1. 1 The KVS Enterprise Vault The State of Iowa’s The State of Iowa’s Return on Investment (ROI) Program Presented by John GillispieTom R. Shepherd Executive Director, Iowa Communications NetworkExecutive Officer 4 Chief Operating Officer, Iowa Information Technology Enterprise (515) 281-6902 President, National Association of State Chief information Officers (NASCIO) Malcolm Huston Malcolm Huston IOWAccess Manager IOWAccess Manager (515) 281-0393 (515) 281-0393

2. 2 The Genesis of Iowa’s ROI Program In 1998, Governor Tom Vilsack sponsored the creation of an ROI program for IT projects. The program was intended to: Identify and quantify the benefits to Iowa citizens and/or state government Identify and quantify the benefits to Iowa citizens and/or state government Gain alignment between IT projects & strategic plans for the state & the Governor’s agenda Gain alignment between IT projects & strategic plans for the state & the Governor’s agenda Identify current and future project costs Identify current and future project costs Establish a priority order among competing projects Establish a priority order among competing projects Make recommendations on projects funded out of agency budgets Make recommendations on projects funded out of agency budgets

3. 3 What the Research Told Us IT Executives from both the private and public sectors were asked to comment about the ROI methodologies for IT projects and systems in their organization. Private Sector Comments Accountability is a problem (especially true for IT projects) Independent verification and validation (IV &V) of outcomes is inconsistent Few companies have a comprehensive ROI program for IT investment

4. 4 What the Research Told Us Public Sector Comments A comprehensive implementation of the proposed program would be useful in most governments. Not every IT project equally lends itself to the quantification of benefits. Auditing of IT project results in the public sector was highly inconsistent. The ROI program must have executive sponsorship.

5. 5 Public Sector vs. Private Sector Values Public Sector Mission Effectiveness Cost Reduction; Efficiency Accountability To Public; Integrity; Fairness Customer Satisfaction Taxpayers; Auditors; Legislators Leadership; Legislators; Planners Privacy Laws, Security Best Management Practices Sameness; Economies Of Scale Standardized Technology Private Sector Competitiveness Profit; Growth; Market Share Innovation; Creativity; Good Will; Recognition Customer Satisfaction Stockholders; Owners; Market Customer Demand Protection Of Intellectual Capital; Proprietary Knowledge Growth Rate; Earnings; Market Share Uniqueness, Product Differentiation Advanced Technology General Strategic Goal General Financial Goals Values Desired Outcome Stakeholders Budget Priorities Set By: Justification For Secrecy Key Success Factors Strategic Feature Source: Balanced Scorecard Institute

6. 6 ROI Program Features The Iowa ROI Program was designed to classify and prioritize IT projects competing for pooled funding. Its’ features included: Cost/benefit and payback analysis. Cost/benefit and payback analysis. A review by of senior Level IT and other A review by of senior Level IT and other government managers and knowledgeable government managers and knowledgeable citizens. citizens. Independent verification and validation of IT Independent verification and validation of IT project results. project results.

7. 7 Initial ROI Program IT Project Information Required Is this project consistent with meeting the goals and objectives of the State's strategic plans? Is this project consistent with meeting the goals and objectives of the State's strategic plans? Project’s impact on existing customer service processes. Project’s impact on existing customer service processes. Citizen impact of project deliverables. Citizen impact of project deliverables. Description of processes that will be reengineered. Does the project use information technology to reengineer “traditional” government processes? Description of processes that will be reengineered. Does the project use information technology to reengineer “traditional” government processes? Risk Assessments - Likelihood of successful implementation; and Impact to customers if the project fails Risk Assessments - Likelihood of successful implementation; and Impact to customers if the project fails

8. 8 Provide Three Examples of Relevant Agency IT Projects, Project Experience, and Results. Provide Three Examples of Relevant Agency IT Projects, Project Experience, and Results. Project Duration and Funding Requirements Estimated by Funding Source on a Fiscal Year Basis. Project Duration and Funding Requirements Estimated by Funding Source on a Fiscal Year Basis. Related Projects Related Projects Source of All Project Funds Source of All Project Funds Project Budget Project Budget Pre-Project Annual Costs Pre-Project Annual Costs Post-Project Annual costs Post-Project Annual costs Initial ROI Program IT Project Information Required

9. 9 Current Technology Environment Current Technology Environment Proposed Technology Environment Proposed Technology Environment Data Description for New Data Base(s) Data Description for New Data Base(s) Proposed Project Schedule Proposed Project Schedule Outcome Measures Outcome Measures ROI Project Review & Assessment ROI Project Review & Assessment Initial ROI Program IT Project Information Required

10. 10 Initial ROI Evaluation Criteria (100 Points Total) Statutory or other requirements mandating the proposed IT project (15 points) Statutory or other requirements mandating the proposed IT project (15 points) Customer service improvements (15 points) Customer service improvements (15 points) Impact on Iowa’s citizens (10 points) Impact on Iowa’s citizens (10 points) Tangible and/or intangible benefits (10 points) Tangible and/or intangible benefits (10 points) Use of information technology in reengineering government processes (10 points) Use of information technology in reengineering government processes (10 points) Risks associated with the project (10 points) Risks associated with the project (10 points) Continued funding requirements (10 points) Continued funding requirements (10 points) Collaboration with other agencies (10 points) Collaboration with other agencies (10 points) Maximizing (optimizing) resources (5 points) Maximizing (optimizing) resources (5 points) Past performance on other IT projects (5 points) Past performance on other IT projects (5 points)

11. 11 Initial Lessons Learned You can lead a policy maker to knowledge... You can lead a policy maker to knowledge... Get the right people involved in completing the ROI Get the right people involved in completing the ROI Applicants time is limited Applicants time is limited Evaluator time is limited Evaluator time is limited Someone eventually needs to actually read ROI Forms Someone eventually needs to actually read ROI Forms It takes more expert staff to do this right It takes more expert staff to do this right Analysis of Outcomes pays off: Analysis of Outcomes pays off: Identifies successes (and failures) Identifies successes (and failures) Aids in future project planning Aids in future project planning Helps to improve future project specifications Helps to improve future project specifications

12. 12 Assessing Citizen Impact Assessing citizen impact of IT projects: Drives reengineering of “traditional” processes Drives reengineering of “traditional” processes Places a customer service emphasis on projects Places a customer service emphasis on projects Documents objective customer service improvements Documents objective customer service improvements Is both a driver and identifier of VALUE in IT Projects Is both a driver and identifier of VALUE in IT Projects In 1999, we assumed a citizen “cost” of $10/hour for every hour a citizen was required to stand in line or wait for some type of service. We also developed various annualized estimates of citizen interaction time with government.

13. 13 Example of “Reengineering” to Improve Customer Satisfaction Early to Mid-20 th Century Motor Vehicle Registration January – February Only Iowa Motor Vehicle Registration Staggered Registration By Birth Month Online or Mail Renewal

14. 14 The Three-Year-Average Median Household Income for Iowa (2002-2004) = $43,042 1. This is equivalent to a average household income of $20.69 per hour 2. Also include any reasonable transportation, parking, and other charges. Use other metrics established by your organization or customary for your community. 1 U.S. Census Bureau 2 Assuming an average of 2,080 hours per year Assessing Citizen Impact

15. 15 Mandated ROI for Agency IT Projects Following the initial “success” of ROI for prioritizing IT projects for pooled funding, legislation in 2002 required ROI assessments for each regular IT budget item over $100,000. Following the initial “success” of ROI for prioritizing IT projects for pooled funding, legislation in 2002 required ROI assessments for each regular IT budget item over $100,000. The Governor, through the Department of Management, and Legislature received ROI documents and evaluations for IT projects to review. The Governor, through the Department of Management, and Legislature received ROI documents and evaluations for IT projects to review. Legislature Governor

16. 16 Current Implementations of ROI With the implementation of the Vilsack “Budgeting for Results” Program, ROI was discontinued for ongoing agency IT projects. It is still required for: Pooled Technology Funding Requests Pooled Technology Funding Requests IOWAccess Funding for e-Government Projects IOWAccess Funding for e-Government Projects

17. 17 Current Pooled Technology ROI Process Agencies complete the ROI funding document Agencies complete the ROI funding document The ROI documents are reviewed, scored, and prioritized by the Joint Chief Information Officers and the Technology Governance Board The ROI documents are reviewed, scored, and prioritized by the Joint Chief Information Officers and the Technology Governance Board Final rankings are submitted to the legislature for the formulation of an appropriation to the Technology Reinvestment Fund (Pooled Technology) Final rankings are submitted to the legislature for the formulation of an appropriation to the Technology Reinvestment Fund (Pooled Technology)

18. 18 There are three sections within each application that determine the score - maximum possible points = 1,250 Section I - Project Description (24% - 300 points) Section I - Project Description (24% - 300 points) Section II - Expected Results (24% - 300 points) Section II - Expected Results (24% - 300 points) Section III - Financial Analysis (32% - 400 points) Section III - Financial Analysis (32% - 400 points) Bonus Points for multi-agency and cross-boundary projects (20% - 250 points) Bonus Points for multi-agency and cross-boundary projects (20% - 250 points) Pooled Technology ROI Scoring Process

19. Technology Return on Investment Malcolm Huston IOWAccess Manager State of Iowa

20. IOWAccess Advisory Council - to create an electronic gateway to government information

21. IOWAccess Revolving Fund Motor Vehicle Records Online Convenience-Fee Applications

23. Scope AnalysisDesign Implementatio n

24. Scope AnalysisDesign Implementatio n

29.  Strategic Plan  Current Technology  Statutory or Other Requirements  Impact on Iowa's Citizens  Process Reengineering  Timeline  Funding Requirements  Scope  Source of Funds

30.  Strategic Plan  Current Technology  Statutory or Other Requirements  Impact on Iowa's Citizens  Process Reengineering  Timeline  Funding Requirements  Scope  Source of Funds

33. Challenges Scoring Discussion vs. Scores Weight Cost Estimation at Stage 1,2 and 3 Verification and Validation Public Value vs. IT ROI

34. “A sound governance model for state-local collaboration is one that encompasses shared accountability, establishes leadership, encourages mutual trust and promotes collective dedication to achieving the same strategic goals.” Connecting State and Local Government: Collaboration through Trust and Leadership

35. “A sound governance model for state-local collaboration is one that encompasses shared accountability, establishes leadership, encourages mutual trust and promotes collective dedication to achieving the same strategic goals.” Connecting State and Local Government: Collaboration through Trust and Leadership

36. Acknowledgement of Conditions for Approval of IOWAccess Project

37. Public Return on Investment social, societal, and citizenry benefits derived from the project investment.

38. Public Return on Investment Increases in efficiency — obtaining increased outputs or goal attainment with the same resources, or obtaining the same outputs or goals with lower resource consumption. Example: new ERP systems help achieve substantial efficiencies in financial management, with resulting increases in accuracy.

39. Public Return on Investment Increases in effectiveness — increasing the quality and/or quantity of the desirable thing. Example: an online registry for land data can contribute to improvements in property tax administration and more equitable tax for homeowners.

40. Public Return on Investment Enablement — providing means or allowing otherwise infeasible or prohibited desirable activity, or preventing or reducing undesirable events or outcomes. Example: birth and marriage records online enables research by local historians and genealogists.

41. Public Return on Investment Intrinsic enhancements — changing the environment or circumstances of a stakeholder in ways that are valued for their own sake. Example: enhanced financial accounting and reporting opens government financial decision making to greater transparency.

42. Potential Public Value Governance Elements

43. 43 Questions?