1 expect the best Lemuel C. Stewart, Jr. CIO of the Commonwealth Information Technology Investment Board June 20, 2005 CIO Status Report

2 expect the best Quarterly Highlights Held VITA Dialogue meeting April 26 on Transformation Presented update on VITA to the Joint Commission on Technology and Science May 4 Participated in NASCIO Fly-in and met with Congressmen to promote data sharing on May 4 Launched customer satisfaction program in May –Independent customer satisfaction survey –“Customer Service Basics” course for all VITA employees by May 15; advance training in late summer –Initiated customer satisfaction charter with initial focus on internal customer satisfaction

3 expect the best Quarterly Highlights Received Greater Richmond Technology Council 2005 Leadership Award on May 11 Issued Agency IT investment guidance to help agencies complete IT portion of their strategic plans on May 13 Presented rates to JLARC Subcommittee on May 26 with action by full commission on June 13

4 expect the best Transformation Update Infrastructure PPEA Status –Briefing to Governor on April 15 –Detailed proposals due June 20 –On schedule for potential comprehensive agreement by October 12 Enterprise Applications PPEA Status –Formed EA Steering Committee –Launched Due Diligence on May 2 –On schedule for potential comprehensive agreement by October 12

5 expect the best Infrastructure Current Status MilestoneStart DateEnd DateStatusComments Program Planning1/10/20051/27/2005 Develop plan for the detailed review of the VITA PPEA infrastructure proposals. Conduct initial planning meetings. Establish Infrastructure PPEA Steering and Finance Review Committees. Due Diligence1/27/20054/15/2005 Establish the base case/current processes and automated systems which support them. This task has been COMPLETED. Draft SOW/SLA/Ts & Cs3/28/20054/28/2005 Develop Statements of Work (SOW), Service Level Agreement (SLA) expectations and draft terms and conditions. Provide to proposers for completion of detailed proposals. COMPLETED Develop Detailed Proposals4/29/20056/20/2005 Proposers develop detailed proposals in response to base case, SOW/SLA and Terms & Conditions Review Detailed Proposals6/21/20057/25/2005 Commonwealth team reviews detailed proposals Negotiate Comprehensive Agreement 7/26/200510/15/2005 Negotiate Comprehensive Agreement (CA) for infrastructure services. G G G G G G

6 expect the best Enterprise Applications Current Status MilestoneStart DateEnd DateStatusComments Start-up3/22/054/11/04 Develop Plan for the detailed review of the PPEA Enterprise Applications proposals. COMPLETED Due Diligence4/11/056/23/05 Establish the base case, including current processes and the automated systems which support them. Draft SOW/Ts & Cs4/11/056/23/05 Develop Statements of Work (SOW) and draft terms and conditions, to define the services that the Commonwealth envisions obtaining from the offerors. Release Proposal Package to Offerors 6/23/05 The Proposal Package, consisting of the Due Diligence Data, Draft SOWs and Draft Terms and Conditions is released to the offerors Develop Detailed Proposals6/23/058/4/05 Proposers develop proposals in response to base case, SOW/SLA and Terms & Conditions. Evaluate Detailed Proposals8/4/059/16/05 Commonwealth team evaluates proposals. Negotiate Comprehensive Agreement 9/16/0510/15/05 Negotiate the Comprehensive Agreement for Enterprise Applications and obtain senior management approval. Executive Approval10/15/05 The Comprehensive Agreement is signed by the Governor. G G G G G G G G

7 expect the best Interim Leadership Team (June 21- July 22) CIO and Deputy CIOLeslie Carter Chief Financial OfficerKaren Robinson Budget Analysis & PlanningMarvin Simms Dir. of Business Systems ServicesPaul Hendricks Dir. of Computer ServicesLinda Crenshaw Dir. of Customer Services (Relationships)Loyd Lane Dir. of Customer Services (Operations)Barry Condrey Dir. of Human ResourcesCindy O'Connor Dir. of Strategic Management ServicesPaul Lubic Dir. of Supply Chain ManagementPhil Pippert Dir. of Telecommunications & Network ServicesDoug Wilson ESD for Commerce/AgricultureLee Tinsley CommunicationsJulie Rogers

8 expect the best Local Outreach Update New Customers since April 2005 –Appomattox County –City of Petersburg –Crater Youth Center –Dinwiddie School Board –Mathews County –Prince William County Schools –Rappahannock Area Community Services Board –Virginia Outdoor Foundation –Winchester Public Schools

9 expect the best Audit Activity NEW 2005 APA Performance Audit Report was issued June, Audit was for the period 7/1/2002 – 6/30/2004 and found: Revenue and expenses are properly reported in the Commonwealth Accounting and Reporting System Compliance with all applicable laws and regulations Management has established and maintained internal controls except for one finding. The one finding is “Develop Policies and Procedures for Granting, Evaluating, and Terminating Employees in PeopleSoft.” Status: The Policy and Procedure has been developed.

10 expect the best Audit Activity 2005 APA Performance Audit Actions Update 3 of 15 actions completed 3 actions have revised dates: #1 IT Strategic Plan 3/31/06 #4 VITA Sys. Dev. Project Ranking 7/15/05 #13 Security Audit Program Dev. 12/31/05 Remaining 9 reported to be on schedule 2004 APA SAS 70 Audit Actions Update 3 of 4 actions are completed Remaining 1 reported to be on schedule Internal Audit Small Purchase Charge Card Audit with Action Plan completed 7 results with 16 recommendations

11 expect the best VITA Collaborative Programs VITA values and encourages broad participation of stakeholders –Formal Groups Council on Technology Services Finance Council Information Security Officers Community of Interest Groups (CoIns) –Business Development –Centers of Excellence Geographic Information Systems

12 expect the best CIO Major IT Project and Procurement Actions Since Last ITIB Meeting Project Planning Approval None Project Development Approval Department of Game and Inland Fisheries: Automated License Delivery System Contract Approval None Project Suspension or Resumption Approval None NOTE: See the June ITIB Major IT Project Status Report (provided separately) for a complete status of the Commonwealth major IT project portfolio

13 expect the best New Internal Service Fund Requirements New Requirement Program Management Database Risk Assessment/Incident Management TOTALS Total Request $1,650,000 $3,271,000 $4,921,000 Projected Agency Impact FY 2006$4,900,000 FY 2007$4,300,000 FY 2008$4,300,000

14 expect the best Financial Results FY05 Adjusted Budget April 2005 Actual Results Operating Revenues$263,520,186$188,317,636 Expenses, including transfers267,286,832182,317,795 Net change(3,766,646)5,999,841 Ending, retained earnings51,267,070 As of April 2005

15 expect the best Cash Flow Update VITA cash flow showing significant improvement –February 2005:($ 1.5M) –April 2005:($ 0.4M) Resulting from change of customer payment terms from 30 days to 10 days Prepared internal services fund cash flow analysis for submission to DOA and DPB for discussion of options –Treasury Loan –Line of Credit Slight shortfall (less than $500K) projected for fiscal year end

16 expect the best Proposed Meeting Schedule for ITIB PurposeDate Special Board meeting Closed session to review & approve the recommendations of the Infrastructure PPEA Steering Committee to proceed (or not) into negotiation phase July 25 1 – 4 p.m. Regular Board meeting PPEA updates August 10 1 – 4 p.m. Special Board meeting Closed session to review and approve the recommend- ations of the Enterprise Applications PPEA Steering Committee to proceed (or not) into negotiation phase September 8 1 – 4 p.m. Reschedule Regular Board meeting from 10/12 Potential closed session to review and approve Comprehensive Agreements for both tracks October 5 1 – 4 p.m.

17 the best FY06 Proposed Operating Budget VITA Financial Management Services June 6, expect the best 17

18 expect the best Budget Summary Budgets for discretionary spending cut 3.8% to cover legislated salary increases in FY 2005 and 2006 Budget reprioritizes operating initiatives and objectives to fully support transformation

19 expect the best Expenditure Focus

20 expect the best Significant Budget Adjustments Lower priority activities are scaled back or eliminated Budgeted activities relate to enhancing customer service Budget grows VITA’s business (including local outreach) and advances transformation of the state’s IT infrastructure

21 expect the best Budget Development Challenges Less than a full year of revenue and expenditure history with transitioned agencies exists New rates being developed will be completed in September Legislative policy guidance causes increased reliance on rates and may require budget adjustments during FY 2006

22 expect the best ITIB Budget Development Timelines June 2005—FY 2006 VITA operating budget approval for fiscal year 2006 beginning July 1, 2005 October 2005— biennial budget approval for submission to DPB for FY 2007 and FY 2008 budget years Jan – Mar 2006 General Assembly— biennial budget approval; FY 2006 “caboose bill”

23 expect the best Proposed FY06 Operating Budget All Funds Operating Revenues $249,176,872 Operating Expenses $248,458,316 Net Change $718,556

24 expect the best expect the best 24 Shared Service Rates Methodology

25 expect the best Shared Services Rates Methodology Current Environment –An interim direct bill chargeback methodology was implemented July 1, 2004 for transitioned agencies –Agencies pay for requested and approved services based on the direct expenses plus a 5.52% administrative fee –This method restricts VITA’s ability to utilize staff across its customer base

26 expect the best Shared Services Rates Methodology Proposed Environment –Establish a Service Matrix to cover the cost of personnel Basic (Time-based) Standard (7:00AM-6:00 PM, Monday-Friday) Enhanced (Standard + 8:00AM-5:00PM Weekends and Holidays) Comprehensive (24 X 7 X 365) –Hardware, software, contracts, maintenance remain in direct bill

27 expect the best Shared Services Rates Scope Applies only to in-scope agencies Legacy chargeback remains in effect for VITA Central expenses Interim step to get to full shared services rates

28 expect the best expect the best 28 Initiatives Benefits Methodology

29 expect the best Initiatives Benefits Methodology Provides detailed methodology to capture benefits of VITA initiatives –Savings –Cost Avoidance –Productivity Gains Required by Code and APA audit Requires Secretary of Finance approval

30 expect the best Initiatives Benefits Methodology Documents baseline compared to new environment in order to determine benefits Provides standard templates to capture information Identifies participants, initiatives, time periods and dollar thresholds for use of methodology

31 expect the best Initiatives Benefits Methodology Sample template included in member packets Provides an example of savings, cost avoidance and productivity gains calculated for a licensing initiative Illustrates savings associated with a change in contract terms resulting from a negotiated discount term

32 expect the best Initiatives Benefits Methodology Next step –Provide to Secretary of Finance for approval