IT Fiddles, California Burns


By Ericka Chickowski

As California teeters on the brink of financial collapse and the California legislature continues its months-long streetfight over the state budget, Governor Arnold Schwarzenegger has been scrambling to keep the state running.

But IT is an impediment to the process.

California is now looking to lay off 20,000 state workers -- a move that follows a recent order to make hundreds of thousands more workers take unpaid furloughs twice per month.

Schwarzenegger has long eyed the payroll as a way to stave off financial shortfalls until a budget reaches his desk for signing. Last July, the governor attempted to cut back payroll by temporarily dropping workers down to minimum wage until a budget deal was hammered out by lawmakers.

This plan was obstructed not by political wrangling or labor lobbyists -- it was held up by absolutely ancient IT infrastructure and a beleaguered project to upgrade to SAP.

The California State Controller's Office (SCO) is currently running on an old COBOL-based payroll system that dates back to the 1970s. The SCO began an initiative in 2006 to update this system, with initial estimates targeting full implementation by 2009. State Controller John Chiang said that the systems needed to carry out Schwarzenegger's minimum wage plan would not be available for six months. That was last summer.

Just this January, the SCO announced that it was canceling its contract with the consulting company in charge of the project and had not estimated when it would hire another firm to carry on. That was $25 million into an estimated $69 million project.

Even with this litany of failure, the payroll systems fiasco has largely been glossed over by the media. But CIOs should really take note. Whether or not better technology could have saved the state from layoffs may be debatable, but one thing is for sure: If your CEO approached you to set temporary paycuts into motion and you told her 'No, infrastructure won't support it,' you'd be out on your butt in a heartbeat.

The fact is that IT failures have very real business consequences. When system upgrades don't go as planned, lines of business must change course. When IT fails to live up to promises it can bring down the business in the process. That's part of the problem today in California.


20 Comments for "IT Fiddles, California Burns"

  • David N February 27, 2009 6:14 pm

    Public Sector has it's own processes (as does any industry) but I feel that's only part of the point of this article. California paid an outside consultant - one that does implementations in the private sector as well - to implement their new ERP system. That system, which was to replace an aging, COBOL-base system (not just to cut worker wages) is behind schedule and underperforming - in spite of already sinking $25M into the project. The question is why. When you buy an ERP system you have to rely on the vendor and implementor to guide you through the process. And you should expect them to be expert enough to help avoid pitfalls, to manage the program effectively and within budget, etc. These consulting firms have practices dedicated to government and and should be well versed in dealing with the idiosyncracies. So while government has its challenges, dealing with those challenges is what you are paying for when you hire the implemenation firm. And they are supposed to be partners with the IT vendor, so they should be in the best position to avoid the problems. Blaming the government agency here is a little like blaming you when your mechanic can't fix your car: it must be your fault because you never pre-diagnose the problem correctly.

  • Debunk February 22, 2009 8:32 pm

    Oh, was it also built by the lowest bidder?

  • Hi There February 22, 2009 6:05 pm

    Government at all levels is incompetent. When government money goes into a project, you can be sure that it wil be 1.slow, 2.expensive, 3.done incorrectly. As these governments grow larger and people expect more from them, they become more incompetent. Whether it's be The Federal Reserve's funny money, the Congress' unintended consequences, or the State government's reliance on Federal welfare, it's all a digusting farce and a disgrace to the founders of this once great country.

  • Ken C. February 22, 2009 4:15 pm

    I am in complete agreement with David B. who posted on 2/20 at 2:06 pm. The problem is systemic and is NOT unique to government (state or federal). What is interesting is that many companies facing financial troubles are laying off the very IT workers they need to fix their problems. I was laid off by such a conglomerate late last year. One major problem was that they did not have a centralized financial system to consolidate financial results. Their financial problems seem to grow each week as they were negotiating for a federal "bailout". After the bailout, one of the first projects that was killed was a new centralized SAP system. Go figure!

  • Robert Madore February 20, 2009 5:13 pm

    Interesting that MY comment about the incompetance and potential plaguarism of this writer was refused to be allowed to be printed here! check out the site and article: http://www.theregister.co.uk/2008/08/14/cobol_california/

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