Higher Ed Exemption Study 10-11-2011

1. Higher EdExemption Study10-11-2011 Higher Ed Exemptions from Modernization Reforms http://hd31.org/164

2. Exemptions • Financial Services • Purchasing • Information Technology Consolidation • OneNet

3. Financial Services HB 1207 – SB 541 • In 2007, The Hackett Group conducted a study of Oklahoma financial processes. The study included two Higher Ed institutions. • Hackett Group – 2007: “State of Oklahoma has significantly higher FTEs than NASACT peer group.”

5. Purchasing • IBM – 2006: “52% of state spending is exempt from CPA because of Higher Ed exemption.” • IBM – 2006: “By adopting legislation that ensures all state entities work together to combine purchasing power, the state can reap tremendous ongoing savings for years to come.”

7. Purchasing • Treya – 2008: “State spends 3.5 billion / Higher-Ed spends 2.3 billion.” • Treya – 2008: “There is no searchable online catalog of products/services provided by state use vendors.” • Develop an online catalog to facilitate the process of identifying mandatory items. • OSU and DCS develop separate catalogs.

8. Information Technology / OneNet • Capgemini – 2011: State has limited shared IT services. Reform would “result in significant cost reductions by removing duplicated services and administration.” • Oklahoma spends 40 million each year that comparable states do not spend. • “The state owns a significant fiber plant . . . However, packets of responsibility and ownership exist (ODOT, OnetNet, OSF) through the state for the laid fiber, with no single owner and/or authority in place for state-owned fiber. This enables additional purchases of capacity and creates an inefficient use of state-owned capacity.”

9. Information Technology / OneNet • Capgemini - 2011: “Establish a single statewide optical backbone using state-owned fiber. The existing OneNet environment should be the basis of this single network. Onenet should be rolled under ISD as a statewide IT service provider for telecommunications.” • Capgemini – 2011: “It is recommended that the use of OneNet by state agencies be mandatory for all networking services.”

10. Results • State and local governments experience $20 M savings as a result of purchasing system reforms. • Department of Education set to experience $600,000 of savings each year from IT consolidation.

11. Not Exempt • Payroll – House Bill 1086 – “The Director of the Office of State Finance shall promulgate procedures by which state agencies shall enter into a shared-services arrangement with the Office of State Finance for the provision of payroll processing services.” • Open Books – Purchase Card Data

12. Reasons for Exemptions • Lobbying Power / Political Support • Constitutional Provisions • Other

13. Recommendations - Purchasing • Purchasing savings have been documented and the time is right to include Higher Ed. • State should work with Higher Ed to develop integrated purchasing catalog which allows Higher Ed purchasing officers to order from statewide contracts. • If state and Higher Ed fail to cooperate, the time is right to consider policy changes.

14. RecommendationsFinancial Services / IT • If consolidation processes result in savings to state agencies, they should either be expanded to include Higher Ed, or duplicated within the Higher Ed system. • OneNet should be consolidated into the state’s IT infrastructure as soon as possible.