Report 2002-111 Summary - February 2003

Information Technology: Control Structures Are Only Part of Successful Governance


Although the Department of Information Technology (DOIT) ceased operations on July 1, 2002, the need for what it was chartered to do continues to exist. Our review of California's and other states' information technology (IT) governance structures revealed the following:


In 1995 the Legislature created the Department of Information Technology (DOIT) to provide leadership, guidance, and oversight for information technology (IT) initiatives and projects throughout the State. In July 2002, DOIT ceased operation, but the need for what it was chartered to do continues to exist.

California is governed by a multitude of agencies and departments, each with a focus to support the business of the State by supplying a myriad of goods and services. The complexity of the State's governance and other circumstances created challenges for DOIT as it attempted to achieve its mission. Some of these challenges can be traced to the composition and organizational placement of the department, others stem from the all-encompassing charter of being both an advocate and a control organization, and still others are a result of the inability of state IT stakeholders to effectively collaborate.

To determine what lessons can be learned from states with exemplary practices in IT governance, our consultant conducted case studies in New York, Virginia, Pennsylvania, and Illinois. The studies revealed three models for achieving effective IT governance. They varied substantially in the extent to which formal authority is concentrated in the state's highest-level IT office as well as where that office is located in the governance structure and how it interacts with other stakeholders in IT initiatives.

Analyses of case studies plus a review of relevant research literature enabled our consultant to identify a number of common factors likely to account for successful IT programs under any of the different governance models observed. Successful models tend to have executive leaders who are champions of IT and emphasize its value for achieving state missions, a participative and collaborative management style that emphasizes "carrots" over "sticks" and that evidences a commitment to employees during periods of change, and a modular, incremental approach to development and implementation of IT initiatives. These factors typically did not characterize California's approach to IT governance.

A number of common challenges also face states, regardless of their approach to IT governance. Most of these challenges involve making decisions about tradeoffs among competing interests and approaches, with no glaringly right or wrong answers. Among the most critical is the need to determine the appropriate amount of consolidation and centralization of state IT functions such as data center services and the degree of standardization of IT systems. A related challenge is ensuring equity through competitive procurement when deciding on the degree of standardization. The decision whether to outsource IT operations poses another challenge for state government, which must weigh the benefits of the flexibility gained from contractor-provided services against developing an over dependence on such services. States face a challenge in developing a strategic plan focused on IT or developing a business strategy in which IT plays a supporting role. Another issue faced by state governments is the establishment of an IT inventory and regular replacement of obsolete IT office equipment, and lessening the burden of the approval and procurement process requirements for such routine purposes.

Operating in the public sector poses some unique challenges that state governments must face in carrying out their IT operations. One such challenge is the effect of administration turnover on the continuity of the statewide IT vision. The lengthy budget cycle also causes major problems for IT development, as does the impending retirement of a significant number of older workers because of government's limited ability to hire enough personnel with the needed IT skills to replace those who retire.


The success of a new IT governance structure depends on the support and cooperation of many stakeholders, including the governor's office, the Legislature, control entities, client entities1, and technical entities that will be affected by the IT program. The selection, adoption, and development of a governance structure should, therefore, be a collaborative effort involving stakeholders at all levels.

Regardless of the governance model California adopts for its IT program, it should make sure the program includes common success factors and other vital elements by taking the following steps:

California will also have to make decisions regarding governance structure issues that are common to any statewide IT program, but for which no universal solutions exist. Some of the more critical challenges that will need to be considered and addressed include the following:


The state CIO found our report to be comprehensive and useful in listing many of the challenges the State confronts in effectively and efficiently managing its IT resources. He agreed with several of our recommendations, but needed further discussion before agreeing with others.

The director for the Department of Finance agrees that successful use of technology is important to the State, and values having a strong IT governance structure in place to develop appropriate strategies for the future. Toward that end, he will thoughtfully consider the ideas proposed in our report.