All Eyes Are on Texas

Texas, which has a reputation for being larger thanlife, has been grabbing a lot of headlines lately. But it's not aflamboyant politician or corporate scandal that's drawing the attention.It's a nearly $2 billion systems integration and re-engineering projectthat, as one analyst put it, is "likely to be the largest procurement inthe history of state government."

Indeed, the Texas Integrated Enrollment System (TIES) has transformedthe state capital, Austin, into a virtual tent city of informationtechnology managers and national policy experts. They, in turn, arealigned with some of the biggest names in technology, including LockheedMartin IMS, IBM Corp., Electronic Data Systems Corp., Unisys Corp. andAndersen Consulting Inc.

These heavy hitters, in some cases teamed with state agencies, are vyingfor the opportunity to overhaul Texas' human services infrastructure,currently a hodgepodge of more than 12 independent enheadlinement programs.Along the way, they plan to shrink the state's administrative costs by25 to 40 percent, re-engineer its business processes and make aprofit.

Can They Pull It Off?

"In lumping so much money and scope into one project, the obviousconcern is that [the solution] will have to be a grand design, and granddesigns have not done well at the federal level," said Bob Greeves, aVienna, Va.-based consultant on state and local government ITpolicies.

Others are more sanguine. "There is always the risk in largeorganizational change that you won't be able to accomplish it," addedLarry Singer, a research fellow in the Program on Strategic Computingand Telecommunications in the Public Sector at Harvard University's JohnF. Kennedy School of Government. "But if Texas is going to shift from anenheadlinement-oriented structure to an outcome-oriented one, they need todo a massive overhaul. Besides, it's Texas, and everything is big inTexas."

On the face of it, the state's plan to overhaul its human servicessystems is not unique. Other states—including Illinois, Maryland andFlorida—are facing similar challenges. But because it's Texas—with254 counties, 400 enrollment sites and annual expenditures of $550million on human services eligibility programs—all eyes are on theLone Star State.

With TIES, the state wants to provide its welfare and human servicesclients a single point of access to multiple services. Under the plan,the Human Services Department, the Health Department and the TexasWorkforce Commission would use a single, integrated database to qualifyapplicants for services ranging from food stamps and Aid to FamiliesWith Dependent Children to Job Opportunities and Basic Skills andmedical services. Other agencies also would use the system, togetherwith external assessments, to determine eligibility for programs.

Texas's information resources managers—somewhat embattled by groupsopposed to human services privatization—take pains to emphasize thatthis is not simply a hardware or software project. "This is not atechnology procurement per se," said Andy Slack, associate commissionerof Information Resources Management for the Texas Health and HumanServices Commission (HHSC). "The goal is to streamline and integratework processes and to reduce redundancies."

That's saying a lot. The state wants to improve the speed and accuracyof the eligibility determination process and, not incidentally, reduceits administrative costs, which represent the lion's share of theprogram budget. The winning bidders also will need to specify ways toconsolidate the state's significant and costly real-estate holdings,serve clients where they live and work, reduce the amount of programstaff and establish a clear workflow where none existed before.

While those goals are not entirely technology-driven, everybodyacknowledges that IT will be inherent to the success of the system. Thespecific technology solution, however, will be up to the bidders. "Wewant to avoid proscribing an architecture," said Slack, whose departmentrewrote the request for offers (RFO) to make it more results-based. "Wewant to take advantage of the creativity of the marketplace, and when wesay marketplace, that now includes public-service organizations."

The Texas Legislature last year directed HHSC to work with the state'sCouncil on Competitive Government to analyze the costs and benefits ofcompeting some of the department's functions, which opened the door forthe various public/private consortia to bid on the TIES proj-ect. Oneteam comprises Lockheed Martin, IBM and the Texas Workforce Commission.A second team includes EDS, Unisys and the Texas Department of HumanServices. Andersen Consulting is expected to be a third major bidder.

The Road Not Taken

Each team will need to accommodate or replace the current system—orlack of system—in which myriad departments maintain separateenrollment systems and eligibility data. Much of that is paper-based;the rest often resides in mainframe-based legacy databases, and verylittle of it is shared electronically among departments.

"When you look at how Texas uses technology now, it's focused onfinancial data once eligibility has been determined. They don't havetechnology on workers' desks to help clients," said Robert Carlson,director of health and human services at the Bethesda, Md., office ofIBM. "Most of the energy is expended in keeping legacy systemsrunning."

On the plus side, the state does have a relatively new wide-area networkthat should serve as an advantage to whatever system is finally adopted."The HHSC has a very sophisticated network already in place; we're veryproud of it and proud of the governance structure for it," Slack said,explaining that various agencies worked together as a buying cooperativeto put the WAN in place. "The RFO says you'd have to either use [that]network or cost-justify choosing another method."

So far the bidders are mum about their plans, at least until the RFO ismade public. But some basic principles are emerging."We would want to build an infrastructure that will allow us tore-engineer the workflow by taking silo-based delivery systems, whichare entirely self-contained, and bringing these together so that youonly have to do it once," IBM's Carlson said. "That would be your singlepoint of contact into client services."

A second priority, he says, will be for Lockheed Martin, IBM and theTexas Workforce Commission to develop alternative ways for clients toget to the system—a challenge all bidders face as they try to reducereal-estate and personnel costs without endangering the delivery ofbenefits to clients.

"We're looking at digital kiosks, phone systems, PC networks andintranets," Carlson said. And while he admits a Web-based access systemmight seem a bit far-fetched to the average human-services client today,that might not be the case seven years from now. "Once the first PCgeneration graduates from high school, Internet access won't sound soextreme."

EDS sees paper and redundancy as two big challenges for the new system."Traditionally, welfare has been very paper-intensive," said LouisMatrone, vice president for state and local government at EDS. "We needto eliminate the need for paper flow, to do away with the hundreds ofmillions of documents and to reduce the number of individuals that haveto deal with those documents."As for redundancy, he said: "There is no system in place for agencies toshare information. Networks and databases will be shared across multipleagency lines to eliminate duplication of effort."

However, Matrone appears less enthusiastic than others aboutaccommodating legacy databases. "We are approaching the days where thelegacy systems have far outreached their usefulness," he said. "Anysolution will replace those."

On the desktop, Matrone predicts that caseworkers, both state andprivate employees, will use a PC-based graphical system that willeliminate some current functions while adding new ones. Training alsowill be part of EDS' package. "We will have a training program to helpthese individuals transition into these new functions," he said.

For its part, Andersen Consulting will concentrate on building acleaner, more accurate system that includes performance indicators sothat managers will be able to gauge their effectiveness as they go, saysRobert Tyre, global managing partner for human services at Andersen."There are an awful lot of systems and databases out there withredundancies and inconsistencies, so data cleanup will be a veryconcerted effort," he said.

Rather than scrap the legacy systems, Tyre says he advocates, at leastinitially, cleaning up the data and consolidating it with a graphical,case-management front end. "We could put something in place quickly andinexpensively that allows us to know the business immediately. Some kindof expert engine [front end] would allow you to begin making consistentdecisions right away."

Andersen also would meet the goal of one-stop servicing with what Tyrecalls "non-stop" offices that break out of the "9-to-5 paradigm" as wellas regional call centers tied to a central database of clients. "Wewould know your history, the last time you called [and] what systems arealready in place for you, just the way an airline has your preferencesand travel history right there when you call," he said. "And we don'tneed to invent new technology to make this happen. The trick is just tobreak out the programmatic barriers to enable us to focus on the citizenone time, in one place."

Pay Day

It's clear from the size of the bidding investments that the companiesbelieve there is a lot of money waiting to be made in Texas. The state,however, is leaving it up to the bidders to propose just how they willmake their money. According to Singer, the three most likely scenariosare: a per-transaction basis, an outcome basis (where the contractor ispaid for each client who successfully gets off welfare) or a risk-sharebasis, where companies take their profits from the savings from reducedadministration costs.

That way, vendors can gauge both their investment and their return. "Youcan 'incentivize' vendors to increase their technology investment byhaving their contract be performance- and incentive-based," said HolliPloog, senior vice president of business development in the Washington,D.C., office of Lockheed Martin IMS. "If we're willing to spend ourcapital to achieve results, then we [and the state] can both besuccessful."

As an added bonus, the winning bidder very likely will be able to take awin in Texas and parlay that into more work in other states, all ofwhich are scrambling on some level to automate and consolidate humanservices administration. "Winning one of the most contestedhuman-service procurements will show that a company is serious aboutdelivery," Singer said.

"Only California and New York could ever approach this project in termsof size. Texas is the place—if you can do it there, you can do itanywhere."

TRACY MAYOR is a Beverly,Mass.-based free-lance writer specializing in information technology.