Texas CIO: Shared Services Contracts Hold Great Potential For Channel

Solution providers looking to transact with state government customers like Texas should figure out how to contribute to shared services contracts around key technology initiatives, the state's CIO said.

Technology spending in Texas is very decentralized, with more than 90 state agencies, 70 institutes of higher education, and 12 court systems each fulfilling their IT needs separately, according to Todd Kimbriel, CIO, State of Texas. Kimbriel therefore encouraged channel partners to look at non-traditional vehicles to get the most bang for their buck.

"The concept of a statewide contract doesn't exist," Kimbriel said at the XChange 2018 conference, hosted by CRN parent The Channel Company. "So if you want to work with the state, look at these shared services contracts that we have that are delivering technology for all agencies across the state."

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The decentralized, federated IT model employed by Texas and many other states means that solution providers must take a team approach to their public sector business rather than relying on a single relationship with a single technology buyer, according to George Phipps, services practice specialist for Salt Lake City, Utah-based solution provider NetWize.

But even having relationships with a multitude of state agencies or departments isn't enough, Phipps said. Channel partners must also look at the prime contractors in areas of interest or expertise within the state government and figure out where they could potentially add value as a sub-contractor, Phipps said.

NetWize has lots of strong relationships at the city government level, and Phipps said he'd like to identify areas of the IT budget where cities have an outsized influence on state contracts so that NetWize can leverage its pre-existing municipal relationships to potentially win some state business.

From Texas' point of view, Kimbriel pointed to the state's data center program – which currently supports 80 percent of the state's compute – as an example of a successful shared services contract. Prior to adopting a shared services approach, Kimbriel said Texas made a single data center program award and signed a single large contract, which resulted in the state ending up with a jack of all trades and master of none.

"That really was not meeting our expectations," Kimbriel said Sunday at the conference, being held Aug. 19 - 21 at the JW Marriott Hill Country in San Antonio, Texas.

The provider won the opportunity by bidding far below the actual cost of delivering the service, which Kimbriel said resulted in them losing $3 million on the contract each and every month. As a result, Kimbriel said they weren't investing much in the program, which meant it was taking them 14 months to rack and stack a single server.

Once the company got out of the contract, Kimbriel said Texas opted to move away from the traditional way of doing business and instead implement a multi-sourcing integrator (or MSI) model, enabling the state to bring in additional partners with more specialized areas of expertise.

In fact, Kimbriel said Texas was the second organization in the world to implement an MSI model, behind only Rolls Royce in the United Kingdom. Under the MSI model, Kimbriel said Capgemini would be responsible for the overall project, but separate source component providers would be brought in to fulfill specific areas of expertise around the mainframe, server, network, data center and print.

Xerox and Atos currently serve as the source component providers for Texas's data center project, according to Kimbriel. He encouraged solution providers to understand what areas of IT are being delivered as a shared service in Texas -- as well as which vendors are the prime contractor for what services -- in order for partners to successful work themselves into a sub-contractor arrangement.

In addition to the data center program, Kimbriel said the Texas.gov state portal handles roughly $2 billion in online transactions each year, with every state agency required to do all of their online payment processing through Texas.gov. As of Sept. 1, Kimbriel said Deloitte and NIC will have operational responsibility for the Texas.gov shared services portal.

"Those shared services that we deliver to our agency customers, they are your customers," Kimbriel said. "We depend heavily upon managed services and partnering with our private sector partners."