OKLAHOMA CITY (Jan. 13, 2009) – Several states have seen significant
savings after either privatizing their procurement and technology
services or dramatically restructuring them for better efficiency,
members of a joint House and Senate budget committee were told by
experts today.
"I am encouraged by the information presented today," said House
Speaker Chris Benge, R-Tulsa. "We have a real opportunity to seek
tremendous savings for the state of Oklahoma."
The meeting was part of study requested by State Representative Jason
Murphey who is seeking to modernize state government, including
upgrades and streamlining in technology and improvements to the
state's procurement process.
"There are several reasons to streamline government, including
improved services and cost-savings," said Rep. Jason Murphey,
R-Guthrie and chairman of the House Government Modernization
Committee. "It is our duty as lawmakers to make sure our tax dollars
are spent efficiently, and we will continue to push for savings to
indefinitely ensure Oklahoma taxpayers are protected from frivolous
spending of their hard-earned dollars."
"Technology is producing a quickly changing world with great
opportunities for increased effectiveness," said House Appropriations
Chairman Ken Miller, R-Edmond. "We have made some progress in the last
several years toward modernizing our government, but there is much
more to be done. We have to fight the status quo, especially given the
current revenue outlook. We can always do better for the people of
Oklahoma."
Making the state's purchasing practices more efficient will continue
to be a priority this year. Last year, Murphey's legislation (HB 3325)
that enabled e-procurement and allowed vendors to be paid
electronically was signed into law, but bureaucratic paperwork
continues to delay the process.
Reforms proposed in legislation last year were formulated in a 2007
interim study, which analyzed a 2005-2006 report from IBM that
identified at least $70 million in possible savings if the state put
in place industry best practices when it comes to purchasing.
"We have a chance to save millions of dollars, increase efficiencies
and improve services, all without a cost to the state at all," said
Tim Clem, senior managing consultant for IBM Global Services.
Today, a second study was presented by Treya Partners, who was
contracted by the Department of Central Services to identify areas of
savings and efficiency within the agency.
The Treya study verified that the savings potential ranges from $24
million to $71 million and could be realized within 12-18 months time.
The study showed that due to lack of spend visibility and leverage and
limited utilization of best practice procurement techniques, Oklahoma
could be paying as much as 14 percent more than they should for goods
and services, said Rahul Ahuja, the Treya Partners DCS project
manager.
The Treya study, like the IBM study, suggests that DCS officials
leverage the agency's purchasing power, develop a greater
understanding of supplier markets and economics, increase supplier
competition and unbundle pricing for greater transparency, which will
move the focus from the individual purchase price of a specific good
instead to the total cost of the entire purchase.
Savings will continue to be sought based on these studies throughout
this session and in future years.
Leonard Gilroy, director of government reform at the Reason
Foundation, said Florida's e-procurement system has led to an improved
understanding of purchasing patterns, less paperwork and faster
transactions with vendors.
Since moving its purchasing online, Florida has seen at least $71
million in savings, with 91 percent satisfaction from users of the
system.
Experts testified today that IT is well suited for privatization
because government is not flexible or fast and able to adapt to new
advances in technology.
"Today was a good first step toward bringing Oklahoma State Government
into the 21st Century," said Sen. David Myers, R- Ponca City,
vice-chairman of the Senate Appropriations committee. "I'm optimistic
that the cooperation of Senate and House members -- Republican and
Democrat alike – working together with state agencies to develop
solutions, will allow us to move forward in bringing cost savings and
new efficiencies on behalf of Oklahoma's taxpayers."
Members also learned that there are plenty of private companies ready
and willing to help state government achieve efficiencies and costs
savings in both procurement practices and management of information
technology, often without any up-front cost.
This year, House and Senate Republicans will also continue to push to
centralize the state's information systems and information technology,
and centralize all the financial and management information services
for the state. Currently, Oklahoma's state agencies have many separate
strategies for managing technology and equipment, some more or less
effective than others.
A coordinated approach to information technology will help achieve
technological compatibility among state agencies, ensure that all
state agencies are using information technology to its best advantage,
and better utilize the state's purchasing power.
Jerry Simonoff, director of IT Investment & Enterprise Solutions for
Virginia's Information Technologies Agency, told committee members
that the states' savings have been significant by centralizing the
state's IT services.
Had Virginia's IT services not been centralized, Simonoff said the
state would have spent more than $120 million on failed major IT
projects; $200 million more over the next decade supporting an aging
IT infrastructure; an additional $120 million on energy consumption
over the next decade; and paid $45 million more for IT products and
services without central IT procurement management.
Government modernization will be a priority this session for both
House and Senate Republicans.
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