RD176 - Recommended Technology Investment Projects (RTIP) Report For the 2012-2014 Budget Biennium, September 1, 2011 Submission

Executive Summary:
This year marks the ninth annual submission of the RTIP Report. It is the desire that the report add value to the Commonwealth's technology investment decision-making process. To this end, the report reflects the CIO's increased emphasis on strong investment alignment to the Commonwealth's strategic goals and objectives as established by the Council on Virginia's Future, the Governor and the 2007-2011 Commonwealth of Virginia Strategic Plan for Information Technology. Only projects supported by a strong business case, based on established selection and ranking criteria, were considered as priorities for funding.

While fiscal year 2010 signaled major changes in oversight and governing structures, fiscal year 2011 brought the successful implementation of the supporting changes in project management oversight and governance. In January, the Commonwealth Project Governance Assessment (CPGA) model was successfully implemented. With the goal of "just enough governance, just in time," the Commonwealth IT Project Complexity Model was revised to analyze risk and complexity over the life of the project, to determine the appropriate levels of governance and oversight for Commonwealth projects. Dollar value is no longer the determining factor. Projects of $250,000 or more are evaluated, assessed and are assigned an oversight and governance category based on their risk/complexity score. There are four categories, with Category 1 requiring the most oversight and governance as they are highest risk projects and Category 4 the least.

The project categories for the major project portfolio are displayed in Appendix A, and the breakdown of those projects recommended for funding by risk and complexity can be seen in Exhibit 1. Note that two Virginia Department of Transportation (VDOT) projects, SharePoint 2010 estimated to cost $2,400,000 and Financial Management System (FMS) Data Mart - Sun Set estimated to cost $2,726,572, have been classified as Category 4 projects. Once active, these projects will be overseen by the agency, VDOT, and will only have to report quarterly progress to the Project Management Division. Independent Verification and Validation (IV&V) reviews are not required for Category 4 projects.

Forty two percent of the portfolio are Category 1 projects and twenty three percent are Category 2. Accordingly, over fifty percent of the portfolio is characterized as “high risk”, which increases resource demands on those participating in oversight and governance activities. Another view into portfolio risk can be seen by the breakdown in business affect as seen in Exhibit 2. Projects that are “transformational” in nature are higher risk as they transform the way agencies will do business and involve reengineering business processes. Twenty three percent of the proposed portfolio is transformational in nature while sixty five percent is categorized as “improving the business”. It should be noted that projects that improve the business also can impact business processing, although these changes tend to be more localized to divisions.

FY2010 marked the first year that active major IT projects were defined in the Governor's Budget and in the Appropriation Act. Supported by the Commonwealth Technology Portfolio (CTP), the Chief Information Officer (CIO) now is able to maintain better visibility into the Commonwealth IT investment portfolio and conduct regular quarterly portfolio reviews. Closer, regular scrutiny of the portfolio by the oversight and governance process has significantly reduced, but not eliminated, the number of last-minute agency projects being submitted for planning and development approval between RTIP reports.

Capturing and retaining project information in the CTP over time has opened up opportunities for charting spending trends. Exhibit 1 shows IT project dollars spent on new investments for fiscal years 2007 through 2011. These cost figures were taken from the data reported by agencies on the Commonwealth Major IT Projects Dashboard each month. FY2011 is much higher than the other years because of expenditures in the Virginia State Police's (VSP) Statewide Agencies Radio System (STARS) and VDOT's Cardinal projects. The size of the STARS project is not typical of the average project, and 2011 was an unusual year even for STARS as the project had expenditures of approximately $78 million this year. Three projects, VDOT's Cardinal, Virginia Employment Commission's (VEC) Unemployment Insurance Modernization, and Department of Motor Vehicles' (DMV) DMV CSI Systems Redesign Project - Development and Implementation, with combined expenditures of $37,377,290, also contributed to the increase in project spending in FY2011 over FY2010.

Overall IT expenditures for Executive Branch agencies for FY 2007 through FY 2011 can be seen in Exhibit 4, which shows the breakout between infrastructure, project spending under oversight and governance, and ongoing operations and maintenance (O&M) over the five-year period. These expenditures do not include higher education, the Judicial Branch or Legislative agencies. The data for each of these years are from year-end reports from the state general ledger system, Commonwealth Accounting and Reporting System (CARS), and are provided by the Auditor of Public Accounts (APA) in Excel workbooks. In the past agencies have not reported against baselines for projects of less than a million dollars on the Commonwealth Major IT Project Status Report Dashboard or in the Commonwealth Technology Portfolio. Accordingly, VITA does not have a method for determining dollars spent in a given fiscal year for those projects. These dollars are embedded within the O&M category at this time.

CARS captures agency-reported data, making spend numbers wholly dependent upon accurate sub-object coding of expenditures by agencies. VITA has some reservations about using CARS expenditures as a surrogate for “IT costs”; however, the information is provided from a reliable, independent source and the methodology is consistent from year to year. Refinement of the reporting and data collecting methodologies will be pursued, to improve the accuracy of IT spend numbers.

As stated earlier in this report FY11 Agency IT project costs increased due to expenditures in the STARS and Cardinal projects. The increase in VITA infrastructure and telecommunication service fees resulted from the GA approved rate increase. Agency IT payrolls continue to hold steady.