What I Was Thinking... During My Last Major Capex Decision

David Fletcher, CTO, State of Utah | 7/9/2013 | 15 comments

David Fletcher
[Editor's Note: This is part of a series written by CIOs discussing their thought processes and lessons learned from major events in their tenures as CIO. Check back tomorrow for a companion post to this one.]

Several years ago, I was faced with the need to provide a more robust architecture for our web-based operations. As an organization, we had made a major commitment to delivering government services online whenever possible. This was a strategic direction that also had the commitment of the governor. Our network traffic was growing rapidly and we were in the process of adding new online services that would potentially add millions of new visits to our domain. Off-hours traffic was also growing so we needed to ensure reliability through a redundant architecture that would provide fail-over at any time.

Our central IT organization operated as an internal service fund, meaning that it had to cost recover all expenses through rates charged to the various agencies that used our services. For that reason, it became important for me to understand what the needs of each of those customer agencies were with respect to this equipment and if it was something that could be justified from their perspective. Ultimately, I would need to be able to cost recover this expenditure within a reasonable time-frame.

The first step was to determine if this expenditure was really a priority when compared to all of the other needs of the organization. The state legislature sets dollar limits each year on internal service fund capital expenditures, and requests to expend these funds almost always exceeded what was available. After analyzing the growth in web traffic, particularly that traffic associated with the delivery of online services, I made a quick determination that we really should move forward with the expenditure in order to adequately support the business requirements of the combined agencies.

The next step was to prepare a business case that clearly identified all of the costs and benefits of the proposed purchase. I involved our network planning team and tasked them to look at various alternatives. This would include identifying various potential vendor solutions making sure that they would function well within our enterprise architecture and then preparing more detailed cost estimates associated with these alternatives as well as the advantages of each alternative.

After these alternatives were ready, I had staff from the other areas of operations and engineering review and comment on the preferred solutions. In particular, I made sure that security, hosting (system administrators), and the software engineering manager all had a chance to provide input. Because this would potentially impact the performance of each of their products, I wanted to make sure that they contributed to crafting the solution.

Once we felt comfortable that we had identified a requirements set that would meet the needs of these various sections, as well as the growing demand from customer agencies, we were ready to draft a request for proposals (RFP).

Government RFPs can be a challenging process, both for the agency that has to develop the RFP as well as the vendors that wish to respond. Occasionally, vendors will question or challenge the requirements that were outlined by the agency. In order to optimize this process, I always tried to make sure that we drafted RFPs that were concise and direct, with clear language and easily understood requirements. With this RFP, I wanted to make sure that any reliable vendor that could meet these requirements was able to bid. Hopefully, this would ensure that we received a reliable and low-cost solution that would meet all of our needs.

In a few weeks, we were able to complete the RFP process and begin implementing a solution.

In my next blog post, I will let you know how it turned out and discuss what I have learned from going through this and other capex purchases.

Related posts:

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Kerstin Carson   What I Was Thinking... During My Last Major Capex Decision   7/31/2013 7:36:33 AM
Re: What I Was Thinking...During My Last Major Capex Decision
@davidfletcher – You mentioned that the most challenging aim to meet is making sure system admins, network planners, and developers stay on the same wavelength while preparing an RFP to create a "win-win" for everyone. Do you find that such an interactive process ends as a teachable moment that makes the next RFP easier for a team to work on?
Shamika   What I Was Thinking... During My Last Major Capex Decision   7/11/2013 1:32:11 AM
Re: Major Capex Decision
@jastro absolutely. All these falls under team work. Managing resources is also an important aspect irrespective of the size of the project. I think implementation, the decision-making or the expectations along with the teamwork are challenges.
Shamika   What I Was Thinking... During My Last Major Capex Decision   7/11/2013 1:22:33 AM
Re: Major Capex Decision
Managing cost, time and scope are the key areas of any project. Change in any of these parameters will either drag the project or sometimes can be put on hold. Therefore these factors have to be properly managed.
Shamika   What I Was Thinking... During My Last Major Capex Decision   7/11/2013 1:19:57 AM
Re: Major Capex Decision
Having all these steps in place, it is very much important to create a project plan with the timelines. It will keep your focus towards to project and all the tasks will be monitored.
Shamika   What I Was Thinking... During My Last Major Capex Decision   7/11/2013 1:19:37 AM
Re: Major Capex Decision
Very interesting article. This is what exactly we practice when we do IT projects. It is very important to identify the business case and obtain the scope of the project and lock it to make sure it is not deviated as per the projects plan.
DBK   What I Was Thinking... During My Last Major Capex Decision   7/10/2013 11:30:07 AM
Re: Major Capex Decision
LuFu - Quick story I don't do a lot of federal work but I do have a federal research group that I do work with.  Historically they have engaged me for project and I design a solution, they issue the PO we do the job.  Recently I was asked to come in and evaluate a problem they had and design a solution.  I drove the 2 hours to get to the site, met with the team.  Did a site and needs evaluation.  Went back to my office put in the time required to develop the solution and provided a statement of work and price.  They asked for a better break down in my build of materials, which I reluctantly provided.  And guess what no good deed goes unpunished I received an RFP from that agency with my scope of work and build of materials.  And yes they took my work and published a federal request for quotation.  Needless to say that level of support that I had provided for them is no longer on the table, pay as you.  And so now I have a personal issue, do I not respond to the RFP or do I proceed?  Frankly I don't think that they can get someone else to do the job based on the location and the specific build of materials.  I will need to consider my next steps carefully.
LuFu   What I Was Thinking... During My Last Major Capex Decision   7/9/2013 10:58:58 PM
Re: Major Capex Decision
@David - As a vendor I find there are fewer headaches and rein-pulling when dealing with states than the Feds. They have less budget to work with but then less bureacracy. It's sort of a weighted value between headaches and rewards.
davidfletcher   What I Was Thinking... During My Last Major Capex Decision   7/9/2013 5:05:52 PM
Re: Major Capex Decision
LuFu, I think we typically have the flexibility that we need although sometimes it takes a little longer than I would hope.  Things change over time and between agencies, so I'm not going to try to speak for the federal government.
davidfletcher   What I Was Thinking... During My Last Major Capex Decision   7/9/2013 5:03:45 PM
Re: Major Capex Decision
+DBK The reason for an RFP is so that we can consider other criteria in addition to cost.  Cost typically accounts for about 40% of our scoring when we review an RFP. Yes, we are a government agency that provides consolidated IT services for all agencies in the state of Utah.
LuFu   What I Was Thinking... During My Last Major Capex Decision   7/9/2013 4:42:25 PM
Re: Major Capex Decision
@David and DPK - To piggy-back on DPK's questions if you were with a government agency or a government service provider, do you see a difference operating and within a state government versus the Federal Government? My perception is working within state gives you more flexibility while the Feds is more restrictive.
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