Michigan Data Center Consolidation: How Did They Pull It Off?

The state of Michigan has almost completed a massive data center consolidation effort, which has reduced 17 mainframe data centers to two and will save an estimated $79 million in its first five years of operation. The effort started five years ago and incorporated a charge-back revolving fund that transformed information technology into a utility and enabled the state to order and implement systems without going through the normal appropriations process. The project's success also hinged on support from the state's governor.

Five years ago, Michigan Gov. John Engler decided that 17 separate agency-controlled data centers-16 in Lansing and one in Detroit-compromised the state's ability to provide high-quality, reliable and timely IT services. Most of the platforms in use were out-of-date, and several were incompatible, so there was little or no communications among agency systems and no way to combine and analyze information from the agencies.

The governor enlisted help from then-chief of policy John Kost to study the problem. Kost, senior vice president of Federal Sources Inc., McLean, Va., now runs the state and local government consulting practice for the firm. Back in 1992, he decided a centralized office of the chief information officer was needed to determine policy and manage the state's rightsizing or outsourcing project.

The governor appointed Kost as the state's CIO in late 1992. By the beginning of 1993, Kost hired Deloitte&Touche to conduct an exhaustive study of the current computer environment and the state's choices to outsource, consolidate or do nothing to change the current systems environment.

The study also measured the cost savings of each choice. In November 1994, Kost took the results to the agency CIOs and promoted data center consolidation as the best course. "With the governor's support and the numbers to back us up, it was difficult for most agencies to challenge a consolidation effort," he said.

Michigan decided against outsourcing due to its high cost and what officials perceived as a lack of absolute control of critical governmental applications. "There are too many applications that require state governmental control, such as police, corrections, treasury and others that deal directly with ongoing state functions," said Gary Swindon, director of Michigan's Office of Computing and Telecommunications.

Once the decision to consolidate was finally made, the hard work was only beginning. The next challenge was identifying how to proceed. With help from consultants and his vendor partners, Kost decided to house all the data in two centers, located about eight miles apart, to mirror each and provide processing, application development and disaster recovery services for the state's computing operations.

The "Before" Picture

In all, nine of the data centers housed Unisys Corp.'s A Series mainframes, which ran civil service, commerce, corrections, lottery, mental health, state, state police, transportation and treasury applications. A Unisys 2200 mainframe ran social services applications. Three aging Bull systems-two DPS 90s and one DPS 8000-ran education, public health and more social services applications, and four incompatible, aged IBM Corp. DOS/VSE and VM platforms housed environmental quality, education services administration, natural resources and treasury applications.

Kost decided to segregate the 17 data centers along vendor lines and partner with various vendors to find the best way to consolidate the systems. As luck would have it, Unisys had just completed an exhaustive consolidation of 58 of its own data centers into a single center. Kost asked for help from Unisys' corporate staff, which had the experience to manage the state's effort. "Those people offered invaluable assistance providing templates of architectural and data center design that helped Michigan plot a successful migration strategy," Kost said.

The state's IT officials then went back to the agency heads and established guaranteed service levels for each group, in terms of response times and capacity requirements.

And then the IT organization set a schedule for the migrations. The state decided to merge all the Unisys-based applications into one larger A Series model-the A18 742, with 543G of storage-for production applications and a Model 522 with 265G for development applications.

The "After" Picture

The first agency to migrate was the Treasury Department in August 1995. Throughout 1996, six other agencies also migrated to the production data center, located eight miles south of Lansing, Mich. A separate Unisys 2200 Model 9244 with 240G of storage was moved there as well.

The second data center houses the Unisys A Series Model 522 development system, which also acts as a hot-site backup facility for the first data center. A Bull DPS 9000 with 311G of storage was placed in that second data center, located in downtown Lansing.

Due to the age of the equipment, the software (which was several revisions behind) and the training needed to bring applications up to current levels, the state outsourced the environmental quality, natural resources and educational services applications to IBM Systems and Services Co., Boulder, Colo.

The state's lottery system, which is still housed on a Unisys A Series platform, is in the midst of an 18-month migration process to outsourcing. The state will provide disaster recovery and migration support for this gaming application, but by the end of 1998, this too will be outsourced, Swindon said.

Michigan also has added a Teradata Corp. data warehouse, which is channel-connected to the Unisys A Series production system and the Bull DPS 9000. The Teradata 5100 has 1.1 terabytes of storage capacity and houses human resources applications, tax audit applications and a national drug code system.

Also, a new Tandem Computers Inc. data exchange gateway server with 40G of storage was installed in the second data center to support security functions and electronic commerce messaging to the outside world. Because some insurance companies want to verify driving and other state resident records on-line, and agencies such as Natural Resources want to provide automated environmental reporting, the electronic commerce gateway server was installed this past April.

In addition to melding 17 data centers into two, Michigan set up an enterprisewide network based on TCP/IP and consisting of three sets of Fiber Distributed Data Interface 100M backbone rings that connect users to each other and to the data centers (see diagram, Page 20).

Funding, Savings, Head Count

Michigan used a system of charge-backs to each agency and a revolving fund amortized over five years to pay for the new systems and services needed for the consolidation. This enabled the state to buy new systems and recover the cost of new equipment by billing agencies for their use without going through the normal appropriations process. And the new systems incorporate software that measures usage and bills departments automatically, Swindon said. This revolving-funds practice was well-accepted in Michigan before the data center consolidation effort, having been used to pay for telephone expenses and office supplies.

In measuring the savings of such a project, head count played a big role. Michigan reduced the number of people in its data centers by 50 percent, although no one was laid off. Originally, there were more than 800 people working in IT for the state. Kost, Swindon and the consultants decided to limit the scope of the consolidation by establishing that application development programmers, analysts and database management administrators remain within the jurisdiction of their respective agencies. That reduced the IT staff significantly.

Then Kost started recruiting the best and brightest of the IT people from throughout the state to run the new data centers. In all, 100 people now run the two centers. Those not selected were re-absorbed into the agencies from which they came, offered other positions or retrained for other jobs within the state's government.

Swindon maintains that the actual savings from operating the two new data centers, over running the 17 previous data centers, is $10 million annually. And another $29 million was saved by avoiding the purchase of systems, software and services to upgrade the various agency data centers.

Lessons Learned

One of the biggest lessons learned was the value of top-level support. Without it, the proj-ect never would have succeeded, Kost said. For example, when the state police balked at migrating classified criminal records to the new system, the governor was brought in to listen to police concerns. He suggested bringing in an outside security expert to establish which system would be more secure and, later, the best way to migrate the state's sensitive criminal data. Now the state police's administrative functions have been migrated to the Unisys A Series system, and the criminal records should be transferred before year-end.

Michigan IT officials also maintain that it's important to hire impartial outside consultants to assist in researching current systems and establishing goals and boundaries for this type of consolidation project.

Barbara DePompa is a free-lance writer based in Germantown, Md.

Tips to the Wise

State and local governments with a mishmash of disconnected systems and few ways to improve the quality of IT services should consider these practices based on the experience of the Michigan data center consolidation.Establish a push/pull process

Unisys' team helped the state create two teams of people: one team that prepared the data to be pushed to the new system and another that prepared the new systems to accept, or pull, the data into the center.

Strict schedules

Swindon maintains he has lived by three rules during the consolidation project. "No slack, no subtlety, no excuses. If certain deadlines are allowed to be missed, the whole project can fall into disarray," he said.

Offer incentives

The officials say offering incentives and rewarding early support from agencies can boost statewide support and help promote the success of the ongoing effort.

Continuous follow-up

Don't assume that when everyone is quiet, everything is OK. A data center consolidation involves so many people that the key to a successful effort is clearly not to ignore any customers. Keeping written records of every meeting and providing progress reports and written agreements also are key to keeping many separate agencies moving forward.

Avoid brute force

Michigan IT officials claim that remaining diplomatic and escalating concerns to higher authorities when necessary is the best course to follow when settling disputes.