INFORMATION TECHNOLOGY COMMITTEE

North Dakota Century Code (NDCC) Section 54-35-15.1 requires the Legislative Council, during each biennium, to appoint an Information Technology Committee in the same manner as the Council appoints other interim committees. The committee is to consist of six members of the House of Representatives and five members of the Senate. The Chief Information Officer of the state serves as an ex officio nonvoting member of the committee.

North Dakota Century Code Section 54-35-15.2 requires the committee to:

1. Meet at least once each calendar quarter.
2. Receive a report from the Chief Information Officer of the state at each meeting.
3. Review the business plan of the Information Technology Department.
4. Address macro-level questions relating to the Information Technology Department.
5. Review the activities of the Information Technology Department.
6. Review statewide information technology standards.
7. Review the statewide information technology plan.
8. Conduct studies of information technology efficiency and security.
9. Make recommendations regarding established or proposed information technology programs and information technology acquisitions by the executive and judicial branches.
10. Review the cost-benefit analysis of any major information technology project of an executive or judicial branch agency. A major project is a project with a cost of $250,000 or more in one biennium or a total cost of $500,000 or more.
11. Review the cost-benefit analysis of any major information technology project of the State Board of Higher Education if the project significantly impacts the statewide wide area network, impacts the statewide library system, or is an administrative project.
12. Perform periodic reviews to ensure that a major information technology project is on its projected schedule and within its cost projections.

North Dakota Century Code Section 54-35-15.3 provides that:

• The Information Technology Committee may review any information technology project or information technology plan.
• If the committee determines that a project or plan is at risk of failing to achieve its intended results, the committee may recommend to the Office of Management and Budget the suspension of the expenditure of money appropriated for a project or plan.
• The Office of Management and Budget may suspend the expenditure authority if the office agrees with the recommendation of the committee.

North Dakota Century Code Section 54-35-15.4 authorizes the committee to request the State Auditor to conduct an information technology compliance review. The review may consist of an audit of an agency's information technology management, information technology planning, compliance with information technology plans, and compliance with information technology standards and policies or an audit of statewide compliance with specific information technology standards and policies.

The committee was assigned the study of the state's information technology organization and information technology management as provided for in Section 13 of House Bill No. 1505 (2003) and the responsibility for receiving:

• A report from the Chief Information Officer regarding the recommendations of the department's advisory committee regarding major software projects for consideration pursuant to NDCC Section 54-59-02.1.
• A report from the Chief Information Officer regarding the coordination of services with political subdivisions and a report from the Chief Information Officer and the commissioner of the State Board of Higher Education regarding coordination of information technology between the Information Technology Department and higher education pursuant to NDCC Section 54-59-12.
• A report from the Information Technology Department regarding any executive branch agency or institution that does not agree to conform to its information technology plan or comply with statewide policies and standards pursuant to NDCC Section 54-59-13.
• An annual report from the Information Technology Department regarding information technology projects, services, plans, and benefits pursuant to NDCC Section 54-59-19.
• Periodic reports from the Information Technology Department regarding budgeted and actual information technology equipment and software purchases and estimated savings by funding source pursuant to Section 7 of House Bill No. 1505.
• Information from the Information Technology Department relating to the delivery of consolidated services to agencies and the status of accumulated savings pursuant to Section 12 of House Bill No. 1505.

Committee members were Senators Larry Robinson (Chairman), Randel Christmann, Randy A. Schobinger, Tom Seymour, and Rich Warder; Representatives Eliot Glassheim, Keith Kempenich, Bob Skarphol, Ken Svedjan, Robin Weisz, and Lonny Winrich; and Chief Information Officer Curtis L. Wolfe.

The committee submitted this report to the Legislative Council at the biennial meeting of the Council in November 2004. The Council accepted the report for submission to the 59th Legislative Assembly.

INFORMATION TECHNOLOGY ORGANIZATIONAL AND INFORMATION TECHNOLOGY MANAGEMENT STUDIES

The committee was assigned the information technology organizational and information technology management studies as provided for in Section 13 of House Bill No. 1505.

The information technology organizational study was to include a review and identification of:

1. The cost and benefits of a centralized and decentralized information technology structure.
2. The cost of providing electronic mail administration, file and print server administration, seat management and desktop personal computer support, mainframe and distributed computing hosting services, consolidated storage management and disaster recovery, and software development.
3. The roles and responsibilities of agency personnel providing information technology services under a centralized and decentralized information technology structure.
4. The employee positions and competencies needed by the Information Technology Department to provide the information technology services on a centralized basis, including the organizational changes required within the department to provide the centralized services.
5. The human resource management issues, including change management, training, and employee compensation, to be addressed for a successful centralization.
6. The adequacy and quality of the services as currently provided and proper performance measures.
7. The comparison of current costs to industry and other states' data.
8. Information technology services appropriate to be performed by individual agencies.
9. A plan to either centralize or decentralize the services identified, including the reorganization tasks, personnel transfers, and the changes required for information technology budgeting and cost allocation processes.

The information technology management study was to include a review of:

1. The technology management processes of other states and private industry with respect to prioritizing state agency information technology budget requests, establishing information technology standards and policies, and overseeing information technology expenditures.
2. The role of other states in providing information technology services to nonstate government entities.
3. The level of information technology outsourcing in other state governments and the private sector and the applicability to the state of North Dakota.
4. The trends that will impact technology deployment and spending in the next 5 to 10 years.
5. The level of coordination in the management of enterprise initiatives, such as the statewide information technology network, the enterprise resource planning system initiative, the geographic information system (GIS) initiative, and the criminal justice information sharing initiative, compared to other states, including a recommendation regarding the appropriate governance structure to provide the maximum benefits to the state.
6. The potential changes to the organizational structure of the Information Technology Department and other state government entities as related to information technology.

Consultant Services and Methodology

Section 13 of House Bill No. 1505 provided a general fund appropriation of $350,000 for the purpose of contracting with consultants to conduct the information technology organizational and information technology management studies and to provide assistance with the preparation of the request for proposals and consultant oversight.

The committee received proposals from three entities interested in providing the committee with assistance in the preparation of the request for proposals, consultant selection, and consultant monitoring for the information technology organizational and management studies. The committee selected and contracted with Techwise Solutions LLC, a consulting company based in Fargo.

The committee, with assistance from Techwise Solutions LLC, released a request for proposals for the information technology organizational and information technology management studies in July 2003. The committee received proposals from four entities interested in conducting the studies, but one of the proposals was excluded because the entity's proposal was too technically focused. The committee received presentations of the proposals from representatives of the three finalists and received information from Techwise Solutions LLC, regarding the finalists. The committee selected and contracted with Pacific Technologies, Inc., a consulting company based in Bellevue, Washington. Pacific Technologies, Inc., began its work in August 2003 and concluded the studies with the presentation of a final report to the Budget Section in January 2004, as required by House Bill No. 1505.

Pacific Technologies, Inc., completed interviews with representatives of state agencies, departments, and institutions; reviewed documentation; assessed information technology organization and labor cost information; reviewed the state's enterprise initiatives; and gathered external benchmarking information.

Study Findings and Recommendations

The Pacific Technologies, Inc., final report for the information technology organizational and management studies included key findings, positive attributes surrounding information technology in the state, information technology labor costs, underlying assumptions, major recommendations, and transition plans.

Key Findings

Pacific Technologies, Inc., identified the following information technology organizational and management key findings:

• The state has a highly fragmented approach to workstation support and help desk services.
• The state has inconsistent standards and policies surrounding workstation platforms, configurations, and replacement.
• The state can achieve additional savings and improve alignment with long-term goals through continued server consolidation efforts.
• The state lacks consistent methods, tools, and performance measures to assess information technology impacts on business operations, prioritize requests for major information technology projects, and evaluate information technology projects.

Positive Attributes of North Dakota Information Technology

Pacific Technologies, Inc., identified the following positive attributes of the state's information technology:

• The state has an indepth understanding of its information technology labor costs and labor distribution.
• The state has a strong commitment to investing in information technology support.
• The state is ahead of most other states on a number of enterprise information technology initiatives.
• The state has made positive, initial strides toward effective information technology governance.

Information Technology Labor Costs

Pacific Technologies, Inc., identified the state's annual information technology labor expenditures to be approximately $26.9 million, of which $13.1 million is at the Information Technology Department and $13.8 million is at the other state agencies. Approximately 50 percent of the state's annual information technology labor expenditures are for application development and maintenance. Pacific Technologies, Inc., recommended the state streamline its application portfolio and refine its approach to information technology project approval processes to significantly impact the application-related labor expenditures.

Underlying Assumptions

Pacific Technologies, Inc., identified the following underlying assumptions that frame their recommendations:

• The state desires to move toward provisioning basic information technology services as a "utility."
• The state wants information technology to be performance-managed at both the agency and enterprise levels.
• The state should adopt best practices when practical.
• The state should favor long-term improvement over short-term considerations.

Major Pacific Technologies, Inc., Recommendations

Pacific Technologies, Inc., presented the following major recommendations and corresponding primary benefits:

Major Recommendations	Primary Benefits
Workstation support and help desk services consolidation - Consolidate all workstation support and help desk services within the Information Technology Department, including: Initial problem reporting and resolution Workstation environment maintenance and support Adds, moves, and changes Hardware replacement management Associated performance measurement and management	Positions the state's information technology environment for the long term Allows state agencies to focus on core business needs rather than technical infrastructure Leads to long-term labor cost-savings
Workstation standardization - Move to a highly standardized workstation environment on a statewide basis with the Information Technology Department managing a workstation replacement program	Improves the state's purchasing power and license management Enhances information sharing and staff productivity through common and current workstation tools Promotes the provisioning of basic information technology services as a "utility"
Server consolidation - Continue to consolidate all agency-managed servers into the Information Technology Department	Allows state agencies to focus on core business needs rather than technical infrastructure Promotes the provisioning of basic information technology services as a "utility" Leads to long-term labor and hardware cost-savings
Information technology governance - Improve the existing information technology governance processes by: Improving the processes and tools for information technology project evaluation Improving mechanisms to support cost-containment Developing meaningful statewide management and reporting views of information technology initiatives Implementing information technology performance measures Establishing an information technology innovation fund	Leads to better-informed decisionmaking Provides a more equitable, business-based, and consistent evaluation of information technology initiatives Provides the best opportunity to manage application portfolio costs

Workstation support and help desk services consolidation - Pacific Technologies, Inc., recommended the Information Technology Department target a future staffing ratio of 200 workstations per support full-time equivalent (FTE) position, an increase from the current ratio of 149 workstations per support FTE position. Maintaining service quality at the elevated support ratio depends on gaining efficiencies through the use of specialized staff and successful implementation of a standardized workstation environment and associated support tools. If fully implemented, the consolidation of workstation support and help desk services offers potential labor savings of approximately $519,000 per year in total funds; however, the capturing of all the savings would require the elimination of partial FTE positions at the agency level. Pacific Technologies, Inc., recognizes the elimination of partial FTE positions would be difficult due in part to other responsibilities of these employees. A portion of the savings would be offset by annual maintenance costs ranging from $60,000 to $260,000 of total funds and one-time costs for software, hardware, and telephone system upgrades ranging from $160,000 to $1,010,000 of total funds.

Workstation standardization - Pacific Tech-nologies, Inc., recommended the state limit workstations to two or three models (low-end, mid-level, and high-end), tightly control the associated configurations, and allow agencies the option of selecting between a three- to four-year replacement cycle. The Information Technology Department would manage the replacement cycle, including collecting necessary funds from agencies through workstation charges, procuring, configuring, and installing the workstations. The implementation of the standardized workstation environment is critical for the success of the consolidation of workstation support and help desk services. The resulting annual workstation costs would be approximately $2.9 million to $3.7 million in total funds or $30 to $36 per month per workstation, depending on the mix of workstations and the replacement cycles.

The Information Technology Department did release a request for proposal for acquisition of a single brand of workstations for all state agencies and has awarded a contract for desktop and laptop acquisition to Hewlett Packard. Under the contract, agencies will be allowed to purchase workstations directly from the vendor.

Server consolidation - Pacific Technologies, Inc., recommended the Information Technology Department assume the administration of existing agency-managed servers as the servers are replaced and reduce over 150 servers from the state's inventory. As the number of servers are reduced, the Information Technology Department should maintain a 29-to-1 server to support FTE position ratio. The continued server consolidation has the potential annual labor-savings of approximately $162,000 in total funds in addition to significant long-term savings in hardware costs.

Information technology governance - Pacific Technologies, Inc., recommended an information technology project investment review process relating to the evaluation and prioritization of information technology initiatives and an evaluation criteria development process relating to the development of evaluation criteria. The state should develop a set of supporting tools, including business case templates, business plan templates, and an information technology report card, and the state should significantly increase its performance measurement efforts to improve insight into information technology operations and expenditures by implementing performance measurements in the areas of customer satisfaction, financial and management performance, project performance, and consolidation transition performance. Pacific Technologies, Inc., noted the prioritization of proposed major computer software projects by the State Information Technology Advisory Committee is a positive step toward implementing the information technology governance recommendation.

Summary of estimated savings and costs - The following is a summary of the estimated savings and costs of the Pacific Technologies, Inc., recommendations:

Recommendations	Potential Annual Savings (Total Funds)	Recurring Annual Expenditures (Total Funds)	One-time Costs (Total Funds)
Workstation support and help desk services consolidation	$519,000	$60,000 to $260,000	$160,000 to $1,010,000
Workstation standardization	Unknown	$2,950,000 to $3,680,000	$20,000 to $430,000
Server consolidation	$162,000		$0 to $20,000
Information technology governance	Unknown	$200,000 to $340,000	$480,000 to $1,010,000
Total	$681,000	$3,210,000 to $4,280,000	$660,000 to $2,470,000

Transition Plans

Pacific Technologies, Inc., recommended the following transition plans for implementing each of the recommendations:

1. Workstation support and help desk services consolidation - Consolidate all workstation support and help desk services within the Information Technology Department.
   1. Establish a project governance process.
   2. Establish service levels.
   3. Finalize implementation options and costs.
   4. Finalize a funding mechanism.
   5. Develop legislation.
   6. Develop a tactical rollout plan.
   7. Implement consolidated desktop services.
2. Workstation standardization - Move to a highly standardized workstation environment on a statewide basis with the Information Technology Department managing a workstation replacement program.
   1. Establish a project governance process.
   2. Inventory hardware and software.
   3. Develop workstation options.
   4. Define replacement cycles and criteria.
   5. Finalize implementation options and costs.
   6. Develop legislation.
   7. Develop a tactical rollout plan.
   8. Implement the rollout plan.
3. Server consolidation - Continue to consolidate all agency-managed servers in the Information Technology Department.
   1. Establish a project governance process.
   2. Develop a preliminary consolidation schedule.
   3. Develop legislation.
   4. Develop a tactical rollout plan.
   5. Implement the rollout plan.
4. Information technology governance - Improve the existing information technology governance processes.
   1. Develop State Information Technology Advisory Committee initial evaluation criteria.
   2. Finalize and communicate the State Information Technology Advisory Committee evaluation process.
   3. Develop information technology innovation guidelines.
   4. Establish statewide information technology business case templates and tools.
   5. Develop baseline, statewide Information Technology Department performance measures.
   6. Develop legislative reporting package templates.

Additional Recommendations

Pacific Technologies, Inc., recommended the following additional recommendations:

• Business application support - Maintain business application support within state agencies.
• Enterprise architecture process - Focus attention on the enterprise architecture process by applying adequate resources and increasing management attention to ensure the process is completed in a timely manner.
• North Dakota University System - Conduct a similar study and review aimed at improving the overall efficiency of information technology expenditures and information technology governance for the North Dakota University System.
• Application cost analysis - Summarize the state's application environment by gathering data on application spending, labor effort, expected life, and asset value.
• Innovation fund - Establish an innovation fund to provide agencies incentives to pilot new technologies that may be useful to the state on a broader basis.

Responses to Pacific Technologies, Inc., Recommendations

The committee received responses regarding the recommendations included in the Pacific Technologies, Inc., final report from Techwise Solutions LLC, Information Technology Department, Agriculture Commissioner, Department of Human Services, Public Service Commission, Department of Corrections and Rehabilitation, Department of Transportation, Land Department, Oil and Gas Division of the Industrial Commission, State Water Commission, and Supreme Court.

Techwise Solutions LLC Response

Techwise Solutions LLC, the committee's consultant manager, supported the recommendations, as appropriate, if the state desires to move toward providing basic information technology services as a "utility." Techwise Solutions LLC agreed with the recommendations to consolidate workstation support and help desk services, standardize the workstation environment, and retain business application support within state agencies. Techwise Solutions LLC suggested the state review its application development environments, data bases, and related tools and the North Dakota University System work with the Information Technology Department to determine if similar efficiencies can be achieved within the North Dakota University System.

Information Technology Department Response

The Information Technology Department supported the recommendations in the Pacific Technologies, Inc., final report. The department instructed a subcommittee of the state's Architecture Review Board, an enterprise architecture team responsible for partnering with the Information Technology Department in setting the future direction of information technology in the state, to review the recommendations in the Pacific Technologies, Inc., final report. The subcommittee completed a review of the recommendations and identified the following next steps:

1. Standardize the specifications for workstations to be used in state government to reduce the total cost of ownership.
2. Prepare and execute a request for proposal to begin aggregated single brand acquisition for workstations.
3. Adopt a four-year replacement cycle for workstations to reduce the total cost of ownership.
4. Continue to study the consolidation of workstation support and help desk services.
5. Continue to study how to best manage the workstation replacement cycle process.

In regard to the standardization and acquisition of workstations, the subcommittee defined four classes of workstations--office automation desktops, power user desktops, mainstream laptops, and power user laptops. The subcommittee estimated state agencies, excluding higher education have approximately 7,700 workstations, of which 5,000 are office automation desktops, 1,300 are power user desktops, 1,000 are mainstream laptops, and 400 are power user laptops. In July 2004 the department released a request for proposal for acquisition of a single brand of workstations for all state agencies. The department received responses from six vendors--Dell, Gateway, Howard, Hewlett Packard, IBM, and MPC Computers, LLC. After review of the proposals by the Architecture Review Board and the State Information Technology Advisory Committee, the department awarded a contract for desktop and laptop acquisition to Hewlett Packard. The Architecture Review Board has recommended the contract be a mandatory contract for state agencies. The contract would also be available to other entities, including higher education, school districts, and other political subdivisions.

The subcommittee estimated the state spends approximately $4.6 million over two bienniums ($2.3 million per biennium) to replace 4,288, or approximately 85 percent, of its total office automation desktops. Implementing the aggregated procurement contract with a four-year replacement cycle would ensure all office automation workstations are replaced every four years at an estimated cost of $3,325,000, resulting in estimated savings of $1,275,000 over two bienniums. The Office of Management and Budget is working with state agencies to review budget requests for the 2005-07 biennium based on the request for proposal prices, and it appears that a majority of agencies will have sufficient funding in their budgets to support a four-year replacement cycle for office automation desktops using the request for proposal pricing.

The subcommittee is continuing its further study of the consolidation of workstation support and help desk services and the study of how to best manage the workstation replacement cycle process.

Agency Concerns

The committee learned some state agencies have major concerns with the recommendations included in the Pacific Technologies, Inc., final report, including:

• Implementation should proceed cautiously to avoid undoing the significant progress and efficiencies accomplished by many state agencies through an aggressive adoption of information technology applications. (Agriculture Commissioner)
• The recommendations fail to address the specialized high-end needs of scientific and engineering-based agencies. The state's information technology system should include enough flexibility to allow exceptions for agencies with unique or complex, specialized information technology needs. (Public Service Commission)
• Agency loss of control over workstation support could result in increased costs and potential inefficiencies in conducting business if Information Technology Department response times are not as fast as agencies are currently receiving. (State Department of Health)
• Providing workstation support to remote offices is not in place and would need to be developed. (Department of Corrections and Rehabilitation)
• The recommendations lack an analysis from agencies' perspectives related to potential inefficiencies resulting from further centralizing information technology services. (Land Department)
• The recommendations do not recognize the delicate balance that must be maintained between the three branches of government. The state needs to maintain an information technology system that recognizes the equal dignity of the judicial, executive, and legislative branches and the need for the branches to work independently for the good of the state. Consolidation could result in an executive branch agency setting information technology priorities for the legislative and judicial branches. (Supreme Court)

Committee Recommendations

The committee accepted the Pacific Technologies, Inc., final report completed for the information technology organizational and management studies.

INFORMATION TECHNOLOGY FUNCTIONAL CONSOLIDATION

The committee was assigned the responsibility for receiving information from the Information Technology Department relating to the delivery of consolidated information technology services to agencies and the status of accumulated savings pursuant to Section 12 of House Bill No. 1505 (2003).

House Bill No. 1505 provides for the transfer of state information technology employee positions; transfer of accumulated information technology functional consolidation savings to the general fund; and consolidation of information technology services, including electronic mail, file and print server administration, data base administration, storage, application server, and hosting services. The following is a summary of the information technology functional consolidation requirements included in House Bill No. 1505 and the status of the requirements:

Requirements	Status
Transfer of related state agency information technology employee positions - Section 10 provides that on November 1, 2003, 24 FTE positions in 15 state agencies relating to the identified information technology services be transferred to the Information Technology Department. The Information Technology Department was to identify the number of FTE positions required for the consolidated services and make the necessary reductions.	The Information Technology Department established a project executive committee consisting of Mr. Bill Goetz, Chief of Staff, Governor's office; Ms. Pam Sharp, Director, Office of Management and Budget; and Mr. Curtis L. Wolfe, Chief Information Officer, Information Technology Department, for implementing the consolidation of information technology services required by House Bill No. 1505. The project executive committee recommended the transfer of 8.5 FTE positions to the Information Technology Department on November 1, 2003, and the exemption of the remaining 15.5 FTE positions. Of the 15.5 FTE positions exempted, 11 FTE positions were primarily performing duties not related to the services being consolidated, 2 FTE positions were required for support of the Unisys mainframe at Job Service North Dakota, and 2.5 FTE positions were exempted due to unique agency requirements. The department filled 6 of the 8.5 FTE positions transferred from various agencies and transferred a .5 FTE position to the Office of Management and Budget resulting in a net reduction of 2 FTE positions.
Information technology functional consolidation accumulated savings - Section 11 provides that the Office of Management and Budget and the Information Technology Department shall achieve efficiencies during the 2003-05 biennium relating to the required functional consolidation, and the director of the Office of Management and Budget shall transfer the savings accumulated as a result of these efficiencies in the amount of $1.4 million to the general fund by June 30, 2005.	The department is estimating savings of $438,775 for the 2003-05 biennium, of which $330,429 relates to the 15 agencies identified in Section 10 of House Bill No. 1505 and $108,346 relates to the remaining 29 agencies that are required to participate in the functional consolidation but are not required to transfer FTE positions. The estimated savings have been impacted by the timing of the consolidation, equipment credits provided to agencies for equipment on lease, and funding source restrictions. Pursuant to an Attorney General's opinion, not all funding sources estimated to have savings are able to transfer the savings to the general fund because of restrictions on the use of select special funds. The department estimates approximately one-third, or $146,258, of the savings will be transferred to the general fund by June 30, 2005. The department estimates savings for the 2005-07 biennium of $961,146 from all funds.
Required information technology services - Section 16 provides that each state agency and institution, excluding the legislative and judicial branches, institutions under the control of the State Board of Higher Education, Public Employees Retirement System, Retirement and Investment Office, Attorney General's office, and any entity exempted by the Office of Management and Budget after advisement by the Information Technology Department, shall obtain the identified services through a delivery system established by the Information Technology Department in conjunction with the Office of Management and Budget.	The project executive com-mittee also recommended exemption of the Bank of North Dakota, Housing Finance Agency, State Water Commission, State Fair, Mill and Elevator, North Dakota Vision Services - School for the Blind, School for the Deaf, State Seed Department, and Adjutant General. Seven agencies had consolidated information technology services with the Information Technology Department prior to the passage of House Bill No. 1505, and five agencies were not impacted by the consolidation because they do not have services to transfer to the Information Technology Department. As a result of the consolidation, 170 servers were migrated to the Information Technology Department and the department plans to eliminate 102 servers during the 2003-05 biennium. The department's help desk has experienced an increase in service calls with the implementation of the consolidation of information technology services. The help desk is to either resolve or assign a call within 10 minutes. The department's goal is for the help desk to resolve 70 percent of the calls received. Those calls not resolved by the help desk are assigned to a technical support position and responded to within 15 minutes of the call. The department is tracking statistics relating to calls resolved and assigned by the help desk, technical support acknowledgment of call, resolve time, and customer notification of resolution.

PRIORITIZATION OF PROPOSED MAJOR COMPUTER SOFTWARE PROJECTS

North Dakota Century Code Section 54-59-02.1 requires the Information Technology Department to appoint an advisory committee for the purposes of prioritizing major computer software projects. The Chief Information Officer is to submit recommendations of the advisory committee regarding major computer software projects to the Information Technology Committee for consideration by the committee and the drafting of appropriate legislation to implement the recommendations.

The committee received information from the Information Technology Department regarding the prioritization of proposed major computer software projects and learned the department assigned the prioritization responsibility to the State Information Technology Advisory Committee, a committee created by NDCC Section 54-59-07 consisting of the Chief Information Officer, chancellor of the North Dakota University System, Attorney General, Secretary of State, Tax Commissioner, Chief Justice of the Supreme Court, two members of the Legislative Assembly, eight members representing state agencies, and two members representing private industry. The State Information Technology Advisory Committee addressed the prioritizing of major projects through information technology portfolio management. Executive branch agencies identified and internally prioritized information technology projects, submitted their information technology budgets into the budget analysis and reporting system, and flagged projects to be ranked by the State Information Technology Advisory Committee. The information technology projects were sorted into three categories--projects over $250,000 requesting funds from the general fund for the investment or the ongoing maintenance costs, projects over $250,000 requesting funds from non-general fund sources for the investment or the ongoing maintenance costs, and projects under $250,000 requesting funds from the general fund for the investment or the ongoing maintenance costs. State agencies self-scored projects over $250,000 requesting funds from the general fund for the investment or the ongoing maintenance costs based on return on investment, customer service benefits, internal efficiency benefits, operational necessity, and project risk. The Information Technology Department presented a preliminary ranking of these projects to the State Information Technology Advisory Committee for the committee's prioritization.

The State Information Technology Advisory Committee met on September 8, 2004, and prioritized major executive branch computer software projects for the 2005-07 biennium as follows:

			2005-07 Estimated Cost
Project		Agency	General Fund Share	Total Cost
1	North Dakota public safety mobile communications	Division of Emergency Management	$3,000,0001	$5,700,0001
2	Medicaid management information system (MMIS) rewrite	Department of Human Services	$3,667,820	$29,188,159
3	Criminal justice information system	Information Technology Department	$1,000,000	$1,000,000
4	Integrated tax system	Tax Commissioner's office	$12,625,000	$12,625,000
5	Computer-aided dispatch	Division of Emergency Management	$500,000	$500,000
6	Offender management system upgrade (ITAG)	Department of Corrections and Rehabilitation	$375,000	$375,000
7	Mainframe migration	Information Technology Department	$6,300,000	$6,300,000
8	AS/400 migration	Secretary of State	$500,000	$500,000
9	Time and labor	Enterprise Architecture	$700,000	$700,000
10	Enhanced support center	Information Technology Department	$1,000,000	$1,800,000
11	Geographic information system	Information Technology Department	$325,000	$325,000
12	Health Insurance Portability and Accountability Act (HIPAA) project	Department of Human Services	$319,000	$3,190,000
1This project also has a $3 million general fund anticipated cost for the 2007-09 biennium.

The Information Technology Department will revise the prioritization to reflect those projects that are funded in the Governor's 2005-07 biennium budget recommendation and will present the prioritization to the Appropriations Committees of the 59th Legislative Assembly (2005). For projects over $250,000 requesting funds from non-general fund sources for the investment or the ongoing maintenance costs and projects under $250,000 requesting funds from the general fund for the investment or the ongoing maintenance costs, the department will prepare a list by agency and priority within agency and provide the list to the State Information Technology Advisory Committee, Office of Management and Budget, and the Appropriations Committees of the Legislative Assembly.

INFORMATION TECHNOLOGY DEPARTMENT BUSINESS PLAN

North Dakota Century Code Section 54-59-06 requires the Information Technology Department to develop and maintain a business plan. Pursuant to that directive the department prepared a strategic business plan for the 2003-05 biennium. The plan includes three goals the department must accomplish to effectively achieve its mission to provide leadership and knowledge to assist customers in achieving their mission through the innovative use of information technology. The following is a summary of the goals and objectives included in the plan:

Goal	Objectives
Define and pursue opportunities for creating, expanding, or eliminating services to maximize the value of the department to government and education	Critically evaluate the value of all the department's services to government and education Pursue opportunities to increase the use of existing services offered to customers Continue to identify and pursue statewide opportunities for sharing infrastructure and providing new services Develop service level objectives for all high-priority services
Manage resources to improve efficiency and reduce cost	Maximize staff productivity by implementing standard procedures for critical operating processes and developing guidelines for managing meetings Improve the department's performance management and project management processes and communicate their value to employees and customers Maintain competitive rates that are less than or equal to benchmarks and meet federal retained earning requirements Hold or reduce costs for hosting and network services while improving service levels
Provide an employee work environment that invites challenge, inspires innovation, fosters pride, and encourages professional growth	Retain the department's knowledge and talent by maintaining a high level of employee satisfaction Continue to develop workforce strategies that will support future services Maintain a workforce recruitment process that allows the department to hire the best and the brightest in a timely fashion Continue to improve upon efforts to recognize and reward employees for their accomplishments Provide a fair and equitable work environment for employees

INFORMATION TECHNOLOGY DEPARTMENT ANNUAL REPORT

North Dakota Century Code Section 54-59-19 requires the Information Technology Department to prepare an annual report on information technology projects, services, plans, and benefits. Pursuant to that directive the department prepared a report that contains:

• An executive summary that describes and quantifies benefits the state is realizing from investments in information technology.
• A status report on the costs and benefits of large information technology projects completed in the last 12 months.
• A summary of small information technology projects completed in the last 12 months.
• Information on the department's performance, including a rate comparison and an update on the department's performance measures.
• An overview of ongoing information technology initiatives.

The committee learned the department tracks and monitors the cost and the revenue for each service to ensure that a service is not subsidizing another service. The federal government does not allow the department to charge rates that generate revenues in excess of costs; therefore, the department monitors its cash balances and adjusts rates accordingly. The department also monitors what other entities are charging for similar services in an effort to maintain quality services at a fair price. The following is a summary of rate comparisons for the services that generate a majority of the department's total revenue and an update on the department's performance measures:

SOFTWARE DEVELOPMENT
	Systems Analysis	Programming
North Dakota Information Technology Department rates	$56.25 per hour	$52 per hour
South Dakota Bureau of Information Technology rates	$48 per hour	*
Montana Information Technology Services Division rates	Local providers	*
Priority Technologies, Inc.	$86.25 per hour	*
Maximus	Ranges from $125 to $275 per hour	*
Capstone	Ranges from $100 to $140 per hour	*
Inet	Ranges from $60 to $100 per hour	*
K-2	Ranges from $60 to $80 per hour	*
Route 94	Ranges from $60 to $80 per hour	*
*The Information Technology Department is the only provider offering programming services at a rate separate from systems analysis.

TELEPHONE FEES
North Dakota Information Technology Department rates	Telephone line - $21 per device per month Speaker function - $2 per month Display function - $1 per month Voice mail (unlimited) - $3 per month
South Dakota Bureau of Information Technology rates	Telephone line - $11 per device per month* Speaker function - Actual cost Display function - Actual cost Voice mail (unlimited) - $6 per month
Montana Information Technology Services Division rates	Telephone line - $20 per device per month Speaker function - $1 per month Display function - $7 per month Voice mail (three-minute limit) - $5 per month Voice mail (six-minute limit) - $8 per month Voice mail (ten-minute limit) - $10 per month
Qwest	$39.88 per month*
Polar Communications	$27.23 per month*
SRT	$28.79 per month*
Consolidated Telcom	$41.06 per month*
*The customers buy their own telephone device.

LONG DISTANCE
North Dakota Information Technology Department rates	In state - $.05 per minute Out of state - $.05 per minute 800 service - $.07 per minute
South Dakota Bureau of Information Technology rates	In state - $.08 per minute Out of state - $.09 per minute 800 service - $.10 per minute
Montana Information Technology Services Division rates	In state - $.105 per minute Out of state - $.105 per minute 800 service - $.10 per minute
Minnesota Department of Administration	In state - $.064 per minute Out of state - $.064 per minute 800 service - $.08 per minute
Nebraska Division of Communications	In state - $.07 per minute Out of state - $.07 per minute 800 service - $.09 per minute
Oklahoma Office of State Finance	In state - $.09 per minute Out of state - $.09 per minute 800 service - $.11 per minute

OTHER CHARGES
Service	North Dakota Information Technology Department Rates	South Dakota Bureau of Information Technology Rates	Montana Information Technology Services Division Rates
Central computer central processing unit (CPU) rates	Batch CPU - $.98 per second CICS CPU - $.98 per second ADABAS CPU - $1.03 per second TSO CPU - $.98 per second	Batch CPU - $1.53 per second CICS CPU - $1.53 per second ADABAS CPU - $1.53 per second TSO CPU - $1.53 per second	Batch CPU - $1.74 per second CICS CPU - $.51 per second ADABAS CPU - $.99 per second TSO CPU - $2.13 per second
Network fees	Device fee - $29 per device per month DSL service - Actual cost (ranges from $40 to $120) ATM T-1 service - $840 per month	Device fee - $46 per device per month DSL service - $125 per month ATM T-1 service - $495 per month Access fee - $52 per device per month	Device fee - $72.60 per device per month DSL service - $250 per month ATM T-1 service - $650 per month

PERFORMANCE MEASURES
Performance Measures	Baseline (Previous Years)	Current Status (June 2004)	Target
Acceptable level of total net assets	2001 - 1.6 2002 - 1.4 2003 - 1.6	1.4	< or = to 2.0
Percentage of Information Technology Department rates reported in annual report that are competitive	2003 - 100%	100%	100%
Total number of customer projects and service requests completed
Projects	N/A	20,826	Monitor
Service requests	N/A	21,742	Monitor
Customer satisfaction indexes (percentages satisfied or very satisfied) relating to:	2002-2003
Value	85.3-86.0%	88.1%	90%
Timeliness	94.9-90.2%	91.6%	95%
Quality	94.6-94.2%	92.3%	95%
Knowledge	95.9-96.1%	97.3%	98%
Professionalism and courtesy	98.6-96.9%	97.3%	100%
Employee satisfaction index	2001 - 1.967 2002 - 2.010 2003 - 1.983	1.96	2
Controllable employee turnover	2001 - 4.0% 2002 - 2.4% 2003 - 1.9%	3.2%	4.0-6.0%
Percentage of service levels met	N/A	100%	100%
Percentage of strategic business plan objectives completed or on schedule	2001 - 35% 2002 - 50% 2003 - 65%	72%	70%

POLICIES, STANDARDS, AND GUIDELINES

North Dakota Century Code Section 54-59-09 requires the Information Technology Department to develop statewide information technology policies, standards, and guidelines based upon information received from state agencies and institutions. Except with respect to academic and research uses of information technology at the institutions under the control of the State Board of Higher Education, each executive branch state agency and institution is required to comply with the policies and standards developed by the department. Information technology policies, standards, and guidelines must be reviewed by the State Information Technology Advisory Committee.

The department has adopted policies, standards, and guidelines in a variety of areas and continues to update and adopt new policies, standards, and guidelines as necessary. Policies, standards, and guidelines adopted include standards for information technology procurement, information technology project management, antivirus, and videoconferencing.

The committee learned in June 2004 the Attorney General issued an opinion stating the Information Technology Department is required to follow the administrative rulemaking requirements of NDCC Chapter 28-32 for establishing policies, standards, and guidelines for executive branch agencies with respect to purchasing information technology hardware, software, and services. The opinion states Section 28-32-01(11)(a) exempts a rule concerning only the internal management of an agency which does not directly or substantially affect the substantive or procedural rights or duties of any segment of the public; however, the exception does not apply to the department's policies, standards, and guidelines since the department's policies, standards, and guidelines go beyond the internal management of government and extend to all executive branch agencies and institutions other than those under the control of the State Board of Higher Education. The committee learned the department's policies, standards, and guidelines relating to information technology are developed through an enterprise architecture process and are approved by the Architecture Review Board and the State Information Technology Advisory Committee. The committee also learned 16 other states exempt information technology policies, standards, and guidelines from the administrative rules process.

INFORMATION TECHNOLOGY PLANS

North Dakota Century Code Section 54-59-11 requires every executive branch agency to prepare an information technology plan, subject to approval by the Information Technology Department. The plan must be submitted to the department by July 15 of each even-numbered year. The plan must be prepared based on guidelines developed by the department; must emphasize the long-term strategic information technology goals, objectives, and activities for the current biennium and next two bienniums; and must include a list of information technology assets owned, leased, or employed by the entity. The department is required to review each entity's plan for compliance with statewide information technology policies and standards, and the department may require an entity to change its plan to comply with statewide policies and standards or to resolve conflicting directions among plans. Agencies of the judicial and legislative branches are required to file their information technology plans with the department by July 15 of each even-numbered year. Based on the information technology plans, the department must prepare a statewide information technology plan.

The committee received information from the department regarding information technology plans and learned 63 of the 72 state agencies submitted their information technology plans on or before July 15, 3 were received the following week, 2 were submitted the first week of August, and 4 had yet to submit a plan due in part to the development of cost estimates for major information technology projects. The department will present to the 59th Legislative Assembly a statewide information technology plan that will communicate a shared vision between state government, higher education, and kindergarten through grade 12; outline strategic initiatives; and establish goals and strategies that will serve as a basis for more detailed planning efforts.

MAJOR INFORMATION TECHNOLOGY PROJECTS

The committee is authorized to review any information technology project or information technology plan. If the committee determines that a project or plan is at risk of failing to achieve its intended results, the committee may recommend to the Office of Management and Budget the suspension of the expenditure of money appropriated for the project or plan. In addition, the committee is directed to review the cost-benefit analysis of any major information technology project, which is defined in statute to be an executive or judicial branch project with a cost of $250,000 or more in one biennium or a total cost of $500,000 or more or a higher education project that impacts the statewide wide area network, impacts the statewide library system, or is an administrative project.

The committee reviewed quarterly reports of major projects compiled by the Information Technology Department and received information regarding specific projects, including the Job Service North Dakota imaging and workflow project, Retirement and Investment Office pension administration system, State Department of Health women, infants, and children management information system project, and Department of Human Services Medicaid management information system. The committee did not recommend the suspension of any project. However, the committee did express concern with respect to the Bank of the North Dakota e-business project.

The committee learned the Bank of North Dakota e-business project consists of the replacement of the Student Loans of North Dakota guarantor and student loan lender information technology systems. The guarantor portion of the project, which was originally scheduled for completion in December 2002, suffered numerous project delays. Due to the project vendor's financial position, the Bank assumed total responsibility for the project and took over physical control of the project's source code. The Bank also completed an analysis of project management "lessons learned" relating to the project and provided the committee with an assessment of the viability of the vendor.

The committee learned through an independent assessment of the e-business project that the delays and cost overruns experienced on the project were caused by assignment of analysis responsibilities to individuals with no experience in analytical work, no proactive risk management of the architecture and the infrastructure, introduction of complex application architecture, failures in the deployment process and infrastructure at critical points in the project, and no ability to automate functional tests.

The Bank of North Dakota used in-house software developers and assistance from the project vendor to complete the guarantor portion of the project in July 2004. The committee learned the new system is demonstrating new real-time functionality, reduction in manual processes, and workflow improvements. Parallel processing and additional system testing between the new system and the legacy system will continue until satisfactory levels of performance are achieved for all areas of the new system. The Bank anticipates shutting down the legacy system at the end of the 2004 calendar year.

The committee learned the Bank of North Dakota is in the process of selecting a consultant to provide assistance with the replacement of the Bank's student loan lender system and the core banking system. The Bank anticipates completing a detailed business case regarding the replacement of the student loan lender system by the end of the 2004 calendar year.

INFORMATION TECHNOLOGY DEPARTMENT COORDINATION OF SERVICES

North Dakota Century Code Section 54-59-12 provides for the review and coordination of information technology between the Information Technology Department, higher education, and political subdivisions. Pursuant to that directive, the committee received information from representatives of elementary and secondary education, higher education, and political subdivisions regarding information technology activities.

Elementary and Secondary Information Technology Initiatives

The committee learned the Educational Technology Council is responsible for coordinating education technology initiatives for elementary and secondary education. The council has established a school data collection committee to study current data collection requirements and processes. The school data collection committee developed a set of guiding principles relating to the development of new data collection processes and the coordination of existing systems and processes, worked to identify specific cases of duplicate data reporting, began coordinating reporting requirements and processes among data collection systems, and investigated state and federal initiatives that may impact data collection in kindergarten through grade 12 schools. The council also completed a kindergarten through grade 12 educational technology status report and needs assessment that concluded technology is widely used for administrative and educational purposes in North Dakota schools and the statewide information technology network is of high value to schools.

Higher Education Information Technology Initiatives

The committee learned the North Dakota University System prepares an information technology annual plan that summarizes information technology accomplishments and information technology goals. The North Dakota University System collaborates with the Information Technology Department on the statewide information technology network and the implementation of the state's enterprise resource planning system initiative, commonly known as the ConnectND system.

Political Subdivisions

The committee learned the North Dakota League of Cities coordinates with the Information Technology Department on a number of information technology services and the North Dakota Association of Counties has partnered with several state agencies, including the Information Technology Department, to develop automated systems that link state government to specific county agencies.

INFORMATION TECHNOLOGY EQUIPMENT AND SOFTWARE PURCHASES

The committee was assigned the responsibility for receiving periodic reports from the Information Technology Department regarding budgeted and actual information technology equipment and software purchases and estimated savings by funding source pursuant to Section 7 of House Bill No. 1505.

Pursuant to that directive the committee received information from the Information Technology Department and learned the department has contracts for several information technology products and services. The department has awarded a contract to AT&T and Sprint for telephone long distance, resulting in savings of $500,000 per year in total funds; a contract to Western Wireless for cellular telephone service, resulting in savings of $60,000 per year in total funds; and a contract to IBM for hardware maintenance, resulting in savings of $80,000 per year in total funds. The committee did not receive any information from the department regarding savings from information technology equipment and software purchases.

The committee learned the Information Technology Department's information technology procurement responsibilities include the review and approval of agency information technology purchases, development of information technology procurement standards, development of contract and request for proposal templates, and technical assistance with large procurements and request for proposal development. The Information Technology Department completed an information technology procurement standard that was reviewed and approved by the State Information Technology Advisory Committee, the Architecture Review Board, and the department's management. In accordance with the standard, information technology procurements will be reviewed prior to the actual purchase transaction to ensure compliance with information technology standards, consistency with enterprise architecture, conformance to agency information technology plans, and adherence to procurement best practices.

OTHER INFORMATION

Information Technology Department 2003-05 Appropriation Status

The committee received information from the Information Technology Department regarding the department's legislative appropriation for the 2003-05 biennium. The committee learned the department's legislative appropriation for the 2003-05 biennium included a $1 million general fund budget reduction. To address the budget adjustment, the department proposed implementing a one-time miscellaneous billing adjustment for telephone and data processing services to recover $500,000 and $250,000, respectively, and reducing funding for the statewide information technology network by $250,000. Agency information technology budgets were not to be affected by the one-time adjustment because the Information Technology Department lowered telephone and data processing rates for the remainder of the 2003-05 biennium due to savings in those areas. However, in January 2004 the Attorney General issued an opinion stating the department does not have the authority to assess a one-time miscellaneous charge to state agencies. Therefore, the department informed the committee that it was unable to reduce general fund expenditures by $1 million and would be requesting a deficiency appropriation of the 59th Legislative Assembly.

The department's legislative appropriation for the 2003-05 biennium also included $862,059 of special funds from various state agencies. The Office of Management and Budget in consultation with the Attorney General's office determined $70,142 of the $862,059 in special funds may not be transferred to the department because of restrictions on the use of those funds.

As a result of these two issues, the department will be requesting a deficiency appropriation of the 59th Legislative Assembly in the amount of $1,070,000 to address the general fund budget adjustment and the shortfall of special funds. If a deficiency appropriation is not provided, the department indicated it would be forced to make reductions to department FTE positions funded from the general fund, geographic information system initiative, kindergarten through grade 12 portion of the statewide information technology network, Division of Independent Study, Educational Technology Council, EduTech, and Prairie Public Broadcasting.

Enterprise Resource Planning System Initiative - ConnectND System

The committee received periodic reports from the Office of Management and Budget and the North Dakota University System regarding the status of the implementation of the enterprise resource planning system initiative, known as the ConnectND system. The committee learned the Office of Management and Budget issued bonds totaling $20 million in September 2003 for the remainder of the project implementation costs for the ConnectND system. The bonds were issued at an interest rate of 3.9 percent for a period of 10 years with annual debt service of approximately $2.7 million. The estimated debt service amounts are:

Biennium	State Agency Portion	Higher Education Portion
2005-07	$1,563,727	$3,828,436
2007-09	1,565,152	3,831,923
2009-11	1,564,822	3,831,116
2011-13	1,565,033	3,831,633
2013-15	778,257	1,905,387
Total	$7,036,991	$17,228,495

The state agencies' portion of the debt service for the 2005-07 biennium of approximately $1.6 million and the estimated operational cost of the system for the 2005-07 biennium of approximately $1.4 million will be recovered through a $12.58 per month charge to agencies based on FTE positions and a $6.68 per month charge to agencies per $1 million appropriated. These charges will be included in 2005-07 state agency budget requests.

The higher education portion of the debt service for the 2005-07 biennium of approximately $3.8 million and the estimated operational cost of the system for the 2005-07 biennium of approximately $3.5 million will be recovered through various funding sources, including student fees, internal reallocation, reallocation of technology fees, and funding from the 2003-05 operations pool.

The committee learned in January 2004 the Governor directed the ConnectND system to be implemented for state government without a timelag for payroll processing resulting in necessary modifications to the system and a delay in the rollout of the system to state agencies. Due to the extended project timeline, the state also decided to implement the employee expense module. The estimated cost of the necessary modifications and the implementation of the employee expense module is approximately $450,000, which will be paid from Office of Management and Budget carryover funds. The financial and human resource components of the system, except for the employee expense, budget, and strategic sourcing modules are to be rolled out to state agencies beginning on October 1, 2004.

The committee learned the North Dakota University System went "live" with the financial, human resource, and student administration components of the system at Dickinson State University, Lake Region State College, Bismarck State College, Williston State College, and the State College of Science in July 2004. At that time, 8 of the 12 North Dakota University System sites were "live" with the system, considering the pilot sites--Mayville State University, Valley City State University, and the North Dakota University System office--had been "live" since April 2003. The remaining higher education institutions--North Dakota State University, University of North Dakota, Minot State University, and Minot State University - Bottineau--did not go "live" as originally scheduled due to the institutions' concerns with the features offered by the grants and contracts module. However, the remaining higher education institutions did implement the student administration component of the system beginning in fall 2004 for the 2005-06 academic year in a phased approach much like the pilot higher education institutions. After receiving results of a review of modifications necessary to the grants and contract modules, the State Board of Higher Education approved a plan for implementing the financial and human resource components of the system, including the grants and contracts module, at the remaining higher education institutions by January 2005. The University System's anticipated additional one-time and ongoing costs for fiscal year 2005 relating to the modification to the grants and contracts module will be allocated as follows:

Forgiveness from Maximus	$1,250,000
ConnectND budget funds	1,380,000
Higher Education Computer Network operating funds	600,000
State Board of Higher Education contingency funds	250,000
State contingency funds	150,000
Higher education institutions	480,000
Total	$4,110,000

Statewide Information Technology Network

The committee received information from representatives of the Higher Education Committee, the Department of Commerce, the private sector, and telecommunications providers regarding private sector use of the statewide information technology network. The committee learned during the Higher Education Roundtable meeting on June 15, 2004, the roundtable discussed the issue of allowing startup businesses in small communities to access the statewide information technology network for a limited period of time and allow other businesses in small communities to access the network to receive workforce training.

The committee learned the Department of Commerce administers three programs to financially assist businesses and communities in North Dakota--the agriculture products utilization fund, Development Fund, Inc., and community development block grant program. A business could request a loan from the Development Fund for information technology hardware needs, and a community could access funds from the community development block grant program to install broadband connectivity, but there are no programs to assist businesses with the purchasing of broadband Internet services. The committee was informed the main issue appears to be affordability instead of accessibility, and the major reasons making affordability an issue are a perceived cost variance for services between different areas of the state, the true capacity needs of businesses, and the difficulty of budgeting for information technology.

The committee learned that any use of the kindergarten through grade 12 portion of the statewide information technology network for any purpose by private sector entities would constitute a violation of federal e-rate rules and would disqualify the state and the state's schools from receiving e-rate discounts on telecommunications services and Internet access. In relation, the committee learned the Federal Communications Commission suspended the e-rate payment process in August 2004. Due to a change in the accounting structure of the Universal Service Administrative Company, which administers the program, the Federal Communications Commission is unable to issue funding commitment decision letters to e-rate applicants; therefore, the state has not received any e-rate funds since July 1, 2004. The Information Technology Department and North Dakota schools receive approximately $2.3 million and $2.2 million, respectively, in e-rate funds each year. Dakota Carrier Network and Sprint, which provide wide area network services to kindergarten through grade 12, may need assistance from the state to cover expenses until the e-rate funds are provided to the state.

The committee learned there is a misconception by the private sector regarding the amount of bandwidth needed for videoconferencing. School districts use a T-1 connection for videoconferencing, so private sector entities believe a T-1 connection is required for videoconferencing. However, videoconferencing equipment is available which will work at the various broadband speed levels available from local telecommunications providers.

The committee learned the Information Technology Council of North Dakota is willing to work with the Legislative Assembly and the Department of Commerce to conduct a rural information technology business needs and cost research analysis and to review state funding programs available to subsidize the cost of service and implementation.

The committee learned the state's contract with Dakota Carrier Network for the statewide information technology network expires in June 2006. It will take approximately two and one-half years to plan, bid, and implement a network upgrade that will meet information technology requirements through the year 2013 and beyond. The future network technology will include optical networking, wireless access, virtual private networking, and legacy broadband. The Information Technology Department anticipates issuing a request for proposals relating to the network upgrade in summer 2005 and beginning implementation of the network upgrade in spring 2006.

Future of the State's Server and Operating System Infrastructure

The committee received information from the Information Technology Department regarding the future of the state's server and operating system infrastructure. The committee learned the state operates critical information technology business applications on a wide variety of platforms, provides disaster recovery services to only a limited number of the critical applications, and requires staff with legacy skill sets to support applications. As staff with legacy skill sets retire from the workforce, the department will have to provide in-house training to assure the availability of staff with necessary skills. The future of the state's mainframe applications should be addressed because a majority of the state's essential business functions are dependent on the mainframe, the operation of the mainframe represents the largest opportunity for cost-savings, and as applications are rewritten and transferred to different platforms the cost of operating the remaining mainframe applications increases. There are four alternatives for addressing the future of the state's mainframe:

• Maintain the current mainframe environment.
• Outsource the mainframe environment.
• Rewrite the mainframe applications to operate on another platform.
• Migrate the mainframe applications to another platform.

The following is the Information Technology Department's cost analysis relating to the four identified alternatives for addressing the future of the state's mainframe:

Alternatives	Ongoing Annual Costs
Maintain the mainframe environment - Current costs	$3,790,000
Maintain the mainframe environment - Future costs	$4,030,0001
Outsource the mainframe environment	$5,100,0002
Migrate the applications to another platform	$1,865,0003
Rewrite the applications to operate on another platform	Unknown
1Maintaining the current mainframe environment in the future is critically dependent on the availability of trained staff. The estimated ongoing annual costs associated with maintaining the current mainframe environment in the future includes $240,000 for three additional full-time equivalent positions and an ass ociated training program. 2Outsourcing the mainframe environment involves utilizing an outside vendor to provide the mainframe environment. The vendor would be responsible for all software, hardware, and labor costs, and the state would be responsible for monitoring service levels. The estimated ongoing annual costs of $5,100,000 includes $4,500,000 for a contract with an outside vendor and $600,000 for expenses associated with network connectivity and service level administration. 3Migration involves moving the existing applications from the mainframe to another platform while performing as few changes as possible. Migration would not address the future replacement needs of the legacy systems. One-time costs associated with migrating the state's applications dependent on the mainframe are $6,300,000, and the ongoing annual costs associated with migration are $1,865,000.

The committee learned the migration option could result in a reduction of $1,925,000 in operating costs from current mainframe cost levels and a reduction of $2,165,000 when compared to future mainframe costs. The Information Technology Department is considering asking the 59th Legislative Assembly for authorization to borrow the necessary funding for the one-time migration costs of $6.3 million. Borrowing the necessary funding for the project and repaying the loan with revenue received through the department's rate structure would allow the department to access special and federal funds for the project instead of requesting funding from the general fund for the entire project. The department is in the process of retaining a consultant to assist in the drafting of a request for proposals for migrating from the mainframe. The request for proposals is anticipated to be released on December 30, 2004, and a bid would be awarded by June 30, 2005.

Geographic Information System Initiative

The committee received information from the Information Technology Department regarding the department's geographic information system initiative. The committee learned the department received a $750,000 general fund appropriation for the 2001-03 biennium and a $678,343 general fund appropriation for the 2003-05 biennium for a GIS coordinator position and for creation of a GIS centralized data hub. The GIS centralized data hub is a data base and web infrastructure hosted by the department for storing and sharing state agency GIS data. Geographic information system data on the hub includes communications, emergency services, geology, political boundaries, state and federal lands, transportation, water resources, and aerial photography. There are 15 state agencies, including over 230 userids, set up for access to the hub. Current GIS initiatives include investigating and adding new aerial photographs, adding new soils data, and working with the Division of Emergency Management on a statewide, high-accuracy road centerlines map. Future GIS plans include continued outreach with counties and cities, new applications, partnering with other levels of government to acquire new data, and additional functionality, including enhanced data download capabilities.

Information Technology Council of North Dakota

The committee received information from representatives of the Information Technology Council of North Dakota regarding benefits resulting from the implementation of the statewide information technology network and future information technology needs. The committee learned the statewide information technology network has encouraged businesses to relocate to North Dakota and the network provides access to university researchers. The Information Technology Council of North Dakota believes the state should sponsor chief information officer conferences, continue to work with economic development centers to attract high-tech businesses, and support an adequate budget for the workforce training quadrants. In order to grow and expand, businesses need more high-tech companies in the state, an improved wireless infrastructure, and better matching of in-state companies to students. The committee also learned school districts' future needs include allowing districts with connectivity issues the option of managing and supporting a Power School server located within a district's network, using partnerships with certified information technology trainers to provide training to statewide school district personnel at a reduced cost, and funding and staffing EduTech at appropriate levels or shifting the focus of EduTech staff to arranging, coordinating, and facilitating training instead of attempting to be the sole providers of training.

Security Assessments

The committee received information regarding whether statutory changes are necessary to authorize the State Auditor to conduct or contract for information technology security assessments of state computer systems. The committee learned the State Auditor does not have specific authority to conduct information technology security assessments. However, the State Auditor plans to request authority from the 59th Assembly to conduct information technology security assessments and has included a funding request of $100,000 for the 2005-07 biennium for such an assessment. Issues relating to confidentiality of the findings of the assessment and the confidentiality of electronic information maintained in the computer system would be addressed.

Information Technology Budget Requests 2005-07 Biennium

The committee received information from the Office of Management and Budget regarding information technology budget requests for the 2005-07 biennium. The committee learned the budget analysis and reporting system implemented for the 2005-07 budget process will include a subsystem for capturing information technology data, including number of workstations, information technology project costs, and information technology expenses. The committee discussed the possibility of having a joint meeting of the Appropriations Committees and the leadership of the 59th Legislative Assembly for an overview of information technology issues for the 2005-07 biennium, including information technology expenses, major information technology projects, and implementation of the Pacific Technologies, Inc., recommendations.

COMMITTEE RECOMMENDATIONS

The committee recommends Senate Bill No. 2037 to:

• Provide that the State Board of Higher Education is responsible for managing and regulating information technology planning and services for institutions under its control; collaborating with the Information Technology Department to coordinate higher education information technology planning with statewide information technology planning; providing advice to the Information Technology Department regarding the development of policies, standards, and guidelines relating to access to or use of wide area network services; and presenting information regarding higher education information technology planning, services, and major projects to the Information Technology Committee.
• Provide that a policy, standard, and guideline, adopted by the Information Technology Department under NDCC Chapter 54-59 primarily intended to affect state agencies and with respect to access to or use of wide area network services, institutions under the control of the State Board of Higher Education, counties, cities, and school districts if the policy, standard, or guideline has been reviewed by the State Technology Advisory Committee, is not considered a rule under the Administrative Agencies Practice Act.
• Revise the powers and duties of the Information Technology Committee and the Information Technology Department, including requiring the Information Technology Committee to receive and review information relating to major information technology projects of the legislative branch in addition to major information technology projects of the executive and judicial branches.
• Provide that the State Information Technology Advisory Committee is to review policies, standards, and guidelines developed by the Information Technology Department and prioritize proposed major information technology projects for executive branch state agencies, departments, and institutions, excluding institutions under control of the State Board of Higher Education and agencies of the judicial and legislative branches.
• Eliminate the role of the Office of Management and Budget in the development of information technology policies, standards, and guidelines; provide that the Information Technology Department is to develop policies, standards, and guidelines using a process involving advice from state agencies and institutions; and exclude institutions under control of the State Board of Higher Education from having to comply with policies, standards, and guidelines developed by the Information Technology Department.
• Revise the contents of the statewide information technology plan and the Information Technology Department annual report.

The committee also recommends Senate Bill No. 2038 to establish a statewide information technology improvements revolving fund for information technology projects providing improvements in the efficiency of state government services or information technology projects involving multiple state agencies or institutions. A state agency or institution interested in obtaining money from the fund is to submit a written request detailing information on the purpose, scope, cost benefit, and projected return on investment of the project to the Chief Information Officer. The Chief Information Officer presents each request to the State Information Technology Advisory Committee for its consideration. If the committee approves the request, the Chief Information Officer is to recommend the proposed project to the Budget Section for approval. The Chief Information Officer may not provide funds for the project without approval of the Budget Section. Agencies and institutions are to repay funds provided from the statewide information technology improvements revolving fund and any related interest during subsequent bienniums as money becomes available through savings, documented reductions in staff, or increases in revenue attributable to the technology improvements. The Chief Information Officer would report to the Budget Section and the Information Technology Committee on the status, projected return on investment, and actual return to the fund for each project approved by the Budget Section. The bill also appropriates $1 million from the general fund to the Information Technology Department for the purpose of establishing the fund.

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