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Below is the HillCo client report from the May 29 House Appropriations Subcommittee on Articles I, IV and V hearing.

The committee met to consider the following interim charge:
 
Examine the status of the state’s information technology (IT) infrastructure, the effectiveness of data center consolidation in reducing IT costs, and the effectiveness of the Department of Information Resources' (DIR) Cooperative Contracts Program in delivering best value for the state in IT purchases.
 
Lena Conklin, Legislative Budget Board

  • DIR serves as the states IT and data center offices
  • The agency received $586 million in current biennium appropriations
    • The agency has programs that generate fees as well
  • Coop program provides statewide negotiated pricing for IT and staffing services
  • Agencies are required to purchase IT items through DIR unless an exemption is given
  • DIR administers approximately 800 contracts through the program at a cost of around $1.8 billion; half of that is for public education
  • Rep. Ruth Jones McClendon asked if local property tax revenues pay for services provided to K-12 customers
    • Payment could be made from a  variety of revenue sources that local entities receive
  • Through the data center services program DIR provides consolidated services to 28 state agencies
  • Participating agencies are billed monthly based on baseline volumes

 
Cesar Saldivar, Audit Manager, State Auditor’s Office

  • Based on a recent report done by the Office, the department has designed adequate processes for procuring contracts; they have a comprehensive renewal process as well

 
Eliana Barbosa, Project Manager, State Auditor’s Office

  • HB 2472 (83R) required the department to negotiate prices based on commonly paid price not MSRP
  • The department does not have a good process for contract monitoring to determine administrative fees it should be collecting and total cost savings
  • The department needs a process to monitor vendor discounts that are specified in contracts to ensure the discounts are being given
  • The department’s cost savings reporting needs to be shored up

 
Karen Robinson, Executive Director, Department of Information Resources

  • Have put new measures in place since that audit from October 2013
    • Todd Kimbriel, COO of DIR noted the department  has either already complied with all recommendations or will have done so by June 1, 2014
  • All legacy systems are studied as required by legislation in the 83rd session; mostly old out of date systems
  • Chairman Sylvester Turner asked if the assessment will determine the need for additional systems and technology
    • Kimbriel replied, the legislation requires a determination for how to address those systems
  • Witnesses discussed the data center contracts; total of three contracts for 8 years is around $1.2 billion
  • Many states are looking to the Texas model in setting up similar contracts
  • Paired with a third party auditor to determine cost competitiveness of the data center contracts; allowed to do that three times within the term of the contract and after the report becomes available adjustments to the contract can be made
  • Turner asked why the comptroller is exempt from the data center contract
    • They were exempted in the original legislation in 2005; based on the footprint of their technology at that time it was determined it would be too costly for them to change the system
  • The current business model for the cooperative contracts program was developed in the 79th legislature
  • DIR combines buying power of authorized customers to obtain discount pricing and has realized $300 million in savings
  • Established contracts through a rigorous process which are reviewed by the contracts advisory team

 
Brad Livingston, Texas Department of Criminal Justice

  • Have mixed feelings about the data center consolidation
  • One of the real challenges from the 2007-2008 period was the transition of agency staff going to work for the vendor; many staffers that were familiar with TDCJ were not deployed in a manner that allowed them to service TDCJ needs
  • In the same time period, the transformation of servers was bogged down
  • The last 2-3 years have been much improved

 
Eric Obermier, CIO, Department of Motor Vehicles

  • Server transition has been in progress and is moving slowly; timeline to transition the remaining 160 or so servers is just over two years
  • DMV recognizes the value the consolidated data center can provide
  • Another challenge has been that the staff at the data center assigned to DMV programs have a high turnover rate

 
Bowden Hight, Deputy Executive Commissioner for IT, HHSC

  • HHSC has participated in the data center since the very beginning
  • HHS agencies comprise about 30% of the contract; HHSC alone comprises about 16%
  • The contract is moving in the right direction in terms of quality of service
  • About 50% of the server transition has taken place but with the complexity of the HHSC enterprise system it is hard to determine exactly how well the transition is going
  • Challenges presented include:
    • The change in volumes and the fact that the contract is volume based make it hard to gauge cost for the future
    • Affordable Care Act required notifications have significantly increased printing and mailing services the agency must use

 
Vijay George, Director of Innovation and Technology, Comptroller of Public Accounts (CPA)

  • CPA operates an agency specific data center to support State of Texas financial systems
  • In 2007 CPA conducted a review to determine if it made sense to consolidate with the state data center; it was determined that it would be significantly more costly to do so
  • Turner asked if Xerox has the statewide contract as well as the CPA contract     
    • Yes
  • Turner asked who did the study to determine it would be more costly to switch over
    • IBM
  • Turner asked if IBM had the CPA data center contract when the study was done
    • Yes