State and local IT agencies are shrinking. Long gone are the days where state agencies both procure and deliver their own technology solutions and services. Due to restrictive budgets, agency consolidations, and a growing demand for experienced IT professionals, state CIOs are forced to adopt a new role to ensure that their respective states can keep pace with the ever-evolving technological landscape.
In order to continue providing cutting-edge technology to their agencies, state CIOs are adopting a service broker role, relying on industry partners to efficiently deliver services to their state agencies. Let’s walk through a few of the state-level challenges that are causing this shift:
State Government Budget Challenges
As identified by an analysis conducted by the Center on Budget and Policy Priorities (CBPP), in 2018 over 25 states identified projected revenues that were less than what is needed to maintain existing services. These state-level revenue shortfalls are the result of a combination of variables, including recent tax cuts affecting state tax collection, as well as cuts to federal grants for state and local agencies (which previously accounted for over a quarter of state revenue).
This is a unique conundrum faced by state and local government, as the general economy has continued to grow in recent years. In order to adjust budgets to counteract these challenges, states are forced to cut spending, increase revenues, or tap reserve funds in order to bridge operating budget gaps. While state IT agencies have persevered, these budgetary restrictions have contributed to the need for a cost-efficient approach for delivering technology.
State Agency Consolidation
State and local agencies are going through a period of consolidation. Due to limited internal resources, and in order to improve service capacity, quality, and cost savings, many state governments are merging, partnering, and consolidating agencies. These consolidation efforts have forced state CIOs to engage with stakeholders across their respective states in order to take inventory of previous investments in IT assets, map out legacy system costs, and then identify a plan for how consolidating these service areas will save money. These consolidation efforts are all-encompassing, requiring inter-agency involvement, sometimes further complicating an already complex state and local government landscape, before providing any promise of savings in return.
State IT Workforce Demand
Attracting and retaining experienced IT professionals has become a growing issue for state and local government. In direct competition with private industry, facing obstacles in recruitment, compensation, and employment benefits, states have fallen behind the curve, losing out on the new wave of talented IT professional entering the workforce.
The workforce gap is compounded by the fact that the state workforce is on average four years older than workers within other industries. As a result, there’s an impending dilemma in sight for state agencies, where large portions of the workforce are nearly eligible to retire, while a shortage of qualified recruits are prepared to backfill these soon-to-be vacant positions. Specifically, as outlined by a 2018 Digital States Survey conducted by Govtech Navigator, 98% of state CIOs identified cybersecurity as the biggest workforce need in 2019.
The unique situation facing state and local government as a whole has changed the way that state IT agencies are delivering information technology services. State CIOs are operating in an evolving landscape, where administering all IT services in-house is no longer feasible nor efficient, because of the lack of available budget, bandwidth, and personnel.
This shift has found state CIOs relying upon industry partners, in order to properly deliver and manage innovative technology throughout their respective states. Their new role as a broker of IT services focuses on industry partner relationships and available services, relying upon as-a-service offerings rather than application development. This shift ultimately will empower states to offer innovative services to state constituents, in the form of digital government offerings, changing state and local government as we know it.
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