RD171 - Center for Innovative Technology (CIT) Operating Plan - Fiscal Year 2016


Executive Summary:
Fiscal Year 2016 Operating Plan

For Fiscal Year 2016, CIT's mission will continue to be "accelerating the next generation of technology and technology companies" coupled with the objective to "achieve national recognition as the premier services provider engaged in technology company creation and company growth."

To achieve these objectives, CIT will operate four service lines and the MACH37™ cyber accelerator each under the leadership of a senior executive. These service lines are:

Service Line: Research and Development
Responsible Executive: Nancy Vorona

Service Line: Entrepreneur
Responsible Executive: Tom Weithman

Service Line: Connect
Responsible Executive: Paul McGowan

Service Line: Broadband
Responsible Executive: Sandie Terry

Service Line: MACH37™ Cyber Accelerator
Responsible Executive: Rick Gordon

In addition to the service lines above, the following corporate support functions are delivered under the leaders identified below:

Operating Area: Commonwealth Operations
Responsible Executive: Bob Stolle

Operating Area: Finance and Administration
Responsible Executive: Linda Gentry

Operating Area: Government and Public Relations
Responsible Executive: Hap Connors

Operating Area: Office of Chief Technology Officer
Responsible Executive: Dave Ihrie

Research and Development Service Line

For Fiscal Year 2016, the Research and Development service line will execute the following programs:

1. Refresh the Commonwealth Research and Technology Strategic Roadmap.
2. Maintain the Innovation and Entrepreneurship Measurement System.
3. Structure, administer, and audit $3 million of new awards for the Commonwealth Research Commercialization Fund and approximately $16 million award base.

In addition to program operations, Research and Development leadership will examine new funding opportunities identified by the other service lines and will monitor opportunities in offshore wind energy. To execute these programs, the Research and Development service line will expend $400,209 as outlined in the funds usage chart on page 9 of the report.

Entrepreneur Service Line

For Fiscal Year 2016, the Entrepreneur service line will execute the following programs:

1. Operate CIT's Federal Funding Assistance Program which helps Virginia companies secure Small Business Innovation Research (SBIR)/Small Business Technology Transfer (STTR) funding and ensures that the Commonwealth preserves its top 5 national ranking for total SBIR/STTR awards.

2. Accelerate seed-stage funding for Virginia's technology startup companies by operating the GAP Fund family of funds, along with the Commonwealth and State Small Business Credit Initiative (SSBCI). Funding for Fiscal Year 2016 will allow the GAP Funds to place 18 investments and support second-round funding for existing high-growth portfolio companies.

3. Accelerate seed and growth funding for Virginia's energy companies by operating the Commonwealth Energy Fund. Federal funding for this Fund will enable the creation or growth of four energy companies.

4. Provide seed funding to emerging cyber security companies through the MACH37™ Seed Fund.

The combination of the GAP Funds, MACH37™ Seed Fund, and Commonwealth Energy Fund will produce a projected 20 to 30 new investment transactions for Fiscal Year 2016. The Entrepreneur service line will offer additional operational support, as required, for programs executed by other service lines, including the Commonwealth Research Commercialization Fund and MACH37™.

In addition to program operations, service line leadership will continue its strong program of community outreach, advocacy, and new business development consistent with maintaining and growing Virginia's appropriation and identifying sources of new business consistent with its leadership in new company formation and funding. Finally, the Entrepreneur service line will examine how best to establish one or more private sector funds to augment financing obtained from Virginia's appropriation process for the purpose of investing in early stage companies.

To execute these programs, the Entrepreneur service line will expend $8.7 million as outlined in the funds usage chart on page 9 of the report.

Connect Service Line

The Connect service line is distinct from the other CIT service lines in that it is a self-funding client focused consulting business. Connect is a consulting service which works with many federal, state, and local agencies, and corporate clients to help them accelerate the use of and assimilation of new technology solutions while delivering significant value to the Commonwealth of Virginia (Commonwealth) through new solution development for Commonwealth implementation and cost offset for CIT operations.

In the last several years Connect has focused on a few key new technology areas including Mobile Learning, Social Media Exploitation, Big Data, Health Information Technology and Education Data - particularly around State Longitudinal Data System (SLDS) Solutions.

Since 2008, Connect has been working with the Virginia Department of Education (VDOE), the Virginia Community College System (VCCS), the State Council for High Education in Virginia (SCHEY), the Department of Social Services (DSS), and other state agencies on the Virginia Longitudinal Data System (VLDS).

VLDS is a software tool that provides insight into data that informs of the effectiveness of Virginia's education and workforce programs. It provides secure access to education and workforce data, while maintaining privacy and confidentiality. VLDS is a critical tool for the Commonwealth and Connect was a key team member in the design, development and implementation of the VLDS.

In 2014, Connect was selected by the State of Nevada to implement a version of VLDS customized to their requirements. This resulted in additional license revenue for Virginia, substantially reduced costs in the provision of operations and maintenance support and created national recognition for the VLDS solution.

For Fiscal Year 2016, the Connect service line's priorities will be as follows:

1. Develop and exploit four growth platforms
2. Aggressively pursue seven new, focused, technology assimilation campaigns

Each growth platform consists of a current key and strategic client relationship which are outlined in more detail below. Each technology assimilation campaign is a focused effort to leverage a core Connect capability into a new market. For example, one campaign is to leverage the VLDS and the Nevada P-20 to Workforce Reporting System (NPWR) work to develop the nation's first SLDS-as-a-service capability which would provide leading edge SLDS capabilities to multiple states on one platform and drive tremendous benefits for Virginia in terms of improved capabilities and reduced cost.

In the successful execution of these priorities it is expected that the Connect service line will generate in excess of $2 million in revenue from external sources.

Broadband Service Line

For Fiscal Year 2016, the Broadband service line will execute the following programs:

1. Operate the Office of Telework Promotion and Broadband Assistance to encourage the usage of telework alternatives for public and private sector employees.

2. Execute programs to support the efforts of public and quasi-public bodies within the Commonwealth to enhance access to and utilization of affordable broadband services throughout Virginia. These programs include:

a. Improve broadband access through mapping and the support and development of tools to facilitate broadband deployment planning.

b. Provide technical assistance to underserved areas to improve their access options.

c. Advance broadband benefits by providing resources to guide communities to implement programs that improve broadband adoption and utilization resulting in sustainable demand.

d. Benchmark Virginia's broadband access and utilization by collaborating with agencies to assess broadband access, capacity, and utilization at schools and libraries across the Commonwealth.

e. Benchmark Virginia's broadband access and utilization through an annual healthcare assessment and collaborating with agencies to assess broadband access and capacity at schools and libraries across the Commonwealth.

f. Monitor national rankings to target areas needing improvement to ensure Virginia is realizing all the benefits of broadband including improved education, healthcare, and overall life.

To execute these programs, the Broadband service line will expend $793,127 as outlined in the funds usage chart on page 9 of the report.

MACH37™

MACH37™ will enter its third year of accelerator operations in Fiscal Year 2016, the program will continue to conduct two annual cohort sessions, one in the spring and one in the fall. Each cohort session will contain between 6 and 10 companies. Also, in FY2016, MACH37™ will become self-sustaining through private sponsorships and transition to an independent operating entity.

To execute these initiatives, CIT will expend $2 million which is included in the Commonwealth Project Expense line in the funds usage chart on page 9 of the report.

Commonwealth Operations and Special Projects

In addition to programs developed and managed in our five service lines, CIT will actively support the McAuliffe Administration, legislative, and other statewide innovation, entrepreneurship, and technology priorities. CIT is partnered with state agencies and other organizations in several significant programs that grow Virginia's technology and innovation economy. In FYI 6, CIT will continue to leverage the extensive knowledge and experience within its staff to provide critical assistance on these non-CIT managed programs, including:

1. Develop and grow regional innovation initiatives
2. Support the advancement of the unmanned systems industry
3. Expand modeling and simulation into new industries including health care, advanced manufacturing, and unmanned systems
4. Support and expand the Commonwealth's initiatives in cyber security and cyber data analytics
5. Provide leadership and support for Governor's Biosciences Roundtable initiative
6. Coordinate with university partners to develop an online resource for accessing combined research capabilities within the Commonwealth

To execute these initiatives, CIT will expend $2.8 million as outlined in the funds usage chart on page 9 of the report.

Corporate Support Groups

In addition to the operating service lines, CIT is supported by the Finance and Administration (F&A) group. CIT's F&A group is responsible for all financial, legal, and administrative functions of the corporation including the design and operation of a federal and state compliant financial management system.

The Chief Technology Officer (CTO) provides leadership of the group responsible for technology vision, as well as information technology services. The goal of the CTO is to take a lead role in defining, promoting, and implementing forward-looking technology policies and processes that advance entrepreneurial activity and the assimilation of technology.

CIT is also supported by the Government and Public Relations group. The Government and Public Relations group is responsible for state, federal, and public relations functions.

Operating Budget

The Fiscal Year 2016 budget, summarized below, plans the controlled use of net assets to achieve impact in all service lines. The projected year end net asset position of $1.5 million ensures our ability to bridge fiscal year commitments and manage operating adjustments throughout the year.

President and CEO's Perspective

Fiscal Year 2014 was the most successful operating year in the history of CIT, both in terms of revenue achieved as well as mission accomplishments. Fiscal Year 2015 will also be successful and it has delivered a new perspective on operating a multi-source funding model to fund CIT operations. During Fiscal Year 2015, CIT's budget from the Commonwealth was reduced by 36% due to reductions in revenues received by the Commonwealth. This reduction, which was implemented as a one-time reduction, initiated a review of standing practices for the inclusion of unsold new business in the CIT operating budget. Due to the 36% reduction in CIT's Fiscal Year 2015 appropriation, the Administration instructed CIT to include high probability unsigned new business in the proposed Fiscal Year 2016 operating budget. This adjusted procedure will enable CIT to present a break-even budget and pursue new business throughout the year to achieve growth and funding objectives.

Also, by mid-year, the current CEO will step down and be replaced by a new CEO; this transition is being navigated by the CIT Board Search Committee with support from an executive search firm and transition support from the leadership team. As the CEO of CIT, I can report that it is a privilege to serve as CEO and we are looking forward to successful candidate recruitment and transition.

Fiscal Year 2016 provides significant opportunity and mission challenges for CIT. Our entrepreneurial approach and focus ensures that we are aligned with our customer base. The entire team is energized to deliver to the goals outlined in this plan.