts being made in agency operating budgets.

The cynical view will be that the IBIS is the latest project to encounter problems - the price tag reportedly is $34 million above original estimates - and that the state budget is a smokescreen.

Oskar Anderson, chief information officer and division administrator of enterprise technology for the DOA, said the department is living by its post-audit pledge to more closely monitor projects.

On any large project, Anderson said the project management team needs elbow room, which is running out on the IBIS project. In addition, the state has about 30 other high-profile projects, which are defined as those with a project cost of $1 million or more, or those involving critical business applications. About half of the high-profile projects are in state agencies, so there isn’t much extra IT money available in agency budgets to reallocate to the IBIS, Anderson said.

For these reasons, if the state had gotten into a jam and needed some extra money for contractors or another need on the IBIS project, it would not have been available.

DOA noted that at this time each year, all state agencies prepare a strategic IT plan outlining projects and technologies to support business functions. DOA reviews the agency plans to match them with available resources.

“One of the things that we had committed to do in our report to the Joint Legislative Audit Committee in October and since to the JCIPT is that we’re going to monitor projects more closely and if we see anything happening that increases the risk of the project beyond what we consider to be an acceptable level, we’re going to do something about it,” Anderson said.

The case for IBIS

According to Anderson, the main reason most organizations implement ERP is to have a common system for tracking financial and accounting information, asset and purchasing activity, and human resources data. The 100 disparate business systems in state government increase the degree of difficulty of aggregating information for reporting purposes. In many cases, agencies have to manually compile data into a single report, which is a time-consuming process. Anderson said a common tracking system would enable the state to very quickly compile reports on state assets or purchasing, and enable common processes.

The 2007-09 biennial budget authorized $19 million for the first phase of IBIS. To date, about $11 million has been spent on software, hardware, and steps such as developing a chart of accounts, hiring staff, and providing ERP training.

PeopleSoft, which was selected in a competitive bidding process in May of 2006, is the software that would replace existing business systems. Given the complexity of the IBIS project, the audit bureau advised the DOA to limit software customization, which has driven up the cost of other projects.

Anderson said the IBIS project is important and would move forward in the future. DOA believes the steps already taken will provide a good foundation for the project when it resumes, and that the state can get by with the status quo.

Chairs weigh in

The letter was directed to Senator Pat Kreitlow, D-Chippewa Falls, and Representative Phil Montgomery, R-Ashwaubenon. They serve as co-chairs of the Joint Committee on Information Policy and Technology.

In a prepared statement, Montgomery expressed some skepticism about the DOA's reasons for the postponement. He said the department never mentioned any delays or ongoing discussions to postpone IBIS two weeks ago when DOA officials testified in front of the JCIPT.

Montgomery said the project was sold to the Legislature as a consolidation that would save taxpayers money in the long run. He said the committee would conduct an analysis of how the postponement occurred and what steps must be taken to save taxpayer dollars moving forward.

Kreitlow plans to withhold judgment until the committee looks into the reasons for the postponement. In a statement issued by his staff, he said one of the major flaws in past IT management policies has been the reluctance or inability of the Department of Enterprise Technology, which is part of DOA, to halt IT projects when problems arise. He called the postponement a welcome change on that front.

"With that in mind, there are also several questions that need to be answered," Kreitlow added.

Those questions pertain to the future direction and cost of IBIS, and when it will proceed, according to Kreitlow's staff.

Related stories

• New Medicaid system the latest IT project to confound state government

• Elections Board reaches agreement with Accenture on computerized voter registration

• Morgan, Anderson claim state IT project management is on the right track

• GOP, Dems split over funding of state technology projects

• State technology chief endorses IT audit recommendations