State computer system initiative: Too huge, too costly

Three years ago the state unveiled a $5 million, 1,300-page plan to modernize and trans­form the state’s antiquated computer and information technology systems — an initiative that former Gov. Neil Abercrombie praised at the time as a "key initiative" in the administration’s New Day Plan.

Today, the state’s top information technology official is warning lawmakers the plan is so huge that it "was not implementable," and must be revisited to break it down into smaller, more manageable pieces to allow state agencies to make a series of far more modest improvements.

Former state Chief Information Officer Sanjeev "Sonny" Bhagowalia had estimated the 12-year plan, dubbed the "Business and Information Technology/Information Resource Management Transformation Plan," would cost $1 billion to implement.

But Keone Kali, the state’s current chief information officer, recently told members of the Senate Committee on Economic Development and Technology that the state hasn’t been able to successfully execute information technology projects of more than $10 million.

In the case of the state­wide transformation plan, "we have a 12-year plan that’s 1,300 pages, and we’re going to implement it over 12 years. Good luck managing that. Nobody can manage that," Kali told senators. "It’s not manageable."

Senate President Donna Mercado Kim has expressed frustration at the cost of the state’s effort to overhaul its information technology systems, and said the admission that IT plans aren’t working out is "troubling."

During questioning at a Senate hearing earlier this month, Kim told Kali that the state seems to make the same mistakes over and over.

"We do these projects in spite of the fact that we’re going to spend all this money and find out down the road that we went the wrong way," she said. "You guys oversaw that — maybe not you specifically at that point in time, but you took over at some point, and we continue to do that."

The 12-year plan was created with a $3 million seed grant in 2011 from the Omidyar Ohana Fund under the Hawaii Community Foundation, and the foundation later upped its total investment in the transformation effort to more than $5 million. Kali said developing the plan did not involve any state funding.

As recently as December, the Office of Information Management and Technology reported to lawmakers the state was in the fourth year of that 12-year transformation plan, and was embarking on the "implementation phase."

But Kali now says the plan is mostly useful as "a reference," and said the state intends to pursue smaller component pieces of the plan over the next two years.

That same December report also announced to lawmakers that Kali’s office was "accelerating implementation" of a related Enterprise Resource Planning (ERP) project to replace existing systems for managing payroll, attendance, budgeting and grants management. That project was dubbed the "Statewide Unified Resource Framework," or SURF, initiative.

However, Gov. David Ige’s office announced last month the state had canceled its request for proposals for the SURF project because the proposals from vendors were all too expensive.

The state spent $10.8 million developing that request for proposals and performing related research and studies, and spent another $321,303 on related legal costs, according to OIMT.

As with the larger transformation plan, state officials say the money spent on the SURF request for proposals was not wasted because the state can pursue smaller, more manageable pieces of the SURF initiative in the next two years. In each case the effort won’t be glamorous, but it represents the way forward, Kali said.

"People really liked the vision of ‘we’ll just transform the world,’ and it’s not that pretty," Kali said. "It’s a lot of ‘taking this musty old server and converting it into this,’ and ‘just get these people to be trained on this.’ … Every little thing has a hundred steps."

Kali acknowledged the original idea was to actually implement the 12-year plan, not to break it down into pieces and select fragments of the plan that can be carried out. But he said it is now clear that won’t work.

"I think the state’s readiness is really what we discovered through this process," Kali said. "The culture’s not ready for it, the people aren’t ready for it, the processes aren’t ready for it, and if we were to just throw in a piece of software for a very expensive cost, it wouldn’t be successful."

Instead, Kali outlined for lawmakers a much more modest "Success Roadmap" the state will follow to achieve goals within the large plan, such as consolidating information technology procurement, improving security and training staff.

Robbie Kane, director of Omidyar Initiatives at Hawaii Community Foundation, said in a written statement that the foundation invested in the state transformation project because it "believes in equal access to state services for all residents on all islands and recognizes the substantial improvements that the state’s transformation program will make, especially for rural and neighbor island populations, by streamlining internal business processes and making more services available online."

The 12-year transformation plan was based on an aggressive budget of $100 million per year, Kane said, and "we’ve always maintained a pragmatic approach to the plan, recognizing that successful imple­­mentation is dependent on the necessary financial appropriations. We’ve also kept in mind the potential impact of changes in administration and leadership, as well as the inevitable advancements in technology."

Kane said the transformation effort has made significant progress in stream­­- lining business processes and improving state infrastructure.

"There is still much work to be done, but with the continued support of the administration, Legislature and community, we believe the effort can truly transform state government for the good of all Hawaii citizens," Kane said in a statement.

Bhagowalia, who is now deputy assistant secretary for information systems and chief information officer of the U.S. Department of the Treasury, did not respond to a request for comment submitted to Treasury officials last week. Bhagowalia in 2013 was honored with a "Federal 100 Award" from Federal Computer Week, in part for his development of Hawaii’s 12-year transformation plan.

Ige announced last week he is nominating Todd Nacapuy to replace Kali as chief information officer for the state. Kali will remain on the job pending Senate confirmation of Nacapuy, who is senior technical account manager for premier commercial services at Microsoft in Hawaii.