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Texas Releases Recommended Fixes for Data Center Consolidation

November 13, 2009 By Matt Williams

Low morale and a faulty one-size-fits-all approach are among several problems associated with Texas' data center consolidation and IT services agreement with IBM, according to a study released Friday, Nov. 13, by the Texas Department of Information Resources (DIR). The report recommended that Texas renegotiate the contract by the end of 2009.

The study, called the Holistic Remediation Strategy, was prepared by consultancy EquaTerra at DIR's request. The report says that neither the state nor IBM -- the vendor managing the contract -- are seeing the benefits that were predicted when the $863 million contract was awarded in 2006. IBM has not yet broken even from a profit standpoint, and the DIR isn't receiving the service it expected, according to the study.

Despite the problems, the study backed the concept of consolidation because it can drive cost savings and improve service when executed properly. But DIR's agreement with IBM "is not sustainable" as currently implemented, according to the report.

"The contract sets up DIR as the single voice for the agencies; however, DIR is not empowered to fulfill this function," the study said. "The contract is predicated on a one-size-fits-all solution that does not map well to the diverse portfolio of genuine business needs across state agencies. This paradigm causes contention between all parties."

In addition, the DIR, IBM and the participating state agencies are "exhausted and highly stressed." The combination of low morale and intractable issues "has resulted in the emergence of hostile and sometimes aggressive behaviors by team members from all sides. It has also resulted in a large and growing backlog of unresolved contract disputes and unfulfilled requests for service," according to the study.

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Texas Says It Will Seek New Data Center Contractors

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