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Texas Data Center Strategy
Fiscal 2006 Status Report on Migration and Consolidation
Department of Information Resources
August 31, 2006
Texas Data Center Strategy: Fiscal 2006 Status Report on Migration and Consolidation gives an overview of current and upcoming infrastructure consolidation efforts for the State of Texas. It includes an overview of the data center services project, the data center Request for Offer (RFO) process, and fiscal year 2006 migrations to the Texas State Data Center. The Texas Department of Information Resources (DIR) prepared this report in response to the reporting requirement set in place by House Bill 1516, passed by the 79th Texas Legislature in Regular Session.
Printable version of this report (315 KB,
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Page Contents
Letter from
the State's Chief Technology Officer
About this Report
Executive
Summary
Data Center
Services Project
Current
Migrations
Appendix:
Summary of Gartner Study
Endnotes
Letter from the State's Chief Technology Officer
August 31, 2006
House Bill 1516 directed a new focus on information
technology collaboration for Texas state agencies. Since July 2005, 27 state
agencies have been working together to build a new approach to data center
services. This project has yielded tremendous results, achieving much more
through working together as an enterprise than agencies can individually.
The new data center system will be a shared infrastructure,
with improved security and disaster recovery to protect Texas data. A private
sector provider will deliver data center services and agencies will purchase
the services they need, rather than acquiring equipment that may be
underutilized or quickly out-of-date. As Texas transitions to this shared
technology infrastructure model, several principles guide the process:
- Establish an accurate base case. Through a comprehensive
and ongoing data gathering process, agencies documented current data center
assets, costs, and performance-at a level of detail not available before in
Texas.
-
Actively promote agency involvement. Over 300 agency
representatives, including technical, IT management, and executive management
have generously given of their time to help meet the expectations set forth in
House Bill 1516.
-
Follow industry-standard best practices. With the support
of experts in the field, Texas is using a proven approach followed for years by
Fortune 50 companies and other public sector organizations.
-
Link the project to key agency milestones. The project
schedule was built around agency budget cycles and the end of the current data
center services contract to allow for proper accounting of funds and ample
transition time for current operations.
The following report describes the Texas data center
services project in more detail. It includes the many accomplishments of the state
interagency teams from the 27 participating agencies, details on similar
procurements in other states, and the best practice procurement approach Texas
has taken.
Larry A Olson
Texas Department of Information Resources
About this Report
Texas Data Center Strategy: Status Report on Migration
and Consolidation gives an overview of current and upcoming technology
infrastructure consolidation efforts for the State of Texas. The Texas
Department of Information Resources (DIR) prepared this report in response to
the reporting requirement set in place by House Bill 1516, passed by the 79th
Texas Legislature in Regular Session (see Legislative Charge, below).
As noted in DIR's Shared Success: Building a Better Texas
through Shared Responsibilities (2005 State Strategic Plan for Information
Resources Management), the shared technologies approach is a direction
that maximizes technology infrastructure and allows individual agencies to
focus efforts on respective core businesses.
These reports can be accessed from the DIR Web site.
Legislative Charge - Excerpt from House Bill 1516, Section 3.04(c)
Not later than August 31 of 2006 and 2007, the department
shall report on the status of the statewide technology center system migration
and consolidation under Section 2054.390, Government Code, as added by this
Act, describing reviews and transfers during the fiscal year, and an update on
the status of any contracts relating to the statewide technology centers. The
department shall file the report with the Governor, the Lieutenant Governor,
the Speaker of the House of Representatives, the Chairs of the House and Senate
committees with primary oversight over the department, the Chairs of the Senate
Finance and the House of Representatives Appropriations Committees, the State
Auditor's Office, and each member of the Legislative Budget Board.
Texas Department of Information Resources
Post Office Box 13564, Austin, TX 78711
512-475-4700
Executive Summary
Building a shared data center system is a critical step toward helping government build a more
secure, agile, and cost-effective infrastructure for the delivery of government
services. The 79th Texas Legislature recognized the importance of a stronger
statewide technology infrastructure and, through the passage of House Bill
1516, directed DIR to lead the effort to accelerate consolidation of the
state's data center and disaster recovery services.[1]
Shared Success: Building a Better Texas through Shared Responsibilities
2005 State Strategic Plan for Information Resources Management
Introduction
Significant progress on data center consolidation has been
made in the 14 months since the signing of House Bill 1516 on June 18, 2005. Twenty-seven
of the largest state agencies have been working collaboratively for over a year
to implement state leadership's vision of shared data center services. These 27
agencies have signaled their commitment to the process by:
-
Gathering extensive data on current operations;
-
Helping to define the in-scope data center functions; and
-
Signing interagency contracts in March 2006 for the assets and
resources pledged to the shared data center system.
This extended project team has met all deadlines established
by DIR. The project schedule has been accelerated and is on track to complete
early, in mid-November or early-December. This highly professional effort has
put Texas in a position to set a new benchmark for statewide data center
services. Other states are watching our progress-and Texas will deliver.
Texas Strategy
State leadership set clear expectations during the 79th
session through House Bill 1516 to move to a shared infrastructure to deploy
technology to serve citizens. This directive serves to improve the value of
technology in place today and ensure future investments in technology assets
and resources deliver maximum returns. This action forms the basis for the Texas Model of the
Enterprise.
Leadership's vision for shared infrastructure, greater
collaboration, and agency focus on core missions sparked a renewed interest in
working together across agency lines to improve technology services. A
prominent element of this activity was the direction to consolidate state data
centers, a topic of discussion and unfulfilled promise over the last decade.
An initial financial and operational base case of data
center assets and resources was established during the 79th Legislature. This
data pointed a clear direction to consolidate operations and issue a
competitive procurement to select a private sector technology provider for the
state's data center services. Several public sector entities have embarked on
similar initiatives; DIR researched these projects and met with leaders from San Diego County and the Commonwealths of Virginia and Pennsylvania to learn from their
experiences. Pennsylvania and San Diego have contracted data center services
for several years. Virginia was in the final stages of procurement during DIR's
initial contact and, subsequently, signed a ten-year, $1.9 billion
contract including data center and other technology services. All three groups
pointed to key lessons learned, best practices for Texas to follow, and
continue to be an ongoing resource for information exchange. A Request for
Offer (RFO) for data center services was developed by DIR and the 27
participating agencies and released on March 31, 2006.
By selecting a service provider for statewide data center
operations, Texas can leverage economies of scale realizing greater value from
data center expenditures. An external provider will facilitate an upgrade of
data center facilities as agencies consolidate operations, so all agencies can
benefit from consistent, measured, robust security and disaster recovery.
Moreover, the transition from 31 distinct data centers across 27 agencies to a
consolidated system requires specialized knowledge and extensive data center
consolidation experience. Many skills, such as planning and executing
operations migrations, will not be needed after transition to ongoing
operations. For these reasons, an experienced service provider offers the best
potential to improve services, reduce risk, and meet the expectations of state
leadership.
Proven Approach
While the current Texas process is significant and
groundbreaking for the state, it is certainly not without precedent. The
information technology (IT) research and analysis firm Gartner, Inc.
characterizes the market for data center outsourcing as "one of the most
mature" IT service categories.[2] The market has developed
over several decades and data center services contracts have become standard.
The global sourcing market continues to account for approximately $67 billion
in total contract value annually,[3] with recent growth
increasingly fueled by government contracts.[4] As governments and global
private sector companies consolidate and source data center infrastructure,
they can find proven methodologies, greater standardization in contracting
practices, and strong competition among service providers for business.
DIR is working with several experts in the field of
technology sourcing to bring the well-established practices for outsourcing to
the Texas data center services transaction. Houston-based Technology Partners
International, Inc., (TPI) was hired to help lead the procurement process.
Since 2000, TPI has advised on more than 25 percent of worldwide outsourcing
contracts. The firm has completed over 780 transactions and the five-member team
supporting Texas has a combined 128 years in the business. Through this
experience, TPI developed contracting practices that have become the prevailing
methodology in the industry. The Texas TPI team adapted this methodology to
create the data center services RFO and help lead the 27 agencies through the
procurement process.
Additionally, DIR established a contract with the Houston
office of Mayer, Brown, Rowe, and Maw LLP, a law firm with extensive expertise
in IT outsourcing contracts, to provide legal counsel for the data center
services contract. The attorneys worked closely with TPI and DIR to develop the
Master Services Agreement (MSA). The Texas MSA is based on a commercial
contract, with the most current industry-standard terms and conditions for
technology outsourcing. It ties directly to the Statements of Work published as
part of the RFO document set. The firm's contribution will continue through
negotiations and execution of the final MSA.
Scope of the Contract
Determining the assets and resources to be included in the
data center services contract requires an extensive and ongoing data gathering
process. Since August 2005, agencies have produced detailed information about
the assets, people, processes, and finances related to data center
expenditures-a collection of information that simply did not exist prior to the
effort. Many agencies have also begun to track the service levels they deliver to
customers at a much finer level of detail. This process has yielded extensive
information about operations at the 27 participating agencies.
Today's world-
-
Thirty-one (31) independent data centers
-
Sixteen (16) mainframes including over 6,000 MIPS (millions of
instructions per second
-
Approximately 7,000 servers which are located in approximately
1,300 locations
-
Approximately 563 Full Time Equivalent (FTE) positions
-
Annual expenditures of approximately $145 million
-
Inconsistent service levels
-
Environments not secure, not redundant
These findings underscored the critical need to meet
leadership's timeline expectations to deliver a new environment for Texas.
To give the Legislature a clearer view of data center
expenditures at an enterprise and agency level, the Legislative Budget Board
(LBB) created a new project for the Information Technology Detail (ITD) in the
Legislative Appropriations Request (LAR) for the 2007-08 biennium. The ITD project
allows agencies to distinguish data center services from other technology
expenditures in their LARs. With the total costs by agency and across the state
documented, DIR will be able to provide analysis of planned expenditures and
document future cost savings for the Legislature.
Collaboration across the Enterprise
From the beginning, data center consolidation has been a
statewide project, emphasizing collaboration and consensus among all 27
participating agencies. Starting in June 2005, DIR
hosted town hall meetings with agencies to document their concerns and build
awareness and understanding of this new direction for statewide technology
services. For over a year, IT Directors from participating agencies have been
meeting as the Data Center Services (DCS) Advisory Council. The Advisory Council
established the guiding principles for data center consolidation, and it provides
input to DIR on an ongoing basis. Additionally, members of the Advisory Council
lead the communication with affected staff and coordination of all activities
related to the DCS project for their agencies.
Members of the DCS Advisory
Council and many of their staff have dedicated significant time to the
procurement activities. Their activities include:
- Data
Gathering. Since October 2005, agencies have extensively documented the
assets and resources that deliver data center services in their agencies. This
effort has included gathering and reviewing contracts, asset inventories, and
workforce analysis.
- Request
for Offer Development. In March 2006, over 60 staff participated in a
series of nine full-day workshops to build the requirements, service levels,
and governance structures for the Data Center Services RFO. Technical staff and
IT leadership worked side-by-side to ensure their agency's requirements were
fully documented in the RFO.
- Interagency
Contract (IAC) Development. In March 2006, a subcommittee of the DCS
Advisory Council met to develop the IAC base contract document. All 27 agencies
signed the base contract. Each contract included agency-specific attachments
listing the agency's assets and resources to be included in the RFO.
- RFO
Evaluation. Approximately 60 agency representatives are participating in
the RFO evaluation, an extensive process of proposal review, analysis, and team
meetings. The RFO evaluation structure is headed by the Chief Technology
Officer with advice from an Executive Advisory Panel. Five teams-Data Center
Services, Technical Solution, Terms and Conditions, Financial Analysis, and
Human Resources-have been instrumental to the process.
Human Resources and Communications
The state has also placed emphasis on respect for state
employees affected by this transition. As committed during the legislative
session, all state employees affected in this process will be offered
employment with the chosen service provider. This is not merely an
obligation-these employees are highly valued and needed by the service
providers. The job offers will afford them the opportunity to continue to support
citizens through their service while growing in their technology skills beyond
what could be offered by state government. A human resources (HR) workgroup was
established to facilitate organizational change across the agencies, and
members of this workgroup participate on the evaluation team. The HR evaluation
team assesses the service providers' proposed employment offers and career
opportunities. The team will make recommendations on negotiation needs to the
state's Chief Technology Officer.
To ensure agencies and affected employees have up-to-date
information about the data center services project, DIR has placed a priority
on communications. In the fall of 2005, DIR's Director of Statewide Technology
Operations and several team members met individually with all 27 agencies'
executive teams. These highly interactive meetings lasted as long as two hours
as DIR presented the project's goals, status to date, and answered questions
from the executives. Additionally, DIR created a project Web site to provide
information to a broad audience (www.dir.state.tx.us/datacenter/). The Web site
contains the bimonthly project newsletter, Data Center Download,
frequently asked questions, all of the RFO documents, and many project
presentations. Additionally, employees can e-mail DIR with questions through a special e-mail account or
send anonymous questions via a Web form.
Federal Collaboration
Throughout the data center services
project, Texas has sought to work in close concert with our federal partners to
help them understand our process and ensure we fully comply with all
requirements for continued federal participation in Texas programs. In August
2005, DIR sent a team to Washington, D.C., to meet with several federal
agencies, including the Department of Agriculture (USDA) and the Department of
Health and Human Services (DHHS). These general meetings established a
foundation for information exchange and paved the way for future conversations
about details such as cost allocation methodology, required documentation, and
billing.
In February 2006, DIR provided the DHHS Division of Cost
Allocation (DCA) a white paper outlining the proposed approach for
consolidation and outsourcing of data center services. The document contained an
overview of the financial analysis from House Bill 1516, a description of the Texas
strategy for data center services, and a review of the implications for federal
programs. This communication was followed by several interactive conference
calls with federal partners, Texas state agencies with significant federal
funding, and DIR. As a result of these efforts, the USDA and the DHHS
determined that Texas, or any other states engaging in similar efforts, would
not have to submit an Advance Planning Document, which would have required
advance approval from all participating federal agencies before issuing the RFO
or awarding the contract.
Communications with our federal partners are ongoing. DIR
provided DCA with a link to the RFO when it was published and an update on the
RFO status in August 2006. With preliminary lines of communication regarding
the Texas billing framework well established, the next steps include developing
the details for the chargeback methodology and submitting the methodology to
DCS in the Statewide Cost Allocation Plans (SWCAP) for 2007 and 2008.
Conclusion
Moving from the environment of 31 data centers supporting
the operations of 27 agencies to a shared data center services solution
presents an excellent opportunity for the State of Texas. Consolidating and
contracting for day-to-day management of data center services will elevate
standards in many agencies. It will bring robust security and disaster recovery
to all participating agencies-an increasingly important requirement for today's
technology environments-and deliver measured, continuously improving service
levels to customers. Equally important, it will leverage the state's collective
size and scale to bring greater value for its investment in technology.
The remainder of this report provides further details on the
schedule and progress of the data center services project and the status of
agency migrations to existing Texas State Data Center facilities.
Data Center Services Project
A consolidated data center system will give agencies equal
access to advanced technologies and will maximize state resources by leveraging
economies of scale. Most importantly, by coordinating and sharing resources at
the statewide level, agencies can focus more of their technology resources on
agency-specific applications that support their unique missions.[5]
Shared Success: Building a Better Texas through Shared Responsibilities
2005 State Strategic Plan for Information Resources Management
Background
The Texas State Data Center (TxSDC) was established in 1996
to provide data center and disaster recovery services to state agencies. Over
the years, legislation (including Senate Bill 1701 of the 78th Legislature,
Regular Session) and reports (including the Legislative Budget Board's Staff
Performance Report to the 79th Legislature[6]) have established the
benefits of the TxSDC and have encouraged agencies to migrate operations to
achieve economies of scale. A number of agencies have moved all or part of
their data center operations to the TxSDC. Migration, however, has occurred on
a case-by-case basis, minimizing the value from consolidation and broader
coordination of operations.
The 79th Legislature (Regular Session) passed House Bill
1516. This legislation, signed by the Governor and effective on September 1,
2005, accelerates the process of data center consolidation in Texas by
prioritizing the largest data centers for consolidation, and requiring the
migration of at least three data centers each fiscal year to shared facilities.[7] With the passage of
House Bill 1516, agencies received a clear mandate to use the TxSDC fully and
approach infrastructure services from a statewide perspective.
In response to the 2005 legislation, the Data Center Services (DCS) project was established
to accomplish the following:
-
Modernize the statewide technology infrastructure to provide
cost-effective data center services to all state agencies;
-
Focus agencies' resources on their missions and mission-critical
applications; and
-
Raise disaster recovery capability, security, and facilities to a
uniform standard across the state.
Utilizing a best practices approach for technology
procurement, DIR has organized a highly experienced team to develop,
administrate, and manage the DCS project. The team is supported by specialists
in the field of data center outsourcing, Texas financing and appropriations
experts, and outside legal counsel. Together, this group brings extensive
experience in technology, project management, and outsourcing to the data
center services initiative.
The DCS Advisory Council, comprised of the IT Directors from
the 27 participating agencies, was formed in July 2005 continues to meet
regularly to provide an ongoing connection to agencies. One of the group's
first acts was to establish Guiding
Principles, listed below.
Guiding Principles
- Do no harm during or as a result of consolidation:
- All services remain at current service levels or better;
- All data center and disaster recovery changes will be transparent to end users.
- The Department of Information Resources will strive to achieve consensus from the
Data Center Advisory Council on issues and policies related to the successful
implementation of the project; however, final responsibility and
accountability belongs to DIR.
- Issues
need to be discussed quickly and effectively. The ability to resolve issues
in a timely fashion is critical to the success of this project. In order to
expedite issue resolution, a formal process for classifying and resolving
issues will be developed and communicated. The definition of this process
will also provide equal consideration to all issues and create a level of
predictable response expectations.
- Work
with the DIR Project Team first to understand and analyze assumptions and
issues, then with the committee.
- Consistent communications need to be delivered to
agency staff on a timely basis:
- Meeting minutes will be captured,
kept, and reviewed at every meeting, approved in subsequent meetings, and
distributed.
- The mechanism for approving committee
recommendations will be formalized and agreed to (e.g., motion second, vote).
Simple minority rules, etc.
- Council
members should become experts on the project and the process to properly
provide the necessary leadership to agencies.
- Council
members should be open and honest in their communications.
- Decisions
will be made based on the overall benefit to the state.
Opportunity
Data center consolidation is a business strategy that has
been successfully employed by governments and many private sector companies to
reduce technology costs while maintaining or improving existing services. The
31 data centers supporting the 27 state agencies in the data center services
RFO provide significant opportunities for consolidation and resource sharing. By
leveraging the collective data center resources of the state, Texas can gain
economies of scale unavailable to even the largest agencies and provide
round-the-clock service to many small agencies for the first time. Additionally,
establishing a robust, shared security and disaster recovery infrastructure
provides a consistent level of support to all agencies and positions the state
to address global risks and threats. This greater level of security and
infrastructure support enables agencies to focus more of their attention on
their missions that serve the citizens of Texas. Consolidating and sourcing
data center services for state agencies will allow Texas to:
- Promote
common interests and share common functions across agencies;
- Enable
business and technology innovations;
-
Support the core missions of government agencies;
-
Provide consistent, measured, and high levels of security,
disaster recovery, and service;
- Pay for services consumed, rather than acquiring
IT assets that are quickly out-of-date; and
-
Create a best value blend of savings and service improvements for
the enterprise.
Agency Participation
House Bill 1516 selected all agencies, except the
Comptroller of Public Accounts and certain portions of the Department of Public
Safety, for participation in shared data center services. In accordance with
the legislation, DIR prioritized 27 agencies, based on IT spend, for the
initial consolidation and participation in the Data Center Services RFO. These
agencies are listed alphabetically below.
Prioritized Agencies
- Department of Criminal Justice
- Department of Information Resources
- Department of Licensing and Regulation
- Department of Public Safety
- General Land Office
- Health and Human Services
- Department of Aging and Disability
Services
- Department of
Assistive and Rehabilitative Services
- Department of Family
and Protective Services
- Department of State Health Services
- Health and Human Services Commission
- Office of the Attorney General
- Public Utility Commission
- Railroad Commission
- Secretary of State
- Texas Alcoholic Beverage Commission
- Texas Building and Procurement Commission
- Texas Commission of Environmental Quality
- Texas Department of Agriculture
- Texas Department of Insurance
- Texas Department of Transportation
- Texas Education Agency
- Texas Higher Education Coordinating Board
- Texas Parks and Wildlife
- Texas State Library and Archives Commission
- Texas Workforce Commission
- Texas Youth Commission
- Water Development Board
Agency participation and collaboration have been key themes for the DCS project
from the beginning. Data gathering, RFO development, RFO evaluation, and data
center governance have involved, and will continue to involve, all 27
participating agencies. This collaboration strengthens communication and gives
agencies multiple ways to have input into the process. Agency involvement has
included over 300 staff in a variety of teams:
- Executive
Advisory Panel (agency executives);
- Data
Center Services Advisory Council (IT directors);
- HR
Workgroup (HR directors);
- Finance
Workgroup (chief financial officers);
- Federal
Funds Workgroup;
- Technical
Workgroups (database administration, disaster recovery, network, security, and
technical services); and
-
Other Teams: Data Collection, RFO Development, RFO Due Diligence,
and RFO Evaluation.
Workgroup activity has evolved over the course of the
project. The technical workgroups were formed to develop recommendations for
the scope of services. The financial workgroup has helped to explain agency
funding requirements. Both groups have completed their mission. Currently, the
RFO Evaluation and RFO Due Diligence teams involve staff from all participating
agencies; the Executive Advisory Panel meets to provide feedback on the RFO
evaluation; and the DCS Advisory Council gives regular input on all aspects of
the DCS project.
Definition of Data Center Services
House Bill 1516 required DIR to define data center services
by rule. DIR presented the rule to the DIR Board of Directors on October 27,
2005. The rule was adopted on December 14, 2005. Additionally, in conjunction
with the DCS Advisory Council and the technical workgroups, DIR established a detailed
list of data center services (in scope for consolidation and expenditure approvals)
and agency-retained services (out of scope for consolidation and not requiring
expenditure approval). The services are as follows.
Data Center Services (in-scope services)
Mainframe
- Mainframe hardware and operating system installation, support,
maintenance
- Mainframe software installation, support, maintenance for
specified products/categories (DB2, CICS, IMS, RACF, etc.)
- Mainframe system programming for all in-scope mainframe software
Servers (Development, Production, Test)
- Server hardware and operating system installation, support,
maintenance
-
Server software installation, support, maintenance for specified
products/categories (Oracle, email, DNS, etc.)
-
System administration for all in-scope server software
-
Remote server administration
-
Server support for mobile access devices (PDA, Blackberry, etc.)
Common Services
- Computer
operations and monitoring
- Production
control (batch scheduling, job scheduling)
- Storage
management (disk, tape)
- Disaster
recovery backups and offsite tape storage
- Physical
database administration (Development, Production, Test)
- Data
center print services printer operations, reports staging for distribution,
ordering paper, special forms, etc., inserts and bulk print mailings)
- Facility
and environmental support
- Capacity
planning
- Disaster
recovery planning and testing for all data center services
- Business
continuity planning (service provider processes)
- Support
center (for in-scope data center services)
-
Hardware/software procurement for in-scope services
Security
- Vulnerability/threat/virus support
-
Security software installation and maintenance
-
Physical security
Process Management
Incident management, problem management, change management,
configuration management, release management
LAN Support and Maintenance in Data Center Facilities
General LAN support and maintenance in data center
facilities
Agency-Retained Services (out-of-scope services)
End-User Computing
- Desktop support and maintenance (including desktop software)
-
Desktop break-fix
-
Desktop anti-virus support and maintenance
-
Desktop and non-data center network printers
-
Mobile access devices (PDA, Blackberry, etc.)
-
Multi-function LAN-attached copier/scanner/fax machines
Network
- LAN support and maintenance
-
WAN support and maintenance
-
Voice/phone support and maintenance
Common Services
-
Help desk (Tier I - all services, Tier II - retained services,
Tier III - retained services)
-
Technology planning, strategies, and visioning
-
Project management
-
Disaster recovery planning and testing for all retained services
-
Business continuity planning (agency processes)
-
Specialized servers (lab, environmental, etc.) - agencies may
elect to move these servers into the RFO scope
-
Packaged imaging systems (scanners, servers, optical disks, etc.)
Coordination of Data Center Print Services
-
Coordinating form changes with
business units
-
Volume trending
Security
- Data security
-
Security design and policy development
-
Systems access requests (directory/file, ID creation and removal,
determination of access rights)
Logical Database Administration
- All logical DBA functions
-
Agency DBAs and developers will retain the authority and access
rights to add/change/delete database objects in development and initial test
environments
Application Development, Support and Maintenance
Development, support, and maintenance of agency applications
Interagency Contracts
House Bill 1516 requires agencies to sign interagency
contracts (IACs) with DIR for data center and disaster recovery services.[8] The IACs serve two
primary purposes:
-
DIR and the agencies use the IACs to document services to be
provided, service levels, and finances. For agencies that are not part of the
initial consolidation, the IACs document that the assets and responsibility for
data center services remain with the agency, or until otherwise notified by
DIR.
-
The IACs communicate agencies' requirements to potential service
providers.
Two IACs were developed, a standard IAC and a short form
IAC. The standard IAC was developed by DIR and a sub-committee of the DCS
Advisory Council. The base document contains standard terms and conditions for
all 27 agencies participating in the RFO process. Each IAC comprises the
standard base document and unique attachments containing inventories of the agency's
assets and resources committed to the DCS project. All 27 of the prioritized
agencies have signed IACs on file with DIR. The short form IAC was developed by
DIR for agencies that are not participating in the initial consolidation. It
does not include attachments, as these agencies are not participating in the
DCS project.
The IAC process allows for potential expansion of the
customer base for data center services. After the data center services contract
is signed and pricing and service levels are known, other eligible entities,
such as other agencies and city and county government, can contract with DIR
using a process similar to the IAC. Agencies who signed the initial IAC in
March 2006 will have an opportunity to sign an updated IAC, with pricing,
service levels, and the final asset inventory, in December 2006.
Financial Base Case
The financial base case captures current costs incurred by
the agencies in the support of data center services and projects these costs
over the life of the contract (seven years). It is used in the financial
evaluation of the RFO responses and to complete the business case analysis,
which estimates savings and benefits to the state. Costs captured in the financial
base case include items like employee salaries and benefits, hardware and
software leases, disaster recovery contracts, and other items like postage and
printing. The total for the base year was derived from the 27 agencies'
self-reported budgets for fiscal years 2006-07. The base case figures represent
a point in time and will be adjusted based on due diligence findings and the
FTE validation.
The seven-year forecast is based
on standard economic modeling factors, including historical productivity gains
and price improvements in technology. These expectations result in a decline in
expenditures over time when no new programs services are added. The industry-standard
factors are based on TPI's extensive experience in data analysis and modeling.
Seven-Year Base Case Financial Model (dollar amounts in thousands)
Category |
Base Year |
Apr-Aug 2007 |
Fiscal 2008 |
Fiscal 2009 |
Fiscal 2010 |
Fiscal 2011 |
Fiscal 2012 |
Fiscal 2013 |
Fiscal 2014 |
Totals |
Service Provider Assumed |
$145,186 |
$38,790 |
$141,340 |
$136,782 |
$120,910 |
$116,317 |
$111,476 |
$107,790 |
$104,321 |
$877,726 |
Pass-Through Expense |
10,816 |
4,507 |
10,816 |
10,816 |
10,816 |
10,816 |
10,816 |
10,816 |
10,816 |
80,218 |
Retained Expense |
13,083 |
27,155 |
13,442 |
13,813 |
14,195 |
14,589 |
14,996 |
15,415 |
15,848 |
129,453 |
Total Base Case |
$169,085 |
$70,452 |
$165,598 |
$161,411 |
$145,921 |
$141,722 |
$137,288 |
$134,021 |
$130,984 |
$1,087,397 |
FTEs |
562.5 |
562.5 |
551.3 |
540.2 |
529.4 |
518.9 |
508.5 |
498.3 |
488.3 |
n/a |
The base case for each agency also includes the salary
related benefits that are appropriated to the Employees Retirement System (ERS)
and the Comptroller of Public Accounts (CPA). For future biennia, the
appropriations to ERS and CPA related to the outsourced staff currently
supporting in-scope services can be eliminated since this funding will need to
be incorporated into the direct appropriations for each agency to pay for data
center services.
The total base year spend is approximately $145.2 million. Base
year expenditures by category (type of expense), agency, and tower (IT
function) are listed below.
Base Year Spend by Category
-
Labor - $38.6 million
-
Hardware - $24.2 million
-
Software - $15.2 million
-
Outside Services - $10.1 million
-
Outside Services, Northrop Grumman - $54.7 million
-
Other - $2.3 million
Base Year Spend by Agency
- Health
and Human Services Commission - $60.6 million
- Texas
Workforce Commission - $17.2 million
- Texas
Department of Transportation - $15.4 million
- Attorney
General's Office, including Child Support- $12.2 million
- Texas
Department of Criminal Justice - $11.2 million
- Texas
Department of Insurance - $5.0 million
- Railroad
Commission - $1.9 million
-
Other - $21.7 million
Base Year Spend by Tower
-
Mainframe - $75.6 million
-
Servers - $69.6
Human Resources
The State of Texas is committed to the fair and equitable
treatment of all its employees and contract staff. In assessing the viability
of sourcing options, DIR and the HR evaluation team are closely examining the
service provider's intended approach to offer comparable employment and
benefits and future career opportunities to current state staff.
The RFO requires the service
provider (and/or its approved subcontractors) to make comparable employment
offers to employees whose positions will be assumed by the service provider.
Offers for affected employees will be for an indeterminate period of time, but
will be based on the expectation and opportunity for regular employment.
Initial base wages or salaries are required to be at least equal to the
employee's current salary. DIR requires the service provider to retain
transitioned employees on the DIR account for at least one (1) year, or two (2)
years in the case of critical affected personnel.[9] The Personnel
Projection Matrix, below, summarizes the number of full time employees (FTEs)
for the enterprise, as self-reported by the agencies.[10]
Personnel Projection Matrix
Tower |
State FTEs |
Contractor FTEs |
Total In-Scope FTEs |
Mainframe |
174.4 |
10.7 |
185.1 |
Servers |
366.7 |
10.8 |
377.5 |
Mainframe and Server Combined |
541.1 |
21.5 |
562.6 |
Evaluation Process and Criteria
The evaluation process for the data center services RFO is
truly an enterprise effort. DIR has assembled several evaluation teams from the
participating agencies who are working together to review the responses and
provide their feedback on the proposals. These teams were actively engaged even
before proposals were received by helping to build the requirements in the RFO.
They have collectively worked for hundreds of hours on the evaluation and they
continue to be vital representatives of their agencies, employees, technical
environments, and, most of all, their customers.
All evaluation teams received at least a full day of training. Team members follow a highly structured process for review
and assessment of the proposals. Each team focuses on a different element of the solution, with specified weights in the
analysis:
- Business Relationship Terms, 20%
- Quality of Service (technical), 30%
- Human Resources Solution, 10%
- Terms and Conditions, 10%
- Financial, 30%
The evaluation teams are supported by an Executive Advisory
Pane (EAP), which reviews the teams' analysis and provides feedback to DIR
based on the business needs of the state. This panel provides the high-level
executive perspective to compliment the teams' more-detailed review of the
technical aspects of the proposals. Details on the evaluation process are
described next, in Current Activities.
Current Activities
The procurement process is underway and the project team has
met all deadlines. Current activities include negotiations with the service
providers, due diligence, and a verification of the number of state employees
who will receive job offers from the service providers (FTE validation).
-
Due Diligence is the process of gathering and verifying data to eliminate
assumptions. The state's due diligence activities may include reference checks
and site visits to proposed data center facilities. The service provider's due
diligence activities may include meetings with key state employees, like data
center managers, and reviews of critical contract documents.
-
Negotiations, occurring in parallel with due diligence, will use
information gathered in due diligence to facilitate the final form of the
contract.
-
The FTE validation will ensure both agencies and the data center
have the right number of employees with the necessary skills and experience to
successfully manage the required functions.
DCS Procurement Timeline
- March
31, 2006 - RFO Released.
- May
31, 2006 - Initial Proposals Received
- June
5-27, 2006 - Team Evaluations and Clarification Sessions
- July
10-17, 2006 - Amended Proposals Received
- July
24-August 11, 2006 - Team Evaluations and Report
- August
15, 2006 - Executive Advisory Panel Meeting
- August
14-September 29, 2006 - Due Diligence and Negotiations to Prepare for Final
Contract
- August
18-September 15, 2006 - FTE Validation
- October
5, 2006 - Best and Final Offer
- October
16-25, 2006 - Team Evaluations and Recommendations
- November
11 and 20, 2006 - Executive Advisory Panel Meetings
- Mid-November-December
- Execute Final Contract
-
March 31, 2007 - Contract Begins
Next Steps
At the conclusion of due diligence, initial negotiations,
and the FTE validation, the service providers will submit their Best and Final
Offers (BAFO) to DIR. The BAFO provides an opportunity for service providers to
make final changes to their proposal, pricing, and acceptance of terms and
conditions. After BAFOs are received, the evaluation teams will convene again
to review the BAFO documents and complete their evaluation.
The evaluation teams will produce a report of their analysis
for the EAP. The EAP will review the report and meet with the state's Chief Technology
Officer (CTO) to give their feedback and perspective on the contract. The CTO
will make the final decision on the selection of the service provider. DIR
plans to execute the contract in November or December of this year. Contract
services will begin March 31, 2007.
Current Migrations
As directed by House Bill 1516, DIR worked with several
agencies to evaluate opportunities to migrate operations to the Texas State
Data Center (TxSDC). The analysis included new and additional service
evaluations.
New Service Evaluations
2-1-1 Server Backups
Texas 2-1-1 is the state's
central point for information and referral for health and human services.
eLoyalty was selected as the vendor to design, host, and support the ongoing
operations of the 2-1-1 solution. eLoyalty contracted with Northrop Grumman for
server backups at the TxSDC.
Date Submitted: 6-Apr-2006
Amount: $373,833
Outcome: Transferred to State Data Center/San Angelo
Railroad Commission (RRC)
The RRC evaluated a new, upgraded mainframe with additional
storage and tape capabilities, including a disaster recovery solution. After
evaluating the option of migrating to the TxSDC, DIR and RRC determined that it
was not cost-effective. The RRC will migrate systems after the new data center
services contract is executed.
Date Submitted: 15-Nov-2005
Amount: $3,907,662
Outcome: Held for data center services contract
Texas Online Storage Area Network and Monitoring
The Storage Area Network (SAN) is used by Texas Online as a
repository for vital records (e.g., births, deaths, marriages, divorces) and is
managed by BearingPoint. The SAN and monitoring were transferred to the Austin
Disaster Recovery Operations Center (ADROC) in February 2006. The SAN occupies
space previously used by DIR, and is physically located inside the DIR cage at
the ADROC.
This SAN is a special "write once" type of SAN, and is
designed to be mirrored at some point in the future to its counterpart at the
TxSDC in San Angelo. Until then, the Texas Online SANs at the ADROC and TxSDC
serve as failovers for each other.
Date Submitted: 16-Jun and
18-Apr-2006
Amount: $97,374
Outcome: Transferred to State Data Center/ADROC
Texas Department of Transportation
The Texas Department of Transportation (TxDOT) requested a
dedicated mainframe, Registration and Titling System (RTS) servers, and
associated disk and tape storage subsystems in the Texas State Data Center.
Existing mainframe, storage, and tape capabilities were migrated in June 2005
to the TxSDC in San Angelo, meeting the deadline of TxDOT Rider 42 (2006-07
GAA, p.VII-27).
Date Submitted: 15-Jun-2005 (June
2005-July 2009)
Amount: $20,418,727
Outcome: Transferred to State Data Center/San Angelo
Additional Service Evaluations
Health and Human Services HSAS Extension
The Human Services Administrative System (HSAS) is a human
resources and financial PeopleSoft® application. The Health and
Human Services Commission (HHSC) extended the HSAS contract to August 2007. The
contract extension provided for uninterrupted service delivery to the five
Health and Human Services Agencies. Additionally, the 18-month service contract
extension enables HHSC to reduce its monthly HSAS hosting expenditure, from
$227,071 to $177,079, a savings of 22 percent.
Date Submitted: 22-Feb-2006
Amount: $ 3,187,242
Outcome: Approved
Attorney General's Office Extension
The Attorney General's office (OAG) received approval to
extend their contract with the TxSDC to August 31, 2009. The OAG extension
added servers to the distributed Websphere® environment and network
file server environment and transferred the Proc Syncsoft® software
to Northrop Grumman, who will have operational responsibility.
Date Submitted: 30-Sep-2005
Amount: $ 2,078,280
Outcome: Approved
Texas Workforce Commission
The Texas Workforce Commission upgraded the agency's PeopleSoft®
servers and changed to an IBM platform to align with other state agencies. The upgrade
and extension to 8/31/2010 was approved.
Date Submitted: 24-Oct-2005
Amount: $ 2,813,320
Outcome: Approved
Appendix: Summary of Gartner Study
DIR engaged Gartner Consulting, an information technology
research and analysis firm, to benchmark the costs and services associated with
Texas data center and wide-area network (WAN) operations at the 24 largest
state agencies and quantify any potential savings related to consolidating
these two functions across multiple agencies included in the assessment.
The Gartner study,
published in March 2005, concluded that significant potential data center
consolidation savings exist, and recommended that the state aggressively pursue
data center consolidation in order to capture savings and performance benefits.[11] In the study's data
center benchmark comparison with peer groups, the state's data center spending
was:
-
22.6 percent above consolidated peers ($29.6 million per year)
and
-
1.2 percent below unconsolidated peers ($1.6 million per year).
Gartner's recommendation was to outsource and migrate from
multiple state data centers to two data centers. Gartner noted additional
performance benefits of consolidation:
-
Greater economies of scale,
-
Improved service levels and accountability,
-
Standardized practices, processes, tools and skills,
-
Increased flexibility to meet changing needs, and
- Improved
usage and leverage of shared infrastructure.
The Gartner study helped to form the basis for the Fiscal
Note in House Bill 1516.
Endnotes
[1] Shared
Success: Building a Better Texas through Shared Responsibilities (2005
State Strategic Plan for Information Resources Management), Department
of Information Resources, page 8. Retrieved 28-Aug-2006 from
<http://www.dir.state.tx.us/pubs/ssp2005/>.
[2]
Gartner Research, MarketScope for Data Center Outsourcing, North
America, 2006, Richard T. Matlus, William Maurer, July 26, 2006, page 2, and
Magic Quadrant for Data Center Outsourcing, 2005, Richard T. Matlus, William
Maurer, June 22, 2005, page 5.
[3]
"The State of the Sourcing Industry", Peter Allen, Partner and
Managing Director, Global Practices, TPI, Inc., 2006 Sourcing Leadership
Exchange Conference, May 9-11, 2006, Omni Mandalay Hotel at Las Colinas, TX.
[4]
Government Sector Drives 49 Percent Increase in Global Spending on Major
Outsourcing Projects in 2003. DM Review, Data Monitor Editorial Staff, January
22, 2004. Retrieved 28-Aug-2006 from <http://www.dmreview.com/article_sub.cfm?articleId=8004>.
[5]
Shared Success, page 8 (see note 1).
[6]
Staff Performance Report to the 79th Legislature, Legislative
Budget Board, January 2005. Retrieved 22-Aug-2006 from
<http://www.lbb.state.tx.us/The_LBB/Access/Other_Documents.htm#Perform>.
[7]
Texas House Bill 1516, Section 2054.390, Migration of Services, 79th Tex. Leg.
R.S. (2005).
[8] Texas Administrative
Code, Title 1, Part 10, Chapter 215, Department of Information Resources,
Statewide Technology Centers for Data and Disaster Recovery Services. Available
online at <http://info.sos.state.tx.us/pls/pub/readtac$ext.ViewTAC?tac_view=4&ti=1&pt=10&ch=215>.
[9]
"Exhibit 5: Human Resource Provisions," Data Center Services - RFO
Documents (Web page), Texas Department of Information Resources, March 31,
2006. Downloaded 29-Aug-2006 from <http://www.dir.state.tx.us/datacenter/docs/RFO/Exhibit 5/Exhibit_5_HR Provisions.doc>.
[10]
"Attachment 5-B: Personnel Projection Matrix," Data Center Services - RFO
Documents (Web page), Texas Department of Information Resources, March 31,
2006. Downloaded 29-Aug-2006 from
<http://www.dir.state.tx.us/datacenter/docs/RFO/Exhibit 5/Attach_5B_Personnel
Projection Matrix.xls>.
[11]
Statewide Data Center Assessment: Expenditure and Facilities Assessment,
Validation and Analysis, Texas Department of Information Resources,
March 29, 2005, page 3. Retrieved 22-Aug-2006 from
<http://www.dir.state.tx.us/pubs/datacenter/>.
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