May 9, 2010 By Andy Opsahl
A group of seven Colorado counties have found a way to drive their hosted software costs downward each year. Instead of purchasing cloud computing services from a vendor that will raise its prices progressively, the agencies are purchasing hosted software services from one another.
In 2008, Pueblo County, Colo., began delivering cloud-computing-style hosted county assessor and treasurer software services to six other counties. The strategy either stabilized or reduced costs for all involved. The arrangement actually became a revenue generator for Pueblo County, which hired three extra employees for the sole purpose of delivering this service to the other counties. Municipalities receiving the software services pay a fee to Pueblo County and insist customer satisfaction is higher than with the private vendors they used in the past. Conejos, Costilla, Alamosa, Rio Grande, Saguache and San Juan are the other six counties participating.
Enabling all county participants to tap into the same software cloud may sound relatively simple at first blush, but it caused a mountain of complications for Dan Mauro, information systems director for Pueblo County. The hosted software, developed by the Pueblo County IT staff, interacted with each participating county's equipment differently. This meant Mauro's workers had to tweak it six different times. Doing just one of those conversions would take more than a year under normal circumstances, said Mauro. His employees did six conversions in one year.
"It almost killed me," Mauro said. "I was working 70- and 80-hour weeks most of the year."
Making the software interface with every county's IT infrastructure involved myriad little programming chores, Mauro explained. Also, he said if he had to do it over again, he would have spent more time addressing the concerns of various individuals from each county. When people necessary for the conversion get nervous, their attitude causes a ripple effect that slows the process, according to Mauro. He doesn't recommend local governments attempt the conversion without help from a vendor .
"We were just uniquely placed to do it because we do our own in-house development. We write our own [enterprise resource planning], finance, budget payroll, HR -- all that stuff is written in-house," Mauro said.
He said a local government could easily hire a private vendor to set up its county-to-county cloud and train the hosting county in how to operate it.
Given that Pueblo County hosts the treasurer and software services, you might wonder how it saves money. Shouldn't its costs increase if it has to pay more people to maintain an expanded infrastructure? However, the fees charged to participating counties exceed the amount Pueblo County pays for the extra employees and infrastructure. By 2010, Pueblo County expects to produce a surplus of nearly $200,000, which it will use toward its own software usage costs. Mauro said the arrangement was a bargain for all counties, many of which would have faced price increases without it.
"They're paying close to the same of what they were paying, only they're getting a newer, better product than if they were to upgrade with the third-party vendor," Mauro said.
Mauro found a surprising affirmation of that claim in Lois Widhalm, treasurer of Alamosa County, Colo. She initially fought the multi-county cloud idea with the Board of Alamosa County Commissioners.
"I dug in my heels," Widhalm said. "I didn't really want to make a change because nothing was broken."
However, as her agency began deploying the software, she was struck by the flexibility of Pueblo County's development support.
"We're dealing with very sensitive people in terms of listening and understanding what we want. Just because it's done a certain way in Pueblo County, they're not forcing that on other counties," Widhalm said.
The cost-stabilizing component of using Pueblo's treasurer software made deployment of it unavoidable, she said.
"Our third-party vendor was going to increase the cost of our product to the point that none of these small counties in this state could afford to stay within," Widhalm remarked. "We were absolutely panicked as to what we were going to do."
Her deployment is still in the process of being completed, but she has high expectations for it in the long term.
"It's a constantly growing and improving product, and I couldn't be happier with it," Widhalm said.
This Digital Communities white paper highlights discussions with IT officials in four counties that have adopted shared services models. Our aim was to learn about the obstacles these governments have faced when it comes to shared services and what it takes to overcome those roadblocks. We also spoke with several members of the IT industry who have thought long and hard about these issues. The paper offers some best practices for shared government-to-government services, but also points out challenges that government and industry still must overcome before this model gains widespread adoption.