U.S. GOVERNMENT PRINTING OFFICE

68–507 DTP WASHINGTON : 2001

THE PERFORMANCE OF FEDERAL CIOs: HOW DO

THEY COMPARE TO CIOs IN THE PRIVATE

SECTOR?

HEARING

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,

INFORMATION, AND TECHNOLOGY

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

MARCH 24, 2000

Serial No. 106–174

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpo.gov/congress/house

http://www.house.gov/reform

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: (202) 512–1800 Fax: (202) 512–2250

Mail: Stop SSOP, Washington, DC 20402–0001

(II)

COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

DAVID M. MCINTOSH, Indiana

MARK E. SOUDER, Indiana

JOE SCARBOROUGH, Florida

STEVEN C. LATOURETTE, Ohio

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

BOB BARR, Georgia

DAN MILLER, Florida

ASA HUTCHINSON, Arkansas

LEE TERRY, Nebraska

JUDY BIGGERT, Illinois

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

HELEN CHENOWETH-HAGE, Idaho

DAVID VITTER, Louisiana

HENRY A. WAXMAN, California

TOM LANTOS, California

ROBERT E. WISE, JR., West Virginia

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

CHAKA FATTAH, Pennsylvania

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

HAROLD E. FORD, JR., Tennessee

JANICE D. SCHAKOWSKY, Illinois

———

BERNARD SANDERS, Vermont

(Independent)

KEVIN BINGER, Staff Director

DANIEL R. MOLL, Deputy Staff Director

DAVID A. KASS, Deputy Counsel and Parliamentarian

LISA SMITH ARAFUNE, Chief Clerk

PHIL SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY

STEPHEN HORN, California, Chairman

JUDY BIGGERT, Illinois

THOMAS M. DAVIS, Virginia

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

JIM TURNER, Texas

PAUL E. KANJORSKI, Pennsylvania

MAJOR R. OWENS, New York

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

J. RUSSELL GEORGE, Staff Director and Chief Counsel

RANDY KAPLAN, Counsel

BRYAN SISK, Clerk

TREY HENDERSON, Minority Counsel

(III)

C O N T E N T S

Page

Hearing held on March 24, 2000 ............................................................................ 1

Statement of:

Doll, Otto, commissioner, Bureau of Information and Technology, State

of Arizona, president, National Association of State Information Resource Executives .......................................................................................... 34

Flyzik, Jim, Chief Information Officer, Department of the Treasury, vice

chairman, CIO Council ................................................................................. 25

Knutson, Gerald J., vice president, Communications and Information

Services, U.S. West ....................................................................................... 64

Krupa, Suzanne, chief information officer, the Rowe Companies ................ 70

McClure, David L., Associate Director, Governmentwide and Defense Information Systems, U.S. General Accounting Office .................................. 4

Letters, statements, et cetera, submitted for the record by:

Doll, Otto, commissioner, Bureau of Information and Technology, State

of Arizona, president, National Association of State Information Resource Executives, prepared statement of .................................................. 37

Flyzik, Jim, Chief Information Officer, Department of the Treasury, vice

chairman, CIO Council, prepared statement of .......................................... 28

Horn, Hon. Stephen, a Representative in Congress from the State of

California, prepared statement of ................................................................ 3

Knutson, Gerald J., vice president, Communications and Information

Services, U.S. West, prepared statement of ................................................ 66

McClure, David L., Associate Director, Governmentwide and Defense Information Systems, U.S. General Accounting Office, prepared statement

of ..................................................................................................................... 7

(1)

THE PERFORMANCE OF FEDERAL CIOs: HOW

DO THEY COMPARE TO CIOs IN THE PRIVATE SECTOR?

FRIDAY, MARCH 24, 2000

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,

INFORMATION, AND TECHNOLOGY,

COMMITTEE ON GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 10 a.m., in room

2154, Rayburn House Office Building, Hon. Stephen Horn (chairman of the subcommittee) presiding.

Present: Representatives Horn and Turner.

Staff present: J. Russell George, staff director and chief counsel;

Randy Kaplan, counsel; Matt Ryan, senior policy director; Bonnie

Heald, director of communications; Bryan Sisk, clerk; Ryan McKee,

staff assistant; Trey Henderson, minority counsel; and Jean Gosa,

minority assistant clerk.

Mr. HORN. The Subcommittee on Government Management, Information, and Technology will come to order.

The purpose of this hearing is to assess the effectiveness of Federal Government’s chief information officers, the CIOs, in comparison to their counterparts in the public and private sectors.

The Clinger-Cohen Act of 1996 required each of the major departments and agencies in the executive branch to appoint a CIO

to manage the agencies’ information technology programs. In addition, the Clinger-Cohen Act required that agencies reform their information technology management organizations based largely on

the successful practices of the private sector. To emphasize the importance of the CIO’s role in management, the act also required

that the Federal CIOs report directly to agency heads.

This morning the General Accounting Office will release a new

executive guide entitled, ‘‘Maximizing the Success of Chief Information Officers: Learning from Leading Organizations.’’ This GAO

guide acknowledges that the position of CIO in the Federal Government is still evolving. And, in fact, agencies are taking steps toward better utilizing the talents and leadership of their CIOs.

However, the breathtaking speed of this information age demands

an equally fast response from Federal agencies. From e-government

and e-security to e-taxes, chief information officers in the private

sector have provided the technical and managerial expertise that

has successfully brought corporate America into an era dominated

by high technology. The private sector knows that information

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management not only dictates how a business works, but increasingly defines what that business is.

Federal CIOs must be empowered to provide the same type of

leadership in government agencies. The Federal Government’s senior management, the Cabinet Secretaries, agency leaders, their immediate staffs and the CIOs, must rise together to meeting the

technical and management challenges that lie ahead. The Federal

Government cannot respond to the information age in a stone age

manner.

We welcome our panel of witnesses, and we look forward to your

testimony.

[The prepared statement of Hon. Stephen Horn follows:]

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Mr. HORN. Let me explain how we work here. One, we swear in

all the witnesses.

No. 2, we go down the line of the agenda, and automatically your

full statement is put in the record. We would like you to summarize it between 5 and 8 minutes, and that permits us to have a lot

of time for questioning and a dialog between members of the panel.

So if you would stand, raise your right hands, we will swear you

in. And anybody that is going to be whispering to you, put them

up, too.

[Witnesses sworn.]

Mr. HORN. The clerk will note that all five witnesses have affirmed the oath.

Mr. McClure is the Associate Director for the Governmentwide

and Defense Information Systems for the GAO.

STATEMENT OF DAVID L. McCLURE, ASSOCIATE DIRECTOR,

GOVERNMENTWIDE AND DEFENSE INFORMATION SYSTEMS,

U.S. GENERAL ACCOUNTING OFFICE

Mr. MCCLURE. Thank you, Mr. Chairman. It is a pleasure to be

here and talk about the role of the chief information officer in the

Federal Government and to introduce our recent study on maximizing the success of chief information officers. Your subcommittee

plays a very important role in focusing both oversight attention

and facilitating constructive dialog on critical information management issues in the government, and we are looking forward to

working with you in that regard.

Mr. Chairman, we are witnessing an unparalleled movement into

the electronic and digital age for business and government. In the

Federal Government, technology investments are paramount to realizing the programmatic results expected under the Results Act,

to improve basic fundamental management and to maximize

human capital skills. IT projects, as you know, can produce spectacular improvements in operations and performance if managed

well. They can leave legacies of costly failures if managed poorly.

With the spending rate for IT approaching $40 billion annually, we

can ill-afford not to manage these investments with increasing

scrutiny and a demand for tangible benefits at acceptable cost.

The CIO positions were created by the Clinger-Cohen Act in 1996

to tackle these issues. The progress to date is mixed and uneven.

We certainly made a lot of progress in many areas. There is more

interaction between Federal CIOs, program managers, and chief

executives in the Federal agencies than in the past. Senior investment boards have been created and are being used on a consistent

basis across almost all of the major Federal departments and agencies to make investment decisions. We have a very active CIO

Council that has brought governmentwide attention to some important issues like security, critical infrastructure protection, IT

human capital, and investment planning.

The heavy involvement of the CIOs in the Y2K problem also

helped to sensitize agency executives to the increasing role that

technology is playing in helping to achieve their mission outcomes

and in their daily operations. We have as a result of the Y2K experience a much better inventory of mission-critical systems in the

Federal Government. However, we also have problem areas that

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continue to persist, and in our reviews of agencies since the

Clinger-Cohen Act, we have noticed a consistent pattern of problems.

There is inconsistent application of IT investment management

across the government, and incomplete cost-benefit and risk data

before projects are actually approved. Improvements are needed in

software development, architecture, and certainly to security.

These are areas where the Federal CIOs can certainly help make

marked improvements and move the government forward.

Today we are releasing our executive guide on maximizing the

success of chief information officers. It is one in a series of guides

that we have put out on best practices in information management

and technology. Others have dealt with investment management,

capital planning, security, and human capital, and many of these

guides have formed governmentwide consensus on how to basically

approach some of the fundamental IT management challenges in

government.

What I wanted to do with you today is give you some highlights

of what we found in the study and answer any questions that you

may have about the specifics. We have a chart up in the hearing

room that basically outlines for you what we found in the study,

and I just wanted to again point out some highlights.

We found some critical success factors, some guiding principles,

and some key players that are important to achieve success of

CIOs. The first column, downward column, on the chart focuses on

alignment and has to do with factors that are outside the domain

of the CIO. This is an important point. In all of the case study organizations that we have looked at, the success of the CIO was

heavily dependent upon executive management understanding,

first, in the role of information management to the organization,

and second, in figuring out the best positioning of the CIO in the

organization structurally as well as the skill set that meets the organizational needs and problems that the company or the public

sector organization is experiencing at that moment in time.

There is no cookie-cutter approach to selecting a CIO. Our study

showed that. There is a fundamental need for both business as well

as technical skills. The key point is matching the right person to

the organizational needs at that moment, and that direction coming from the executive level of the corporation.

The second downward column deals with promoting organizational credibility, and this is, again, an important point to make in

this regard. CIOs in these organizations focused on earning credibility and establishing credibility, and used a series of management

approaches to do so. They managed to put in standards, processes,

and basic approaches that consistently followed industry standards

for good IT management. They were constantly focused on results,

and balancing both short-term results with a need to show longterm improvement. The need for short-term results was critical for

the CIOs to be able to establish their credibility record and to partner effectively with the business side of the organization.

In the third column are our execution responsibilities. Once a

CIO is positioned, and once he or she determines how to build

credibility through informal and formal networks, we have to get

down to the business of implementation. Several key practices were

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notable here. First, organizing the CIO organization in a way that,

again, provided effective services and products to the organization

that it served. Not all of them were formed in the same fashion,

not all of them were focused on the same products and service delivery, but this was a dialog they had to have with the business of

the corporation before they could figure out what skill sets and

what particular products and services were critical to achieving

mission or programmatic outcomes.

The last column deals with developing human capital. This is

pressing for private and public sector. It is a competitive market.

We noticed in the best practice organizations that we looked at,

there was a variety of techniques used for attracting, retaining,

and refreshing skill sets. And there were a variety of techniques

used to motivate employees internally to make sure that they executed their responsibilities in a very, very well-conducted fashion.

If we compare the Federal agencies to those practices, we find

one area of commonality, and that deals with credibility-building.

We see a lot of success in the Federal CIOs in the last 4 years moving to use informal and formal means to establish credibility.

In the other areas there is less commonality and distinct chart

differences. Federal organizations don’t go through the same process in which the chief executive officer along with the executive

peers figure out what specific skills they need in a CIO before the

selection is made. We see less interaction between the CIOs in the

Federal Government and the executive management tier, and we

also see less focus of the Federal CIOs on performance measurement both at the project level, but, more importantly, on the IT

function itself, and how it is delivering value to the organization

as a whole.

So in conclusion, the study points out that there are indeed areas

where we can learn to capitalize more on positioning and putting

in place CIOs that can really make a difference. Agency leaders

must help facilitate success in IT management. The CIOs are necessary, but alone they cannot do this job. They have to have top

executive support. They have to have working partnerships with

business—the business side of the organization, and they have to

have skilled and motivated people to be able to pull off the vast

range of responsibilities that they have. The CIOs themselves can

reinforce these things, and in the years to come we should be looking for CIO credibility to be enhanced through attention to those

specific areas. And progress has certainly been made, and it is admirable progress in the short time since the passage of the act.

I will be happy to answer questions specifically about the guide

as we move on.

Mr. HORN. Thank you very much, Mr. McClure.

[The prepared statement of Mr. McClure follows:]

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Mr. HORN. The document that I have been thumbing my fingers

through looks like a very thorough job, and I believe you might

have a best-seller at the Government Printing Office.

Next is Mr. Jim Flyzik, Chief Information Officer, Department of

the Treasury, and vice chairman of the CIO Council. Mr. Flyzik.

STATEMENT OF JIM FLYZIK, CHIEF INFORMATION OFFICER,

DEPARTMENT OF THE TREASURY, VICE CHAIRMAN, CIO

COUNCIL

Mr. FLYZIK. Mr. Chairman and members of the subcommittee, I

appreciate the opportunity to discuss the role of the chief information officer in the public and private sectors. First I want to thank

the chairman and other members of this subcommittee for your

continued support and encouragement toward the improvement of

information technology performance and accountability in the Federal Government.

As many of you know, I serve as the Deputy Assistant Secretary

for Information Systems and Chief Information Officer for the

Treasury Department. In this role I recognize I provide strategic

direction and oversight for all information technology programs

within the Treasury Department and its 14 bureaus. Since February 1998, I have served as the vice chair of the Federal CIO

Council, where I play a key role in the strategic direction of the

Council and the Federal Government’s use of information technology.

Today I would like to focus my comments on three issues: the

evolution of the CIO in the Federal Government, some differences

between the public and private sector CIO roles, and key challenges facing Federal CIOs.

The role of the CIO in public sector is evolving through various

stages. In the first stage the role was ill-defined, and the CIO was

thought of as a technician and then perhaps as an adjunct to the

CFO. As a result of the Clinger-Cohen Act, the work of the Federal

CIO Council, the growth of the Internet, e-commerce, and the success in addressing the Y2K problem, the CIO is now progressing

toward a business partner and a peer with senior management.

CIOs were able to demonstrate their value and the value of technology to their organizations while addressing the serious issues

involved with Y2K. In the private sector many CIOs have evolved

into a chief technology officer, working side by side with the CEO,

as evidenced by the many dot-com organizations. The public sector

CIO has not yet reached this level of influence. As my colleague,

the Associate Director of the GAO, has testified, most business decisions today involve technology. The CIO should be positioned at

the table with the CEO, chief operating officer, and CFO where he

can work as a team with senior management. It is critical that the

CIO be involved in agency budget and resource allocation decisions.

If CIOs are to be held responsible and accountable for results, they

will need the authority to influence resource decisions. At Treasury

I am fortunate to have an excellent working relationship with the

CFO and other senior officials, which allows me to be involved in

all investment decisions.

There is also a disparity from agency to agency in the organizational placement and authority of the CIO. Regardless of the orgaVerDate 11-MAY-2000 11:53 Feb 15, 2001 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 C:\DOCS\68507.TXT HGOVREF1 PsN: HGOVREF1
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nization placement, however, CIOs must demonstrate value and

earn credibility to be effective.

Although many of the key IT challenges within the public and

private sector are similar, there are several areas where they differ. As public employees, we must abide by statutory and regulatory requirements unique to the Federal Government. We agree

that these requirements are important and necessary to guarantee

the integrity of our actions for our citizens, but we must also recognize that they impose restraints on our ability to procure products

and services, recruit IT professionals, and quickly make resource

adjustments to meet dynamic market priorities. Let me explain.

The public sector cannot compensate IT professionals at the same

level as the private sector. We are constrained in hiring young IT

professionals at entry levels competitive with the private sector.

The private sector can recruit based on talent and based on market

conditions. We also have a difficult time justifying promotions

based on specialized technical skills. The Federal CIO Council is

working closely with the Office of Personnel Management to address these concerns.

Private sector CIOs can work directly with their CEO to make

immediate decisions on resource allocation and procurement priorities to meet changing market drivers. Public sector CIOs must

plan well in advance and work through various layers of government to achieve such change.

Another concern is difficulty of the government to fund interagency and intergovernmental IT programs. Although the business

cases for governmentwide efforts are compelling, the current appropriations processes make funding such projects problematic. The

current ‘‘passing of the hat’’ approach to interagency project funding is not a viable long-term solution. The Federal CIO Council is

working with OMB, the CFO Council, and other governmentwide

groups to identify possible strategies to address this matter.

CIOs in the public sector also carry unique responsibilities to set

information policies within their agencies and comply with governmentwide policies. The public sector CIO must find ways to reduce

paperwork burdens on the public, adopt sound records management programs, and disseminate government information.

Last, I would like to mention some challenges facing Federal

CIOs. There have been several studies focusing on these challenges. I had the opportunity to participate in many of these studies, including the fine work done by GAO in the report they are releasing at this hearing today. Some challenges CIOs face include

taking advantage of rapidly evolving technology to make the government more effective, hiring and retaining skilled IT professionals in the government, assuring information system security

and privacy in preventing unauthorized system intrusions, obtaining adequate funding particularly for interagency and intergovernmental programs, and empowering the CIO as a key decisionmaker

and ensuring that we cost-effectively apply technology through

such processes as IT capital planning and investment management

within the agency.

In summary, I would like to reiterate that the position of the

CIO is evolving in a positive direction. I believe the Y2K success,

the Internet, e-commerce, and other industry trends are creating a

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heightened awareness of the importance of information technology.

This heightened awareness will accelerate the evolution of the Federal CIO consistent with the experiences in the private sector. It

will also result in the true implementation of all provisions of the

Clinger-Cohen Act.

I would like to thank the subcommittee for the support it has

given to the work of the Federal CIO Council. Without your support, we would not have been able to achieve the national success

we enjoyed with Y2K. I would also like to express my appreciation

and commend GAO for the excellent work they are doing in this

area. I would like to thank the members of the subcommittee for

the opportunity to present to you this morning.

Mr. Chairman, this concludes my formal remarks, and I would

be happy to respond to questions.

Mr. HORN. Thank you, Mr. Flyzik. That is helpful testimony from

the firing line.

[The prepared statement of Mr. Flyzik follows:]

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Mr. HORN. Next is Mr. Otto Doll, the Commissioner of the Bureau of Information and Technology, the State of South Dakota,

and president of the National Association of State Information Resource Executives.

Mr. Doll, we are delighted to have you with us.

STATEMENT OF OTTO DOLL, COMMISSIONER, BUREAU OF INFORMATION AND TECHNOLOGY, STATE OF ARIZONA, PRESIDENT, NATIONAL ASSOCIATION OF STATE INFORMATION

RESOURCE EXECUTIVES

Mr. DOLL. Thank you, Mr. Chairman and members of the subcommittee. I appreciate the opportunity this morning to share the

State’s insight into the dynamics of the CIO-Governor relationship

that has evolved over the last few years. Public sector CIOs can be

of vital importance to our public leaders’ decisionmaking on matters of governance. The proper alignment of information technology

to government programs is a key enabler of effective government.

A CIO who can support the chief executive’s vision, whether of a

mayor, Governor or the President, facilitates the achievement of

government’s goals.

To achieve effective use of IT, the States have been gravitating

to CIOs reporting to the Governor. NASIRE’s survey shows 27

CIOs currently report to a Governor, up from 8 in 1996. A Cabinetlevel reporting relationship appears critically important. Technology has become too important to the business of government

today. IT is how business is delivered in government; therefore, the

CIO must be a party to the highest level of business decisions. This

is consistent with private sector’s direction as shown by companies

such as General Motors, whose CIO is at the board of directors

level.

Three variations on this CIO structure currently exist in State

government today where the CIO reports to a Governor without an

advisory board, to a Governor after consulting with an advisory

board, or to a governing board and then to the Governor.

NASIRE’s survey also shows 29 States have some sort of technology commission in a supporting or oversight role. Separating

technology from government programs seems impossible today.

State CIOs are responsible for leading the Governor’s visions and

goals into action. As such, the CIO needs to inspire the leaders to

dedicate political capital to the IT agenda. One powerful dynamic

of IT, whether a State is driven by education, criminal justice, economic development or whatever, IT can enable any of them.

State CIOs’ scope of authority is primarily confined to the executive branch of government, but has expanded in many States to the

educational systems, some into the judicial branch, and a few into

the legislative branch. Based on objectives set by the Governors of

the State, CIOs develop a process whereby each agency is learning

within the constructs of their organization the breadth of the organizational information in a statewide sense while working toward

these common objectives. The larger the enterprise view and responsibilities of the CIO, the better the IT solutions Government

achieves.

Functional authority of the State CIO is concentrated in

enterprisewide hardware and software systems as opposed to the

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desktop world of personal computing, examples being telecommunications networks, large data processing centers, large information

centers, data warehouses, and public access facilities.

CIOs are gaining authority over IT purchasing and acquisitions,

IT facilities, IT personnel, and office automation. By combining

managerial and technical knowledge, the State CIO can contribute

significantly by bringing to government economies and efficiencies

of scale in procurement, interoperability of systems, elimination of

duplicative processes, data-sharing capabilities, and security in privacy.

State CIOs’ scope of approval authority is usually overseeing of

statewide IT plans and policies; approving statewide technical IT

standards, rate schedules, budgets, personnel classifications, and

salaries and resource acquisitions. CIOs are being asked to improve

individual departmental IT rate schedules, personnel classifications, and resource acquisitions.

Many States are considering their CIOs for operational control of

IT assets. The CIO is then in the best position to ensure that IT

investments are meeting the Governor’s policy objectives. This approach matches the private sector where CIOs generally have

budget and operational authority.

NASIRE’s survey showed that 30 State CIOs have responsibility

in at least three of the following four categories: planning, policy,

standards, and acquisitions. Some 25 percent of CIOs have minimum dollar thresholds on their scope of authority. Successful State

CIOs spend most of their time offering perspective, context, and direction to both technology and program personnel. Considering the

considerable size and rate of growth of IT expenditures by government, the CIO must advocate the wise deployment and use of IT

resources to solve business problems or to capitalize on opportunities.

Several elements have been found to contribute to successful

Governor-CIO approaches. Shared IT vision by both the Governor

and CIOs sets appropriate expectations of what technology can and

cannot do. Strong accountability begets trust, the capital of governance. Sufficient level of authority allows working across agency and

jurisdictional boundaries. Good management skills allows the CIO

to get technologists and program personnel to realize the IT vision.

Balance of business and governance orientations allows appropriate

use of business principles in a public sector context. And finally,

the ability to function in public administration allows the CIO to

be effective in the political and civil service spheres.

The State CIO also cooperates with local and Federal authorities,

often serving as the facilitator of multijurisdictional initiatives.

Governments see the value of sharing information, such as law enforcement has seen for many years, and integrating their processes

in digital government is enabling, as is sharing IT infrastructure

such as networks. Having a key authority figure in the CIO allows

States to better coordinate resources across local, State, and Federal Government for the complex information systems required to

solve the governance of today.

The Y2K issue provided unique insight on the importance of the

CIO position in government. Y2K presented the most extensive IT

initiative ever undertaken, with coordination being required beVerDate 11-MAY-2000 11:53 Feb 15, 2001 Jkt 000000 PO 00000 Frm 00039 Fmt 6633 Sfmt 6633 C:\DOCS\68507.TXT HGOVREF1 PsN: HGOVREF1
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tween governments, businesses, and the public. All aspects of IT

were affected. Dealing with such a massive project showed that we

cannot rely on the stovepipe models of the past. Until Governors

took ownership of the Y2K problem through their CIOs and the

Federal Government took ownership through the President’s appointment of John Koskinen, the proper coordination of policy and

processes was not possible.

Mr. Koskinen, in essence, served as the CIO of the Federal Government. He brought accountability and action to bear on the Y2K

challenge, just as the State CIOs were doing in the States, as were

many county and city CIOs across the country. Mr. Koskinen

aligned the numerous Federal agencies and provided a single point

of contact for the States, just as the State CIOs were providing a

single point of contact between the myriad of State agencies and

the Federal Government.

Why not have the structure in place to deal with nationwide law

enforcement standardization, digital government initiatives, digital

divide solutions, et cetera? In the increasingly technology-reliant

world we live in, the CIO serves as the government’s information

management leader and key strategist to the decision points facing

our political leaders. The role of aligning technology to achieve government program goals has never been so crucial to effective government. The CIO plays an essential role for making information

technology work for government.

Again, I appreciate the opportunity to share our thoughts and

look forward to your questions.

Mr. HORN. Well, thank you very much, Mr. Doll. That is very

helpful information.

[The prepared statement of Mr. Doll follows:]

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Mr. HORN. Next is Mr. Gerald J. Knutson, vice president, communications and information services, U.S. West.

STATEMENT OF GERALD J. KNUTSON, VICE PRESIDENT,

COMMUNICATIONS AND INFORMATION SERVICES, U.S. WEST

Mr. KNUTSON. Mr. Chairman and members of the subcommittee,

this is a unique opportunity for someone of the private sector to follow three distinguished gentlemen from the government sector in

discussing this subject. I have had the opportunity in the past few

weeks to review the GAO study, and was interviewed as part of an

input group into the study. I had not really looked at it for some

period of time, and then I was asked to prepare a written statement for this subcommittee, and I did do that. And then I went

back and reviewed the final version of the document, and I was

very surprised to see that the thoughts of the document paralleled

the thoughts in my statement.

Rather than being redundant with what you have heard out of

David and out of Jim from the public sector perspective and the

CIO perspective, which he does very well, and Otto from the State

perspective, I really do concur with the points that they have highlighted and emphasized. They are extremely important points, and

I would like to touch on four points, somewhat redundant, but I

think they merit some further clarification. As was stated, the government spends about $40 billion annually

on technology. In the private sector, we spend generally in the

range of 5 to 10 percent of our company’s revenue on technology

investments. When we focus on spending these significant dollars,

I think it is very, very important that the CIO is positioned properly. This has been the case for successful CIOs and successful

companies in the private sector that the CIO does, in fact, become

a significant member of the lead team and report directly into the

CEO. That has been proposed, I know, in government, and it is

working in various ways in the government, but until the CIO is

recognized and given that authority and accountability across

whatever organizational entity you are dealing with, it will be very

difficult for that CIO to be successful.

It is also important then in that process that the CIO participate

in setting the visions for the company or the organization and in

establishing strategies that are business-oriented. I am assuming

the business entity does, in fact, set strategies, and that they know

what direction they are going to go moving forward, and that the

CIO is an active participant, and, as a result of participating, has

an ability to go back and create the necessary strategies and set

the priorities in spending the very scarce dollars that are required

to do the work in technology.

Another area that is very important is in the area of partnership.

There must be established a mutual trust and confidence level between the CIO and the members of the lead team, and an ability

to demonstrate that the CIO and the IM organization is able to deliver on their commitments and to be responsive to the needs of the

business. What I have seen many times in the private sector is that

you don’t get that sense of trust and confidence between what the

CIO is responsible for and the IM organization and what the leaders of the corporation or the lead executives would expect.

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Another area is in sponsorship. The CIO cannot be successful as

an entity unto himself. He is very dependent upon having very

strong sponsorship from the business side that is driving the requirements, driving the priorities, providing the funds and the people to make it successful. In what I have witnessed with the government is that there is a tendency to throw the problem over the

wall and expect the CIO to pick it up and run within the confines

of the technology community to make it successful, and you don’t

see an equal partner that has skin in the action and that is really

involved and committed in supporting and sponsoring the work.

Unless you get that type of partnership and involvement out of

your business partner, it will be impossible for the CIO to be successful.

The other area is in a partnership with the leader of the business

entity or the government agency to help set the priorities and determine within the constraints of the budgets that are established,

how they want to spend the funds and get the work done through

the assistance of the CIO. But again, there has got to be very

strong leadership from the business side supporting the CIO to

make that successful.

The last thing which was mentioned by Jim, and that is just the

nature of the government and how it operates. The difficulty in getting funding; oftentimes the lack of continuity in leadership and political appointments make it difficult for a CIO to be successful.

You need almost 3 to 5 years of involvement in turning things

around and migrating legacy applications into future technology solutions. With the structure of the government, that becomes very

difficult. Anything that can be done to create some continuity over

the lifetime of that CIO, would be tremendously helpful in making

the CIO position successful.

With that I will be glad to answer any questions.

Mr. HORN. Thank you very much, Mr. Knutson. We appreciate

having you here.

[The prepared statement of Knutson follows:]

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Mr. HORN. The next member from the private sector is Ms.

Susan Krupa, the chief information officer of the Rowe Companies.

You might tell us a little bit about the Rowe Companies. U.S. West

we know about.

STATEMENT OF SUZANNE KRUPA, CHIEF INFORMATION

OFFICER, THE ROWE COMPANIES

Ms. KRUPA. Thank you, Mr. Chairman and members of the subcommittee and the other attendees here today, for the opportunity

to present before you my testimony of my experiences in the private sector as well as some of my experiences in the public sector.

The Rowe Companies is a five operating subsidiary firm. We are

largely in the area of home furnishings manufacturing, which consists of Rowe Furniture, Mitchell Gold, and the Wexford Collection,

which is a case goods company.

In some of the challenges of CIOs in trying to attract talent, I

grapple with those same challenges, having my manufacturing facilities that I am charged with managing the staff there, both engineering and technology staff, in the remote areas of the country,

which is difficult to attract talent. We also have two retail subsidiaries, which are Storehouse Furniture, which is a national furniture chain, and Home Elements, which is a mid-Atlantic/Southeast, moving into the Midwest, home furnishing store as well.

In my capacity at the Rowe Companies, Mr. Chairman, Mr.

Birnbach is the chairman of the Rowe Companies, who I report directly to, and I state that here in this session just to emphasize the

importance of the role of the CIO and where they need to report

in the organization. I have direct responsibilities of reporting to the

board of directors on a monthly or quarterly basis on the status of

IT initiatives. These are mandates within the Rowe Companies.

In my past experience, just to emphasize that point again, I was

the CIO of KPMG Barons Group, which is the international consulting firm of the U.S. Firm KPMG Peat Marwick. There I reported to the chairman of KPMG Barons Group. I was part of that

executive management team, and it is critical in both public and

private sector to have the technology position leveraged within the

business organization.

Mr. Birnbach has made a commitment to proactively managing

information systems rather than continually building upon the current systems investments in a reactionary manner. This approach

positioned the systems to support the growing requirements and

strategic direction of our business. He has charged me with creating an environment that includes both best business practices and

technology talent in the furniture industry; that is, our industry.

He has required me to capitalize on the synergies of the operating

subsidiaries as well as exploit the advantages that are embedded

in the autonomy of these operating subsidiaries, much like the disparate agencies—looking at Mr. Doll’s testimony, he has disparate

agencies to manage within State governments that have their very

different requirements.

I am sure the public area of waste and waterworks, if you will,

is very, very different than the financial offices. So I am charged

with the responsibility of meeting with those business unit heads,

if you will, or agency heads, in Mr. Doll’s case, and helping them

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in defining their requirements and finding where the opportunities

are that we can leverage technology to help drive their business

forward.

We are a service organization. Information technology is a service organization. The Federal Government is a service organization

in much of what it provides to the citizens of this country. That defines the criticality of the chief information officer within the Federal Government as well as the private sector.

Some of the things that we at the Rowe Companies and my colleagues in the industry look at are a couple of terms that I would

like to share with you today, and I hope that we take away and

look in the Federal Government as a passionate vision and mission

that we should move forward with in this century. The speed at

which today’s business environment is moving and changing demands that information systems are not only seen as operational

tools, but as strategic systems that are employed to achieve competitive advantage. And yes, there is competitive advantage in the

Federal Government.

In this century it is a requirement to utilize technology to operate a global business with speed, efficiency and information. In

order to effectively accomplish this business requirement, our information system strategies must communicate, interface, share, and

be sustainable. In looking forward at the dynamic and evolving picture of what business represents, what we do, who we are, and

where we are heading, we must continually ask ourselves what

constitutes our core business. With that can be a process, our intellectual capital or property or business design. Nonetheless, it must

always be aligned to where the market is, and that is directly

translatable in the Federal Government. It must be aligned to

what the business at hand is.

Our core business may evolve faster than we have ever envisioned. Therefore, it is absolutely critical that we have business

systems that assist and facilitate the management of the strategic

inflection points.

The mandate of all CIOs in this century is to motivate change

to affect the way we fundamentally do business. Yes, this century

we will change the way we do business both in the public and private sector. This century clearly represents the speed at which

change can and will occur. CIOs should be committed to employing

strategic technologies in the next 5 years that will define this new

generation, not only in the private sector, more importantly in the

public sector.

We will need to in our respective industries capitalize on the intellectual capital of our team members who are the market-makers

of the past century. We must exploit the boundlessness of the new

team members that see the invisible to achieve what was once

thought impossible. The Internet, the tool kits available to us today

and the various technologies will allow us to accomplish these objectives and this vision.

So I ask you today to empower the CIOs in the Federal Government to effect and motivate change as we have been empowered in

the private sector to do so. I thank for your time and the opportunity to be here today. I would be happy to answer any questions.

Mr. HORN. We thank you very much also.

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We are now going to begin the questioning, and I will start with

Mr. Turner, the ranking member of the subcommittee, and if you

have an opening statement, we will put that at the very beginning

as if read.

Mr. Turner will ask the questions for 10 minutes, and then I will

take 10 minutes until we have the questions out on the table.

Mr. Turner.

Mr. TURNER. Thank you, Mr. Chairman. The subject of this hearing is perhaps for our committee one of the most exciting subjects

that we can discuss, because I think the utilization of information

technology in government provides us with the best opportunity

that we have had in the history of this country to reform government. The tools that can be utilized, that can be harnessed, will

make government more efficient, much more cost-effective, much

more consumer-friendly, and much more transparent and open.

In the long term, our ability in government to use information

technology is going to be the thing that is the real challenge of this

century. Because if we do it successfully, we will increase the

public’s confidence in government, which is at an all-time low. We

will be able to increase the accountability and the cost-effectiveness

in government, and we will be able to provide the things by and

large which the public demands from government.

I understand we have 54 CIOs in Federal agencies currently, and

I would assume, Mr. McClure, and you correct me if I’m wrong,

that the emphasis that we have had on solving the Y2K problem

has probably been the priority of CIOs throughout all of these

agencies. And, of course, I guess many of these CIOs have not been

in place for all that long, 2, maybe 3 years at the most, and this

seems to be a critical time for this particular hearing because we

know that the CIOs’ role in helping solve the Y2K problem was allconsuming in many respects.

Government, we all know, always works better when there is a

crisis. I think the chairman has rightly proceeded with our committee to emphasize the issue of computer security, which is a hot

topic and comes about as close to a crisis as we can talk about. But

those of us who have served in government for a while know that

it is always better to have a crisis to make things happen. I am

hopeful that what we can learn from this hearing and the work of

this committee are ways that we can look at information technology and its applications in government in a broader sense so

that we can accomplish the goals that each of you have stated, and

that is to make sure that chief information officers in the public

sector operate like the successful companies in the private sector.

Clearly, in the private sector if you are not applying information

technology, you are falling behind; and the same is true in the Federal Government.

I was interested in, Mr. Doll, and I am sure there are some examples of States in addition to your own that represent shining examples of successful implementation of information technology.

Perhaps I can brag a little bit about the State of Texas, which was

the leader, first in the Nation to promote the idea of using

smartcards for electronic benefit transfer for the Food Stamp Program, which has saved millions of dollars, eliminated much fraud,

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and made that program much more accountable and efficient to ensure that those who are entitled to the benefits receive them.

But in the early days of the State’s efforts, from my experience

in the State legislature, information technology officers or commissions, one of their first roles was to always review and make recommendations regarding the acquisition of computers and software

for the various agencies so they would be sure that they were buying the right materials. Have we moved away in some of our better

examples of State leadership—have we moved away from that to

the broader role of actually suggesting ways and encouraging and

implementing information technology?

Mr. DOLL. Most definitely. State CIOs are more in an analytical

view of how do you align technology to, in essence, digitize government as well as solve its problems. I think there is an inherent understanding that the more technology we can apply to what has in

the past been a very paper-intensive, process-intensive organization called government, the better off the States will be.

You are right, it is a very competitive environment out there. We

are competing with each other on the State level as well. We kind

of view ourselves much as private industry does. They compete

with their competitors where we turn around and provide the best

government possible to our citizens and our businesses within our

State relative to applying technology as an enabler. So, yes, you

will see us, whether it is South Dakota or whatever State, looking

at how we take the technologies that are in existence, the ones that

are on the horizon, and applying those to the process of governance.

Mr. TURNER. Are you in a position to have enough of an overview

of the various States’ activities to really be able to share with us

what you think the best model is for chief information officer status

at the State level?

Mr. DOLL. What we find in talking with my colleagues and the

surveys that we have done, as I mentioned, we are quickly migrating to the chief information officer being at a Cabinet level; reporting directly to the Governor; having authority, at least from a visionary and a strategy standpoint, across all State government, executive branch for sure, and at times even over judicial and legislative branches; and we do not see that trend stopping. We feel that

that is something that is just—in the future you will find all CIOs

reporting to a Governor, and that is one thing for sure that I think

is of the success model.

I think the other key aspect is that the CIOs themselves are

probably also going to get more and more responsibility over operational matters. Take a look at standardizing technology.

I am lucky in South Dakota as the CIO because I have both operational and strategy. I set all standards for all State agencies. Most

States have IT run by each of their State agencies, and so they

have more of a coordination effort, whereas I have that direct line

responsibility. I think that more States of the smaller and midlevel

populationwise will be moving toward my model. Such States as

Kentucky, that size of State is going to move more toward some of

the operational responsibilities also now falling under that CIO.

So I think those are two basic trends and what people feel they

need to have, that level of authority, as well as have that level of

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exposure to what each of the State agency programs needs done,

because with that level gives you access and input into decisionmaking about those programs.

Mr. TURNER. Mr. McClure, how does what we see going on in the

Federal Government today match up with the models that Mr. Doll

is talking about that he believes to be a successful model for CIOs?

Mr. MCCLURE. It has always been said that the States are the

experimental stations for federalism, and I think what we see in

the States is very reflective of what we see in the private sector.

We actually spent time with the CIO in your State, Carolyn Purcell, a great example of a CIO focused on providing tremendous

oversight and continuity to standards and to common approaches

to systems being built across State agencies.

In all of the States that we visited, three others in the study,

what we found were CIOs were focused on the unique problems,

situations and opportunities confronting State government. Although they are common, many of them had different needs at the

time. In one State the CIO was charged with bringing spending

under control and making sure that dollars were being spent wisely. In another State, a State CIO was focusing on e-government

and making sure that service initiatives were being sent electronically. So very much in line with private sector models in which you

will find that the CIO is matched for the problem and the opportunity that is being presented to the organization at that moment.

And finding someone that can actually hit that problem on the

head is very critical. There is a lot of correlation between State

CIO models and what you see in the private sector.

In the Federal Government we have a very mixed implementation with, again, the same story, but not nearly as much focus as

we see in the States, where State CIOs are partnered with Governors and really participating at very high executive levels in decisionmaking for IT. Again, it is not across the board in the Federal

Government. Mr. Flyzik sits in on some of the most important decisions made at the Treasury Department. He sits at the table. That

is simply not uniform across all of the Federal agencies at this

time.

Mr. TURNER. I yield back the balance of my time.

Mr. HORN. Mr. McClure, let me pursue a couple of things here.

Your testimony raised several challenges about Federal CIOs and

what they face that may not be common in industry, including the

nature of the Federal budget process, the lack of involvement of top

management in key IT projects and human capital constraints.

In your opinion, do you think we should look more toward what

the private sector CIOs do in their entities, and try to make those

opportunities for the Federal agencies, and particularly looking at

the CIO management frameworks that would work and wouldn’t

work in government as to what you see out in the States and the

major cities of America?

Mr. MCCLURE. I think there are some great opportunities for

Federal CIOs to learn tools, techniques, and practices being used

in the private sector that are clearly applicable in the Federal setting. I think Jim raised some very good points about differences in

the Federal sector, that being mainly that our executive management levels at the Federal level are focused mostly on policy, less

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so on operations and management. We have a budget process that

allows multiple entry points for funding streams to be changed. We

have inflexible personnel systems compared to most private sector

organizations. However, and I think Jerry will back me up on this

as well, the private companies are faced with the same problems.

There is high turnover in corporate executives, uncertainty in funding streams at many points in time, and there is a competitive hiring and retention market for all of us.

So these are not insurmountable barriers for Federal CIOs. It

just means the speed, the pace, and the direction in which you are

going to see the reform in government might not parallel what you

would see in the private sector.

Mr. HORN. In your survey did you take a look to see if the CIOs

were simply fully devoted to the CIOs? I had a problem about 5

years ago with a few agencies, one of which was the Treasury Department, where the Assistant Secretary for Management seemed

to want to take over everything, and that is not what we did when

we passed those laws. We want full-time CFOs and CIOs. They are

big jobs, and they should not be diverted. That is why a lot of these

agencies were not doing very well either.

What did you find out in your survey? Do we have too many people under one hat, or do we get an independent CIO in the Federal

Government?

Mr. MCCLURE. In the private sector and in the States, you see

CIOs focused exclusively on IT issues. The reporting relationships

may vary. You see CIOs in private sector reporting to CFOs, to the

heads of the corporations. There is not a consistent model, but

there is a clear difference.

I think there has been tremendous improvement in the Federal

sector in that the majority of CIOs in the Federal Government now

are focused on IT. We have relatively few dual-hatted or

multihatted CIOs.

Mr. HORN. How many do we have? Can we get them for the

record?

Mr. MCCLURE. I think there are approximately three CIOs

among the 24 CFO agencies that are dual-hatted where they are

either the CFO as well as the CIO, or they have another significant

responsibility. That is a marked improvement from the years prior

to the Clinger-Cohen Act.

Mr. HORN. Do you remember the three?

Mr. MCCLURE. I believe I can. It is at HHS, at Justice, and there

is one other. I can provide it for the record.

Mr. HORN. As I remember, the lowest grade that we gave in the

Y2K exercise was the Justice Department. That might explain

something.

Mr. MCCLURE. The other is Department of Defense.

Mr. Money at Defense is a multihatted CIO.

Mr. HORN. Maybe we are just going to have to put it in the appropriations bill. They will probably get the message that way.

The Federal Government, would they benefit from a Federal

CIO, and would they act in the capacity role that Mr. Koskinen

had? He wasn’t really a CIO, he was a coordinator to get the job

done, and he did a fine job. What is the General Accounting Office’s

sort of findings in that regard?

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Mr. MCCLURE. We have been in favor of the concept of a Federal

CIO. When the Clinger-Cohen Act was debated in its early stages,

we were supportive of the creation of a national CIO, as it was

being called at that time. I think there is a great deal of value that

can be gained from having a person that can focus full-time attention on IT issues across the agency and department lines. Continuity, direction, and attention to issues could be ensured by that kind

of position.

We are spoiled. We have had a unique individual named John

Koskinen serve in that capacity when he was Deputy Director for

Management and did an admirable job; and as the Y2K Coordinator another very, very stellar job.

I think what one has to look at is what person with what characteristics do you want in that position? Where do you want the position housed? Who should that person report to, and where should

that position be housed? There was debate in the early years about

putting it in OMB or making the Deputy Director for Management

in effect the national CIO. As you know, that person also serves,

in essence, as the national CFO and has focused a great deal of attention on financial management issues.

So there is a great deal that can be gained from it. There can

be a great deal gained from an individual serving in that capacity

focusing only on the most pressing IT issues, whether that is critical infrastructure protection, security in general for IT, or for electronic government. We have shown the model can work, particularly if it is supported by both the Congress and the administration.

Mr. HORN. What are the downsides of this? Do you know what

might be wrong about it?

Mr. MCCLURE. Well, I think there are always pros and cons. If

this person does not have the support from both Congress and the

administration, if this person cannot work across the organizational lines of the government effectively and is not empowered to

make things happen, and held accountable for making things happen, then I think we are fooling ourselves about the impact. In all

situations where Mr. Koskinen has served in that capacity, he had

those traits going for him.

Mr. HORN. Just as a matter of history, I might say the Deputy

Director of OMB for Management didn’t really do anything at that

point. He retired. And it’s a good choice when he came out of retirement, but while he was in that job nothing much was happening

on the year 2000. They should have been 10 years ahead of that.

And the danger I see with a central CIO, is there’s a tendency in

bureaucracies for the counterparts in the agencies to say, well, we

want to be on the good side of the OMB or whatever and pretty

soon Secretaries lose their own people to the center of the operation

because it’s very heady. You go over there and you’re in the White

House complex in a way and they sort of get out of sight, and I

say that based on a lot of experience, 18 years in the biggest education system in this country. And that’s exactly what always happened when you had, say, 19 to 23 campuses and you had a headquarters type that didn’t know a campus from a headquarters

frankly but he was the headquarters type. So you’d find your top

people just picked off and going to nothing but meetings usually

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and not much happening. But that’s what makes me a little dubious about how you do it on a centralized basis.

I think the key to Mr. Koskinen was his personality. When we

got him out of retirement, and he did a superb job, he put the burden on the networks the CIO counsels and others that got the job

done rather than create a whole permanent bureaucracy on the

subject, and I think that’s why the success came there.

Do you have anything else on the pluses and the minuses?

Mr. MCCLURE. I think the same issues we talked about in the

appointment of any CIO would apply to the national CIO. There

has to be an understanding of what that position is needed for,

where that position would be, and how you’re going to hold a person accountable and make it a credible position. Those are really

key factors that if we create that position need to be worked out

so we’re again not misleading anyone about what the intention or

the purpose of the position is.

Mr. HORN. Mr. Doll, I understand and to the private sector too

where a lot of measurements are being developed by CIOs and that

fascinates me because we frankly haven’t done very well at the

Federal Government in terms of measuring things and when we

had a hearing a few years ago, we found that in South Carolina,

in Minnesota, in Oregon, very exciting things were occurring in

terms of the measurement of the effectiveness of the programs.

This town is still too oriented on simply the finance side of it and

I think they are struggling with how do you get an efficiency, an

effectiveness measurement.

What can you tell us about what the private sector and what the

States are doing in that regard because that’s exactly the kind of

information a Governor needs, a chief executive officer needs, and

which basically we haven’t really had in this town because it’s been

so fiscally oriented.

Mr. DOLL. What we find in the States is not only a drive to account for IT resources and how they are used, but also on the outcome measures and that’s probably the largest area of study that

we see the States doing right now. An example will be look at how

people have tackled education. All the States are doing an awful

lot with education, whether it be South Dakota, and the fact that

we measure not how many schools are connected to the Internet

but how many simultaneous teachers, administrators, and students

can be on-line, not just technology. So one thing that we find is

that we still have to rely on measurements that may be taking

place today at a programmatic level but ensuring that from the

technology standpoint, we also have our set of measures that we’re

starting to drive those metrics into some of the base established

metrics of our programs and that starts to give Governors a real

view what are we getting for our money and also just how quickly

are we evolving because we all understand unfortunately you cannot do these things overnight usually and that adoption and

adaption of technology, whether it be by a citizen, a schoolchild,

whomever, takes time. And so what we look for is the base measurements so that Kentucky, South Dakota, as I mentioned, Texas,

even—I’ve seen some examples in California, Minnesota, Michigan,

ones that I’m familiar with are really driving to metrics that allow

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people to understand when they make a decision, what’s the impact. And that ultimately drives a lot of future decisions.

Mr. HORN. Mr. Doll, has your association, the National Association of State Information Resource Executives, have they put out

any compilation of these measurements? It seems to me you would

have a best seller there. That’s what people are searching for.

Mr. DOLL. We haven’t to date. What we have established is we

have an organization, and I know the acronym. It’s SITC and I forget what is stands for. It’s a State information technology consortium which is tackling those issues. They started with risk management and now they’ve moved into metrics and maybe through

that effort we’re going to be able to compile what’s—and maybe

even do case studies of what’s working in the States. But at this

point unfortunately I’m not able to give you a document.

Mr. HORN. How about it, Mr. Knutson and Ms. Krupa, what do

you feel on measurement standards besides the finance one?

Mr. KNUTSON. We struggled over time to come up with meaningful measurements in the field of technology, but I think over recent

years we have done a very good job, been able to measure things

that are operationally oriented and we can pretty much demonstrate what the impact is to the business as a result of our success with those measurements. Things like availability and response time are things that people deal with on a day-to-day basis

in using technology. The one where we’ve been having more difficulty with is in the area of how well do we deliver programs and

projects and demonstrate quality relative to the work that’s done

in those areas. Now, the thing that we have found to be most successful is where we’ve been able to tie measurements to impacts,

to customers, to employees, to shareholders, things of that nature

where there’s something real tangible that you can relate to in

terms of what your performance might do in dealing with those

people.

The other thing we have found is you can measure, measure,

measure, but unless the measurements drive the behavior that you

want, they are very little value. We really focus on what are the

key measurements that drive the behaviors within the company

and within the organization that will give us the outcomes that the

business expects in terms of service, in terms of dealing with products and services and more. Most importantly in terms of the impact on our customers, we try to tie the behavior-related measurements to what will be the impact on our customer.

Mr. HORN. Ms. Krupa.

Ms. KRUPA. Thank you, Mr. Chairman. One of the things that we

have embraced and I have brought a copy of today with me that

I will share with my colleagues in the public sector, traditionally

in the industry, most of the metrics were based on our Y return

on investment or cost-benefit analysis. Today we have a new model.

It’s called return on opportunity. This model includes not only

leveraging the technology that’s out there and taking that into consideration, there are factors of the human side of it.

Mr. Doll spoke to the adaptability and adoptability of the citizens, whether it be a schoolchild, a schoolteacher, or the Governor

himself in the State of South Dakota. There is that factor that

needs to be calculated. There’s a cultural shift that needs to be

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measured and taken into consideration. Some of the metrics we are

beginning to adopt in the Rowe Companies is this return on opportunity because we too are in an industry and in an environment

where we have intellectual capital and human capital within our

organization that has been with us for 40 plus years and sometimes it is quite difficult to take these individuals and bring them

forward and have them adopt and adapt to these technological

changes.

So what we do is when we do put programs in place that help

them adopt and adapt to these changes, we do have a metrics. This

metrics, if I can just list off some of the things that it takes into

consideration and it’s the perfect metrics. Obviously everything can

be improved upon for the electronic government or electronic business aspect of our industries today. It takes into consideration the

decreasing of time to market. In translation into the Federal Government. That means the decrease in time it takes to deliver different and more quality services to the citizens within the State of

the Federal Government. It also takes into consideration what is

the overall value, what are the value propositions? The ROY really

never took into consideration the value propositions, the ones that

are the intangible, the feel good value propositions, which make

people want to use the technology and leverage it in what they do

every day, which clearly translates into reducing our operating

costs both in the public and private sector. And I will leave copies

of this. I’ll make some copies today and ensure that my—— Mr. HORN. Thank you. We’ll put it into the record at this point

without objection.

Mr. Flyzik, can you tell us what the CIO Council is working on

when it comes to measurement standards that might be ideal

across the whole Federal Government?

Mr. FLYZIK. Mr. Chairman, I acknowledge the fact that the government a few years back with Governor Clinger in the Government Performance Results Act that we weren’t accustomed to doing

good measures and working measures, and at the time we did create a committee called our capital planning and investment committee which was to look at that very issue. As opposed to each

independent Governor agency trying to figure out how to do things,

we decided we’d have a committee that would be able to look at

best practices in the private sector, work being done by GAO.

The committee has been working on new types of investment

tools that we’re looking to proliferate across government to be able

to do a better job. The tools that we’ve been looking at focus on performance measures as a first step. What do we get in terms of

measures for the investment. I also agree quite a bit with Ms.

Krupa’s statement that we not only need to look at quantifiable

ROYs but in government we’ve got other qualitative aspects that

need to be taken into account. In the case of Treasury where I have

law enforcement bureaus, it’s very difficult to put a quantifiable

number on what is better public safety or better law enforcement.

We have those unique issues, yet we all know they are important

issues to the citizens of the country, so we need to find ways to use

these investment tools to standardize across government.

We’ve actually worked with members of your staff in the past of

the subcommittee on some of the capital planning tools that we’re

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looking to use and perhaps proliferate across government to standardize in what we’re doing.

Mr. HORN. Is that very helpful? Does the GAO have any comments now having listened to this discussion?

Mr. MCCLURE. Mr. Chairman, in 1998 we put out yet another

best practices study on this very issue, performance measurement

for IT. I would be glad to make a copy available to you. It argues

for using a balanced set of measures, both quantifiable and qualitative that looks at the impact of IT on strategic directions of the

organization, financial, customer and innovation and learning. It’s

very much a balanced basket of measures. That’s really what we

saw industry doing. We did the same thing looking at private sector and four State governments who had also put in these kinds

of balanced, measured approaches. We can certainly make that

available to you and have shared that with the CIO Council and

have been very supportive of it.

[NOTE.—The GAO report entitled, ‘‘Executive Guide, Measuring

Performace and Demonstrating Results of Information Technology

Investments,’’ may be found in subcommittee files.]

Mr. HORN. Thank you. My turn has long since gone and I’m giving Mr. Turner 20 minutes for his questioning.

Mr. TURNER. Thank you, Mr. Chairman. I have come to the firm

conviction that we do need a Federal Chief Information Officer. I

noted, Mr. Chairman, your concerns about the pluses and the

minuses. There’s no question that if not structured properly, it

could be ineffective, but it does seem to me when we look at some

of the best State models, the CIO is a cabinet level, and I don’t

mean to necessarily say that our CIO, Federal CIO, you’d call him

a cabinet officer. That implies, as the chairman feared, that somehow there’s a big bureaucracy under him because that’s the nature

of Secretaries at the Federal level. The CIO at the Federal level

needs to have direct access to the President, and he needs to be at

the table so that his ideas can be shared as issues of government

are discussed. And if a Federal CIO is properly empowered, it

seems that he would then have the ability, Mr. Flyzik, to chair that

CIO council that you’re the vice chair of and when discussions

occur about ideas for the implementation of new technology and

trying to move toward an e-government, then the President and the

Federal CIO can make the decision that we’re going to choose this

particular agency as the pilot program to see if it’s going to work.

For example, there’s no reason in the not too distant future that

every performance-based budgeting activity of every Federal agency should be real time where Federal managers can see at any moment what the status of those performance measures are. Now, if

that’s correct, obviously the way to proceed in that direction is to

pick out one agency and direct that agency to do it so we can see

how it works. It seems like where we are today is that, Mr. Flyzik,

I would gather when you meet with your counterparts and the CIO

Council, there’s probably a room of very frustrated people not only

because they struggle with their role within their agencies but because there is a lot of good ideas floating around and somebody has

got to try it but nobody has any direction about who is supposed

to jump first.

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If we could have a CIO at the Federal level who had direct access

to the President where these ideas could be implemented on a pilot

basis within the Federal agencies, we’d have our best opportunity

to see meaningful information technology utilized in the Federal

Government.

Am I misstating the attitude, Mr. Flyzik, of those who gather—

I guess you meet monthly?

Mr. FLYZIK. We meet as a full council every other month. We

have an executive committee, which I also chair, which meets

monthly, and we have six committees based on what we have identified as the key subject matter, such as we’ve talked about here

today, the work force effectiveness, critical infrastructure, security

privacy and so forth. They meet in some cases several times per

month and they have working groups working with them. And you

make some excellent points, Mr. Turner, and I think it’s a mixed

group. There are some CIOs that feel that they are empowered.

There are others that I guess the term frustrated would pertain.

Again I believe we’re evolving in a positive direction. I think that

term empowerment is the one I’ve heard this morning over and

over again, and the feeling is that we do need some empowerment

to do, as you talk about the central authority that has the ability

to do intergovernmental, interagency coordination or as you talk

about a kind of an executive agency approach. Some feel the CIO

Council can rise to that role. Today I believe the Council lacks

some authority to control resources to be able to rise to that level.

The John Koskinen model had associated with it funding that

was set aside for that particular program with some control over

that funding. What we do not have as a Federal CIO Council is authority to control funding to that degree to be able to effectuate the

kinds of change that you are referring to. I agree with the chairman’s remarks that those are, so to speak, who would determine

how it is implemented.

I was also involved with the early days of Clinger-Cohen working

with Members up here on that and the discussion at the time was

downsizing, streamlining. We didn’t want more bureaucracy. We

wanted to do away with layers and layers of authorities and so

forth that we felt needed to be.

So if implemented incorrectly, we could wind up again with more

layers of approval processes as opposed to streamlined empowerment of individual agency CIOs. Nevertheless, I do agree with your

points that we need some authority that can put in place the kind

of things we need to do on a governmentwide basis because the

business cases are compelling, that it makes sense to do that from

a customer perspective.

Mr. TURNER. Mr. McClure, I’m going to ask you this question.

We don’t have anybody on our panel today from OMB but in my

investigation into the issue of a Federal CIO, one of the things that

comes up is that the Office of Management and Budget is reluctant

to support this kind of approach and obviously it’s an infringement

or perceived to be an infringement upon their turf. Address that

issue for me and kind of get that out on the table because obviously

we pursue this idea. That’s one of the hurdles we’re going to have

to overcome. How do you view that issue?

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Mr. MCCLURE. Well, I think the Office of Management and Budget, since the passage of Clinger-Cohen, along with the key players

that helped put that legislation together have taken the position

that accountability for IT has definitely been pushed to the agencies. You remember Clinger-Cohen eliminated the Brooks Act

model in which it was really a tail-end look at procurement and acquisition by a central authority and instead we wanted focus at the

front-end for planning of IT projects.

In that spirit, I think OMB has pushed more of the accountability for planning of IT and results of IT into the agencies, agency

heads, agency CIOs and that certainly is their interpretation of the

spirit of that legislation.

OMB’s role is very key in this whole process. OMB reviews agencies’ IT budget submissions as part of the process of constructing

the President’s budget and using the tools that are available under

Clinger-Cohen, which is effective data and analysis showing a business case, effective cost estimates, and some estimates of return

whether it’s tangible or intangible, and improvements are some

things that OMB has a role in examining and asking questions

about it in the formulation of the budget.

So I think their push back is that the accountability model has

shifted under Clinger-Cohen more to the agencies. They do recognize the role they play in reviewing agency IT submissions and in

that regard, again they play a critical role.

Mr. TURNER. Am I correct in sharing my concern that the suggestion of a Federal CIO is going to at least be met with some skepticism by some in OMB or am I misreading that concern?

Mr. MCCLURE. I don’t know what the current position of OMB

is on the topic. In the past they were not supportive of it for many

of the reasons that I stated in the discussions on the debate of

Clinger-Cohen up on the Hill before Mr. Cohen’s committee. So I

don’t know what the current position is in terms of favoring or

disfavoring the creation of the national CIO.

Mr. TURNER. Well, I guess that’s an issue we’re going to have to

study further, obviously if there are legitimate concerns that need

to be taken into account. But if I’m hearing you correctly, it sounds

to me that the responsibility has been moved to the agency CIOs

and therefore there may be less interest in providing leadership

from the top than there should be and I guess in effect for me reinforces the idea that a Federal CIO who is near a cabinet level official might have an opportunity to provide the kind of leadership

the executive branch and the President should be providing to the

implementation of information technology. So I’d like to work with

you on that because I want to pursue this. Mr. Flyzik, do you have

any thoughts to offer on this subject?

Mr. FLYZIK. As I mentioned before, the empowerment issue

comes to mind and the need for someone or somebody or some

group to have the empowerment to do governmentwide and intergovernmental kinds of programs. The Koskinen model, as we

talked about, worked in many ways because we were viewing government not as by agency by agency but as functional sectors of

our country, and I think that is something that needs to be done

because I think there are some tremendous opportunities.

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You mentioned smart cards in Texas for food stamps, obviously

a very, very effective program, and if you step out and look at government from the point of view of the customer of government,

they don’t see a Department of Treasury and a Department of Justice and a Department of Agriculture, nor a Federal, State, local.

To them there is one government. Therefore, we have this need and

let’s stay with your entitlement example.

Today in this country we have people receiving SSA, SSI, Food

Stamps, Medicare, Medicaid, Aid for Family with Dependent Children, and so forth and so forth. They are all dealing with independent government processes, entities sometimes filling out forms redundantly over and over and over again. There is this need for

someone or somebody, some group to begin focusing on what we

can do from that customer point of view.

In my mind I have the virtual department of entitlements coming to the forefront here. That does not mean we need to reorganize

the government. What it means is we need to take advantage of

the inherent infrastructure and IT capability to coordinate what

we’re doing so we can deliver that one face to the customer. So

someone applying for one entitlement program finds about all the

other entitlement programs that are available on one smart card.

We not only deliver those food stamps but we deliver SSA, SSI, or

any other entitlement payments.

I think we cannot only improve service but we can probably

eliminate a lot of fraud, waste and abuse in these programs because we would have better capacity to identify those kinds of problems. I think all of us see these kinds of activities and the need

for again a person or a group or someone in power to be able to

work so we can fund these intergovernmental approaches where I

think some of the real big payoffs in the government’s use of technology in the future will come from.

Mr. TURNER. Thank you. Mr. Doll, when you surveyed the States,

what sector of government has been the best example of the utilization of information technology? For example, are we seeing more

progress made in agency-to-agency transfer of information? I suppose in Texas we have on our mind of course the success of the food

stamp program and elimination of fraud in it. The issuance of licenses would seem to be an area which would be an easy one for

State government. I don’t see why anybody anymore would have to

go to any State office and get a driver’s license renewed. You ought

to be able to look forward to the day when you can fill out the information and take the visual test and at some point you ought to

be able to have your picture made right there and have that transferred to the office and printed out on that card that comes back

to you.

Where are the real areas that we’ve seen significant progress in

terms of the out decision of information technology?

Mr. DOLL. I think you find utilization of technology in a number

of the major programs. You mentioned food stamps. The whole welfare arena, social services activities, most definitely in the financial

side of government. Obviously that’s a natural progression to technology, early adopters they were. So in the past I think you’d see

some of those major—where you find, though, everybody’s focus,

even though I can’t say that the majority of States are there beVerDate 11-MAY-2000 11:53 Feb 15, 2001 Jkt 000000 PO 00000 Frm 00087 Fmt 6633 Sfmt 6633 C:\DOCS\68507.TXT HGOVREF1 PsN: HGOVREF1
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cause we’re not in the areas of digital government where any and

all permits are on-line. You will find today of course probably any

form that you need to fill out in most States is physically available

for you to download, fill out, and mail in or fax or what have you,

maybe even e-mail but a true interactive on-line association between the citizen and State government. That’s what everyone is

working for and that’s the hottest area of development currently.

You find Arizona with some of the things they’ve done in the

driver’s license world, some of the permits in South Dakota, you

can get your birth certificate, a copy of that on-line without having

to talk to anybody, et cetera. Just as in South Dakota we’re probably only down around 15, 20 percent of the transactions in South

Dakota can be done on-line at this point. We have a project to turn

that up to about 80, 90 percent over the next 18 months. We just

started at the beginning of this year.

So I think you will find that there is a quick shift to again automating the processes of government so that the citizen can do it

from home, a business can do it from work, et cetera.

Mr. TURNER. Thank you. Mr. McClure, give me the best example

of a Federal agency that has utilized information technologies to

improve its efficiency, cost effectiveness, and consumer friendliness.

What is the best example of an agency that’s doing that, of course

present company excepted?

Mr. MCCLURE. It’s hard to point to the best, Mr. Turner. I think

what we have and what we continue to find are pockets of excellence in government, as you would expect. We’ve seen and the CIO

Council is very good at every year recognizing a handful—when I

say a handful, anywhere from a dozen to two dozen successful IT

projects in government where there have been specific, tangible,

and recordable outcomes of improvement in service delivery or cost

effectiveness.

In the last year, the Council identified many projects dealing

with e-commerce oriented activities, buying and paying of services

on-line, similar to what Mr. Doll was talking about a moment ago.

There have been examples of personnel systems that have been enhanced to be much more user friendly and much more dynamic

rather than the old paper processes.

Where we really need to focus our attention in the government,

despite these successes, are on the large, large modernization

projects where we are spending enormous sums of money with high

expectations, and we have several of those that have been ongoing

for years. Many of them are beginning to turn around that GAO

has focused on and worked now collaboratively with the agencies

to try to improve those successes.

Mr. TURNER. What agencies are you referring to? Internal Revenue Service?

Mr. MCCLURE. Certainly TSM modernization at IRS has been a

turnaround. The Commissioner and new CIO have put in place

many leading practices similar to what we have talked about today.

Again, the story is not complete but the turnaround picture is quite

promising. Decisions are being business led. There are business

cases. There’s attention to architecture. These are things that in

the years past we didn’t pay attention to.

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The same is true in some of the other modernizations, including

FAA and the National Weather Service, where we have pointed out

problems in the past but we’re starting to see more and more management attention to standards, to good software practices, and to

adequate management attention to the project outcomes.

I think those are itself areas where we need to focus a great deal

of our attention because of the vast sums of money that are being

spent.

Mr. TURNER. Thank you, Mr. Chairman.

Mr. HORN. Thank you, Mr. McClure, Mr. Doll, Mr. Knutson, I

think you have flying arrangements before problems occur in the

Midwest. If you have some parting words we’ll be glad to have

them and we’ll keep the record open if on the plane you have nothing else to do except try to find a flight, why we’d be glad to put

it in the record at this point without objection. So if you have any

summation, we’d certainly welcome it.

Mr. KNUTSON. The one thing I would say relative to a Federal

level CIO is it appeared in the discussion there’s a lot of expectation that by just naming that individual in that position certain

things would happen. That may or may not be true. I think putting

someone at the highest level possible in the area of technology is

a very good decision. You can’t assume by just doing that that the

types of things that Jim was talking about will happen by default.

You need very strong sponsorship from the agencies and the buyin from those agencies and their willingness to give the authority

to make things happen. Unless you have the complementary structure around that position from government as a whole, that position will not be successful.

Mr. HORN. Mr. Doll, any parting comments?

Mr. DOLL. As I mentioned in my talk, we in the States have

found and I believe it’s a general consensus across the States that

we looked hopefully that a national CIO will emerge in some form.

Because we really saw the value. Year 2000 was the best example,

but also in some of the things that are happening in the justice

world. Security is another major concern for us as who do you have

to go to right now. We know what it’s like to going to all the agencies within State government. For us also to turn around and go

from one to many within the Federal Government makes our lives

harder, and so I would encourage you to consider that model because as we’re moving to that model ourselves, I think we would

say that it’s been very successful in the States that have accomplished it and most of the States that are not there yet are talking

or actually in the process of getting there and having that level of

person within the organization.

Finally, I’d say that that individual is not only key but very difficult to fill. We understand that. We get a lot of folks from the private industry these days into that role. And in my comments one

of the things I mentioned was their ability to act within the political and civil service theater is very important. I come from the private sector myself even though I have some government service

under my belt with GSA. At least I had exposure and some orientation to governance from that level and that is really key. If someone cannot operate within that realm, you’re going to find it very,

very difficult to succeed.

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Mr. HORN. One of the problems, obviously, on getting CIOs into

the Federal Government and also at various levels is simply the financial situation, and what have you found in the private sector

on that and how has that changed in the last 5 years? A lot of good

people from the Federal Government have left for the private sector.

Ms. KRUPA. Mr. Chairman, I myself share the same sort of experience as Mr. Doll. I have worked both in public and private sector.

And one of the, I think, challenges and opportunities for those of

us who have been in the technology arena for quite some time is

not to jump ship, and that also the same challenges occur in the

private sector, not to jump ship, if you will, from one organization

to the other.

I think, as Mr. Doll said, it is difficult but what we have to look

for in that individual in the Federal Government, the person coming into that position understanding the value that they are going

to bring to that position and not so much a monetary driver and

there are those people out there. It is going to be a search.

It is going to be somewhat difficult, but I feel there are those

senior level executives out there. Today I think sitting at this table

is representative of the senior level executives that are out there

that have made commitments to their organizations. I agree that

the position needs to be structured and clearly defined, but I concur there needs to be a position at the national level that helps define strategy and vision and helps go to the different agencies and

different State levels with those CIOs and collaborate. The one

thing we don’t do a good job in this country is, and Mr. Turner has

cited over and over again in his questions, is who is doing what is

communicate. We don’t leverage the synergies and exploit the successes that we have from State to State, from agency to agency.

And the private sector has grappled with that for years and we’re

just coming into that light. We’ve scratched the surface of how important communication is.

I have five different operating subsidiaries, and I know in the

order of magnitude in the Federal Government, it is small but the

model I think is important to what you’re trying to accomplish.

They each have five different requirements. I have VPs and director of ITs so, if you will, CIOs in those operating subsidiaries, so

I sit in that position in the private sector reporting at, if you will,

the cabinet level, the executive level to the chairman to define

strategy, to define a vision, to define missions to capitalize on the

synergies in these operating subsidiaries. That’s what we need to

do I believe in the Federal Government.

Mr. HORN. That’s very well said and that reminds me that we

are going to keep the record open. If you have some more good

ideas on the way, please ship it to the staff here and we will be

glad to put it in the record because what we want to do is get people talking just as you’re talking about the communications among

levels of government and private sector and nonprofit sector. Universities, some of us had chief information officers 20 years ago, so

it isn’t new to a lot of us.

Would the gentleman from Texas have any more questions? If

not, we’re going to thank the staff that put this together and that’s

J. Russell George, staff director and chief counsel. I don’t see him

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here right now. Matt Ryan is to my left, your right, senior policy

director on these matters, Bonnie Heald, director of communications, sitting in the back there. Bryan Sisk, clerk, Ryan McKee,

staff assistant. And for the minority we have Trey Henderson,

counsel on behalf of Mr. Turner and the subcommittee minority;

Jean Gosa, minority clerk; and we had two people deciphering all

of our languages today and one was Doreen Dotzler. The other is

Laurie Harris and we thank you both.

With that we’re adjourned.

[Whereupon, at 11:42 a.m., the subcommittee was adjourned.]

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