• $5 billion in IT related Cuts & Efficiencies, as Promised, Mar 3, 2011 TLTV Monologue:

    March 4th, 2011 by admin Categories: Blogs Tags: , , , , , , ,

    TLTV March 3, 2011

    Guest: Anna Brannen


    Hi and welcome to TechLeader.TV, TLTV for short. I am your host JTF. And this is our 5th season of TLTV, continuing with a stellar lineup of topics and guests, the show that everyone’s talking about, a live, streaming Video Webcast, on the public sector information technology and political landscape.

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    We’ll get right into our interview in just a minute with our guest Anna Brennan, CIO for the Bureau of Equalization.

    But first allow me to reflect, or pontificate as some might say, on the critical issues of the day. And as we have said before, what could be more critical than Governor Brown’s plans to shrink the state’s $28 billion budget deficit.

    I criticized the Governor last time on TLTV for only identifying a paltry $200 million of so-called government efficiencies out of a $100+ billion state budget. Even one percent would have meant a billion dollars. $200 million? That’s 1/5 of 1 % for inefficiency, waste, fraud, etc. I said then the governor can do better than that.

    Well perhaps he has. Heeding our advice, or so we like to think here on TLTV, Gov Brown announced two weeks ago that he is seeking the best ideas to cut government waste and increase efficiency. He has formally asked the Bureau of State Audits and the Little Hoover Commission to each provide a list of “Top 10 Actions” California can take to achieve these goals. And the lists are due tomorrow.

    In what can only be described as an enormous bureaucratic oversight by the Brown Administration, we at TechLeader.TV were not asked to weigh in. However, never ones to stand on turgid formalities, we shall, and we have weighed in.

    The many faithful followers of our TLTV blog and twitter page already know that we kicked off a campaign last week to identify a billion dollars of IT related savings each business day, one billion each day,  for five days, that’s $5 billion leading up to March 4th deadline.  Because of the nature of IT spending which in many cases involves spending over several years and rather than attempting to parse these savings over time we’ll just look at the macro picture.

    Today is the 5th day and here are our $5 billion, probably more like $6 billion in IT savings, a combination of major cuts, consolidations and even terminations of non-performing and poorly planned IT projects, and the application of new cutting-edge technology, unique data and advanced scoring analytics which could vastly reduce the state’s improper payouts for benefit programs, tax refunds, and othr programs. Here’s our proposal:

    DAY ONE: February 25, 2011

    Eliminate $1.8 billion Financial Information System for California (FI$Cal) Project

    There is no greater, nor longer-standing proponent of a new, robust financial system for the State of California than I, ever since I walked into the State Capitol in 1995. If you can’t measure it, you can’t reform it. And it took more than a dozen years before the Department of Finance’s luddites left and the new leadership got the message.

    However, the state has gotten along fine more or less ever since my old boss Ronald Reagan approved his Finance Director, Cap Weinberger’s plan for a statewide financial system. CalSTRS while woefully out of date will suffice for now; and the work-around financial systems developed over the last decade by the larger departments are much more capable.

    In addition, the nearly $2 billion FI$CAL Project as it now stands is an over-planned, over-scheduled, over-budgeted monstrosity of a computer projected which by the FI$CAL team’s own estimates will take another decade years to fully implement. I can attest that this project schedule alone is an absolute formula for failure, and I dare anyone outside the FI$CAL team to contradict me.

    In addition, a three year or so postponement will cause little indigestion except within the vendor community. Then, in just a few years, the project could be resurrected with a more rational, abbreviated, rapidly deployable cloud-based alternative for one-quarter the cost.

    DAY TWO: February 28, 2011

    Terminate California Court Case Management System (CCMS) Immediately – Savings: $1.5 billion

    The full cost of the project when, and if, deployed by 2016 will reach nearly $2 billion, by some estimates $2.5 billion.

    I am confident that the State Auditor Elaine Howle will concur with this termination given the highlights from her report last month which stated that:

    • Cost estimates have increased by over 700%
    • There have been 102 contract amendments increasing the SI Deloitte’s contract from $33 million to $310 million.
    • The complete deployment has been pushed back by seven years, and sounding the death knell
    • A majority of the courts believe their current case management systems will serve them for the foreseeable future.

    Just pull the switch. OK, That’s two days – total savings of $3.3 billion

    DAY THREE: March 1, 2011

    Intensify Fraud and Waste investigations of Medical and other state benefit and revenue programs – Savings: $1.5 billion

    Discussion: Federal payments made to the wrong person, at the wrong time, or in the wrong amount, last year totaled approximately $110 billion. Federal agencies paid more than $1 billion to dead people, according Sen. Tom Coburn (R-Okla.). President Obama has set an aggressive goal to eliminate $50 billion in improper payments between 2010 and the end of FY 2012.

    Each of these headlines involved programs most of which are administered and half funded by the states, and of course the biggest chunk is California’s. Fed OMB estimates California’s Medical fraud alone could be over $5 billion a year.

    Ironically, a program championed by the Governor Brown during his Attorney General days could be a model for an expanded, state-wide effort potentially recouping billions. The AG investigates problems in the state’s $40 billion Medical program whose state share is nearly one-quarter of the state’s entire budget. The AG’s Bureau of Medi-Cal Fraud recovered nearly a quarter billion dollars last year, a 400% increase under AG Brown. However, this may be only the tip of the iceberg. By expanding the utilization of new technology based business intelligence analytics, improper payments can be substantially eliminated.

    And the best part is the technology companies and vendors who provide these services, don’t get paid unless the money is recovered, or better yet not paid at all, then they take a small cut. I know that smacks of capitalism and market forces, terms sometimes anathema to many of our elected officials downtown. But believe me, I’ve seen this, it works. OK, That three days – total savings of $4.8 billion

    DAY FOUR & FIVE: March 2-3, 2011 yesterday and today. We did so well in the first three days, getting the balance of our $5 billion was pretty easy, with plenty of options.

    The state’s 75 IT project in its portfolio even after removing FI$CAL and the Courts Case Management system stands well over $5 billion. Serious re-examination of scope, schedules, and procurement strategy, even cancelling several non-performing projects could easily shave 10-20%. Say another $500 million savings.

    Other areas besides MediCal are ripe for aggressive, technology based investigation. Unpaid California state taxes are nearly $7 billion a year, a cumulative total of over $100 billion. Similar error rates apply to other state programs across the board. It is time to get serious about ending this profligacy.

    Finally, consolidation, and moving from infrastructure investment to cloud based hosting solutions can also save hundreds of millions.

    Well, we are well over our $5 billion goal, And we haven’t even discussed all those sales tax scofflaws?  Right?


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