Michigan’s Tech Trio Ready to Prove the Power of Good IT

Michigan Gov. Rick Snyder knew he had a technology problem the first time he visited his state Capitol office. It was Sunday, Jan. 2, 2011, the day after he was sworn in as the state’s 48th governor. Anticipating a busy week ahead, Snyder had gone in a day early to get a head start on the job.

State IT workers were there, too, setting up the governor’s personal technology — a new desktop PC and a dinky square monitor. Snyder, a former computer industry executive who ran as “one tough nerd” during the campaign, wasn’t impressed. The desktop was bad enough, but the monitor was ridiculous.

“I knew from experience that you now pay a premium for square-screen monitors, so I said, ‘Do you realize it costs less to buy a rectangular monitor and it gives a better user experience? Why do I have a square one?’” Snyder recalled. “They said, ‘We didn’t want to look like we were spending money.’”

Michigan's state government will pump millions of dollars into new technology systems over the next few years. Gov. Rick Snyder, a former technology executive, says these upgrades are crucial for improving the customer service delivered by government agencies. In this video, Snyder and other top state officials talk about Michigan's strategic technology investments.

Since then, the governor has turned that approach on its ear, designating millions of state budget dollars for smart investments in modern technology and new services designed to serve citizens more effectively. He’s also hired a top-notch team to help him implement that vision. Budget Director John Nixon, who joined the Snyder administration after managing Utah’s state budget for five years, is considered to be one of state government’s most tech-savvy CFOs. And CIO David Behen has experience both in government — he’s the former CIO and deputy administrator of Washtenaw County, Mich. — and as a private-sector entrepreneur. 

Together, they’re leading a revolution designed to prove that strategic technology investments can both lower the cost of running government and make citizens happier with the services they receive. 

 

It’s rare to find a governor who’s in his element when talking about IT. But Snyder clearly is — as you would expect from someone who spent six years in senior management at a major computer manufacturer. He became executive vice president of Gateway in 1991 and served as the company’s president and CEO from 1996 to 1997. During an interview in his Lansing office, Snyder covers everything from COBOL programming to identity management — exclaiming at the end, “I love talking about this stuff. I can talk about it all day.”

Michigan Gov. Rick Snyder says these technologies are fundamental to improving citizens' experience with government programs and services.

Snyder’s goal is to improve and simplify government for citizens and businesses — which he pointedly refers to as its customers — and he sees technology as fundamental to that strategy. Unfortunately, he says, the technology deployed by government agencies hasn’t done customers many favors. Multiple state databases, systems and procedures make it a hassle for citizens to get what they need, or even understand who they should contact. Add on layers of local and federal government and the picture really gets fractured. 

Citizens want to interact with government electronically, he says, and agencies should make it easier and more pleasant for them to do so. The governor envisions a simpler model where citizens tell the state website what they want to do and it leads them through the task ­— or better yet, does it for them automatically. One example Snyder gives is an address change process that lets a citizen enter a new address once and have the change occur in every state program that uses the information. 

“In a lot of ways, we haven’t done the best by our customers,” Snyder said. “We want to go toward something that I like to call ‘MI page,’ a customer-centric model that says, ‘You are one person; you are one entity.’”

Reaching that goal will take some work, he acknowledged. Snyder ticks off a list of IT upgrades that are fundamental to his plan. First, is standardizing and connecting agency databases so they can function as an enterprise resource and using the cloud where possible to bring these systems up to date. Next is deploying identity management technology to authenticate users and allow them to interact with state programs and services more seamlessly. And finally, he said, the state workforce will need a healthy dose of change management.

“The cultural question is too often overlooked in technology projects. I have lived through this one personally multiple times,” Snyder said. “The big challenge is getting people to understand they can change how they do business processes or interface with customers.”

One step toward changing the culture is a recently launched crowdsourcing application designed to harvest innovative ideas from the Michigan state workforce. The “Bureaucracy Busters” initiative — which lets state workers submit and rank ideas for improving state operations — attracted more than 7,000 users in its first month of operation. 

“The goal here,” Snyder said, “is to create an environment where people can really do the interaction they should, without getting caught up in bureaucracy and legacy issues.”

 

When Nixon was approached about a job in the Snyder administration, the offer was too interesting to pass up. He’d built a reputation in Utah as a savvy financial manager who understood the value of technology. In Michigan, he would lead a consolidated state agency — the Department of Technology, Management and Budget — that oversees all of the state’s finance, IT and administrative functions. 

“One of the things that brought me here was the opportunity to be the budget director and work very closely with IT,” Nixon said. “I really looked at it as an opportunity to see if we could use the budget to leverage IT investment to bend cost curves.”

Michigan Budget Director John Nixon met with the Michigan state IT staff during his first week on the job. Here, he talks about that initial encounter.

Nixon’s new job came with an immediate challenge: The Snyder administration took office with the state facing a $1.5 billion budget deficit. After six weeks on the job, Nixon had rebalanced the state budget and helped Snyder fashion a sweeping tax-reform package that became law last year. But even as Nixon cut overall spending, he found money for small, high-impact investments in technology. 

For instance, he created a $2.5 million innovation fund designed to nurture good ideas that normally would be steamrolled during the appropriations process. Nixon says these ideas typically can’t compete with huge projects — think $100 million Medicaid system deployments — so they never see the light of day. 

The idea, he says, is to choose projects with a high rate of return and use the savings they produce to repay the innovation fund. The fund currently supports five projects, including new self-service terminals for the Secretary of State’s Office and a restaurant inspection and licensing application for Oakland County that will be shared with counties across the state.

“I really wanted to put together a fund where these smaller projects could go through a different process,” Nixon said. “We put $2.5 million into the fund last year — that’s ongoing base funding so it’ll grow by $2.5 million each year. Over the next several years, that fund will grow into something that we really think will help us push the envelope on IT innovation.”

He also implemented a more structured approach to IT planning and budgeting. Even before Behen came on board as CIO, Nixon met with Michigan’s senior IT managers, asking them for long-term technology plans so he could include funding for enterprise technology in the state budget. “Their jaws dropped,” Nixon recalled. “They said the fact that we’re even in the budget director’s conference room talking about IT is unbelievable. That’s never happened.”

From those talks and subsequent conversations, it became apparent that agencies had huge pent-up demand for new technology. Years of financial turmoil had forced the state to bandage up old systems and keep them limping along far past their prime. As Nixon and Behen put together a list of strategic IT projects, they realized they needed more than just a one-time investment. Nixon’s solution was to put $47 million of ongoing funding into the state budget to pay for technology projects. 

“Normally you just fund the project,” he said. “What we did was fund a base amount that stays in the budget year after year.”

 

All of this activity leaves the state CIO with a remarkably full plate. Behen worked with state agencies to identify 17 projects so far — most of them large-scale, multiyear initiatives aimed at replacing legacy systems and enhancing automation.

One of the first tasks will be deploying a new ERP system, Behen says. Michigan’s existing financial management system is nearly 20 years old and can’t perform the kind of data mining and analysis that decision-makers need. The state also is weighing its options for modernizing 30-year-old data center facilities. A 2011 report from consulting firm EquaTerra outlined a series of options — ranging from co-located data centers managed by a private partner to completely outsourced data center services — for the state to consider. Through a request for qualification process, Michigan is asking vendors to present ideas for replacing the facilities. From those responses, the state will develop a short list of vendors that will be asked to respond to an RFP.

Behen says that the close connection between budget and technology in Michigan produces a powerful combination. Photo by Jessica Mulholland

Besides new data centers and ERP, the to-do list includes upgrading Michigan’s Medicaid system to comply with Affordable Care Act requirements and replacing the Treasury Department’s system for collecting sales, use and withholding taxes. “There are a lot of big projects ahead, so we’re focusing on bringing them in on time and on budget,” said Behen. “With money comes accountability, and we’re OK with that.”

He adds that the close connection between budget and technology in Michigan produces a powerful combination. “I report directly to John, so we work on our performance plans together, we work on our strategic plans together, we’re totally aligned on how we’re moving forward,” Behen said. “So when I’m pushing an IT project for our agency partners, John is already there with me.”

NASCIO Executive Director Doug Robinson agrees that the relationship is extraordinarily productive, even if it’s not exactly how his organizaton would have drawn it up. NASCIO recommends that the state CIO report directly to the governor, not the budget director. But in Michigan’s case, the arrangement works.

“I think what you have there is a very unusual situation where you have a tech-savvy governor and a tech-savvy budget director,” Robinson said, adding that most budget officials view IT as a cost to be cut instead of a target for investment. “Right now, Michigan certainly is the exception, so I’m not sure that can be replicated.”

Still, Robinson says there’s a clear lesson for other IT executives to learn from Michigan. “If you’re a CIO, the budget director needs to be your best friend,” he said. “Forming a close partnership is critical to your success.”

Behen has a few other advantages too. Michigan’s IT operations are among the nation’s most centralized, Robinson noted, giving the CIO authority over all statewide IT staff and the entire technology budget. In addition, years of fiscal hardship have made state agencies much more receptive to shared services and other innovative ideas.

Behen acknowledges that he’s well positioned to leave his mark on the state’s IT landscape. “The governor really believes that technology can make an impact on how we do business and provide customer service. And the budget director wants to fund it,” he said. “What better situation could I be in?”

 

Much of Michigan's new approach to technology, thanks to Snyder, Behen and Nixon, hinges on common sense. Photo by Jessica Mulholland

Over the next few years, Snyder, Nixon and Behen will perform a high-profile test of that theory. They’ll pump millions into new systems designed to control the cost of running government while improving public services. And if they do it right, Snyder says, taxpayers will appreciate the investment. 

“Usually when you get your tax bill, you don’t feel like a purchaser, but that is really the theory,” he said. “I want them to feel good that they bought the right amount of government. They bought the right amount of public safety or education — because they have other things that they could be doing with those resources.”

And about that desktop PC that Snyder encountered on his first day in the office? It’s been carted away, replaced by something more mobile. And in place of the little square monitor there are now are several good-sized displays. 

Also on the way out, Snyder says, are the rules that landed new but already obsolete equipment on the governor’s desk in the first place. As he sees it, much of the state’s new approach to technology hinges on common sense. “We have good IT people; they were just following policy. They wanted to do the right thing, but they didn’t feel empowered to say anything.”