GOVERNMENT TECHNOLOGY/Outsourcing services

In January 2003, Minneapolis contracted with a private-sector information technology company to manage its IT infrastructure and provide 24-hour support for employees and residents. Now, the city focuses on delivering services to residents — not on installing and maintaining computer hardware, software and networks.

By 2000, the city’s IT Department was spending 60 percent of its budget and management time just on keeping its infrastructure — laptops, desktops, databases, servers and networks — running. The department also needed to relocate its data center, at a cost of $4 million, and build a $4.5 million backup data center. The city’s technology was becoming outdated, and upgrades would be costly. Additionally, the department needed more employees to provide 24-hour service to residents and city employees, which would add to costs.

At that point, the city changed its IT game plan. Rather than install and maintain computers, its IT staff would educate other departments about technology and then apply it to help them do their jobs better and serve residents more effectively.

At first, city leaders faced strong resistance to outsourcing. The IT Department is unionized, and the union did not favor privatization. To gain approval for the change throughout the city, project leaders let employees know up front what they were doing and why. Because the department involved people from human resources, finance and other city functions, everyone had a stake in the project.

Secondly, project leaders made people — not technology — the first priority. City leaders did not consider the technical aspects of outsourcing until they knew what would happen to the people affected. Of the 20 city employees whose positions were eliminated, six moved to other city positions, and 14 went to the outsourcing company. For those employees, the city negotiated a three-year job guarantee, with equal or better salary and benefits. No city employee lost a job.

Eventually, the city council and mayor accepted the business case for outsourcing and hired Blue Bell, Pa.-based Unisys. Today, the company manages Minneapolis’ IT infrastructure that supports 4,000 city employees in the mayor’s office; city council; the city coordinator’s office; the police, fire and regulatory services departments; and public works. The company owns and operates the entire IT infrastructure, including the servers, which are housed at its data center in the Minneapolis area and are protected against disaster by a separate backup site. The company also provides a 24-hour service desk to help city employees.

The city expects to save $20 million over the seven-year contract. In addition, it has 24-hour service and the disaster protection it previously lacked. Now, the IT Department can focus on helping the city gain the most value from technology. Instead of forcing technology on an outdated process, the department tries to understand the process and how technology can improve it.

Minneapolis leaders feel confident they are taking the right approach to outsourcing. In fact, this May, the city’s relationship with the company received the 2004 Outsourcing Excellence Award from the Dallas-based Outsourcing Center.

The author is assistant city coordinator and chief information officer for Minneapolis.