State outsources accounting system

The Wyoming State Auditor's Office recently concluded a three-year, $4.8

million deal to completely outsource the handling of its payroll and accounting

data, an apparent first in what could prove to be an accelerating trend

by state and local governments during the next few years.

The contract should see the state's payroll system, accounting and procurement

services move completely to American Management Systems Inc.'s Fairfax,

Va., location by the end of August.

Payroll and accounting has been hosted internally within the state government,

and the state auditor's office pays a fee for that service, said Jeanette

Beman, information technology project manager with the auditor's office.

But there were increasing issues with security and service-level agreements.

"There was no monitoring for bugs, there wasn't any intrusion detection,

and there weren't any firewalls in place" at the hosting agency, Beman said.

"They do have plans to boost security, but the timeframe in which they expect

to do this is not good for us. We felt it put us at too high a risk."

AMS provides for all of that, she said, while still allowing the auditor's

office to own the data and the applications they run on, and also allowing

review and control of security features, such as access policies.

A critical factor that also helped swing the decision to outsource was

the detailed service-level agreement that AMS provided, Beman said, something

the state could not come close to matching.

Tom Byrne, vice president of the public-sector group at AMS, said another

deciding factor was the opportunity the company offered the auditor's office

to move forward with a Web-based approach to managing services, something

that would have required a major upgrade internally by the state.

It's something he's hoping will be the beginning of a movement within

state governments.

"I think there's a very strong desire on the state and local side of

government to look at outsourcing," he said, and he expects AMS will strike

another five or six similar outsourcing agreements by the end of this year.

But it's unlikely there will be a flood of such agreements.

The State Auditor's Office "was charged internally for these services,

and so probably had a clearer sight of the issues and advantages" of outsourcing,

Byrne said. "Agencies in other governments might not have this to deal with,

and then it becomes a more difficult return-on-investment issue."

Nevertheless, when agencies realize they can get a complete hosting

system and the infrastructure to run it on for a set price and guaranteed

period — Wyoming offered about the same price as AMS but could only provide

a one-year guarantee — he feels that will prove a major attraction for

many.

Robinson is a freelance journalist based in Portland, Ore. He can be

reached at hullite@mindspring.com.