InformationWeek

October 20, 1997

Pennsylvania To Outsource Data Centers

State plans to steer savings into other IT operations

ennsylvania will issue a request for proposals later this month to outsource and consolidate the state's 18 mainframe data centers. The state's goal is to channel expected savings of about $127 million over the next five years from mainframe operations into other IT operations. Pennsylvania's 1997 IT budget was $400 million.

"We put so much money into our data centers each year, but so little into desktops, networks, and training," says Thomas Paese, Pennsylvania's secretary of administration. "Now, the mentality is to invest in those other areas."

In limbo are the jobs of about 500 data-center workers. "We hope to absorb about 200 or 300 of them into other areas," says Paese.

The state expects a number of outsourcing vendors-including IBM and Unisys (whose mainframes populate the data centers), as well as EDS and Lockheed Martin-to bid for the contract. Paese declined to estimate a value for the contract. Pennsylvania plans to begin the outsourcing in July 1998.

The scope of Pennsylvania's outsourcing plans falls somewhere in between those of other states. At the aggressive end is Connecticut, which is expected to pick a vendor later this year to take over nearly all of its IT and telecommunications operations in a deal that could run as long as 10 years and may be worth more than $1 billion.

At the other end of the spectrum is Iowa, which started considering IT outsourcing two years ago. "We decided that it just didn't suit us," says Jim Youngblood, who joined the state about a year ago as its first director of IT services. "Because you might have a mess on your hands doesn't mean that someone else is going to be able to clean it up any better."

Iowa's own aggressive IT plans include consolidating its three data centers into one next year. Although Iowa may contract a company to help with "workflow issues" related to the consolidation, the bulk of the work will likely be done by the state's own IT staff.

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