Governments often struggle with massive new IT projects

This story was originally published by States Newsroom.

Idaho’s state government was facing a problem.

In 2018, its 86 state agencies were operating with a mix of outdated, mismatched business systems that ran internal processes like payroll and human resources. Some of the programs dated back to the 1980s, and many were written in programming languages they don’t teach in engineering schools anymore.

The state made a clear choice—one many other state and city governments have made in recent years — they overhauled their entire IT suite with one cloud-based software.

But since the $121 million project, called Luma, rolled out in July 2023, things have not gone as planned.

Luma has created procedural and data errors and caused “disruptions in day-to-day processes and [is] impacting overall productivity,” said an audit that was provided to legislators in June.

Five months into its launch last year, the Luma project was still receiving criticism from employees, organizations that work with the state’s government agencies and from top state legislators.

Speaker of the Idaho House of Representatives Mike Moyle said in a November 2023 Legislative Council meeting that the state might want to come up with an exit plan for the platfor—“No offense, this thing is a joke and it’s not working,” he told legislators.

Idaho’s Luma project is just one of many government IT overhauls that hasn’t gone as smoothly as city and state officials may have aimed for.

As few as 13% of large government IT projects succeed, a field guide by the U.S. General Services Administration’s 18F team said. The group of designers, software engineers, strategists and product managers work within the GSA to help government agencies buy and build tech products.

State projects, the org’s report says, can face the most challenges because state departments often don’t have sufficient knowledge about modern software development and their procurement procedures can be outdated for what’s needed to properly vet huge software solutions.

“Every year, the federal government matches billions of dollars in funding to state and local governments to maintain and modernize IT systems used to implement federal programs such as Medicaid, child welfare benefits, housing, and unemployment insurance,” 18F’s State Software Budgeting Handbook said. “Efforts to modernize those legacy systems fail at an alarmingly high rate and at great cost to the federal budget.”

Why are Governments Overhauling Long-standing IT Systems?

Most of the time, as in the case of Idaho, a state is seeking to overhaul a series of aging, inflexible and ineffective systems with one more modernized approach.

Each year, governments need to budget and allocate resources to maintain existing systems and to get them to work with other business operation systems. In 2019, 80% of the $90 billion federal IT spending budget went toward maintenance of legacy software.

Giant projects, like Washington state’s proposed $465 million replacement program of its legacy systems, may likely be replacing the millions spent every year to keep up old systems.

Aging software systems aren’t just awkward or inefficient to use, but they can also pose cybersecurity risks. Departments that use systems built with older programming languages that are going out of style will struggle to find employees who can maintain them, experts say. Departments might also struggle to get newer business systems to integrate with older ones, which causes the potential for hiccups in operation.

A Closer Look at Luma 

Idaho’s State Controller’s Office found itself in that position six years ago when it sought to overhaul all its business operation systems. Scott Smith, the chief deputy controller, and project manager of Luma, said they were trying to maintain systems that they were losing technical support for.

Each agency had built their own homegrown system, or had procured their own up until that point. There was a desire to modernize operations statewide and do an audit on return on investment for taxpayers. The project got the name Luma, an attempt for the state to “enlighten, or shine a light on” its existing systems and update them, Smith said.

After a procurement process, the state chose enterprise resource planning software company Infor, and replaced a collection of separate systems that ran payroll, budgets, financial management and human resources with one cloud-based solution. Many of these legacy systems dated back to 1987 and 1988, and were becoming vulnerable to security threats, Smith said.

Reports by the Idaho Capital Sun found that since its rollout last summer, the new system didn’t correctly distribute $100 million in interest payments to state agencies, it double paid more than $32 million in Idaho Department of Health and Welfare payments, and it created payroll issues or delays for state employees. A nonprofit that works with the state said it wasn’t paid for months, and only received payments when they sought attention from state legislators and local media, and upon launch day in July 2023, only about 50% of employees had completed basic training on the system.

In February, Moyle and a bipartisan group of eight legislators asked an independent, nonpartisan state watchdog agency called the Office of Performance Evaluations to look into Luma’s software. And in June, a Legislative Services Audit found system lacked a range of information technology controls for data validation and security.

The performance evaluation report isn’t due until October, but Ryan Langrill, interim director of the OPE, said in August that they were told to make the Luma study its priority.

“Our goal is to identify what went well and what didn’t and to offer recommendations for future large scale IT projects,” Langrill said.

Smith told States Newsroom that with any large-scale IT project, there’s always going to be difficulties during the first year of implementation. Idaho is the first to do a rollout of this kind, where all business processes went live at once in a multi-cloud environment, he said.

They developed requirements for the system for several years before its rollout last year and spent time in system integration testing with experts from Infor.

“Once you put it into the real world, right? There’s still a lot for you to understand,” Smith said. “And while the system itself can provide you the functionality, there’s still a lot of inherent business processes that need to be adapted to the new system.”

Each agency had to evaluate their own internal processes, Smith said. Large-scale departments like military, transportation and health and human services are going to operate differently than smaller ones like libraries and the historical society. Trying to provide a singular system to support each facet of government is going to come with its challenges, he said.

Human error has also likely played a role in the rollout, Smith said. As employees have to learn the new system and make changes to years-long processes, they’ll have to take time to change, adjust, refine and improve.

Smith said he hopes the Office of Performance Evaluations looks at the Luma project with a “holistic” approach, going back to source selections and analyzing what could have been done better with everything from implementation to the development of requirements for the technology.

“We’ll obviously look at those results and see where we can make improvements, but it can also be used, I hope, as a source document for others…” Smith said. “Every state’s going through a system modernization effort, that they can use to help improve their potential for success in their projects.”

Other Challenging Rollouts 

A similar situation is brewing in Maine with the rollout of its child welfare system, called Katahdin—named after a mountain in Baxter State Park.

The state sought to overhaul its child welfare database used by the Office of Child and Family Services back in 2019 when its older system began losing functionality, the Maine Morning Star reported. It aimed to “modernize and improve” technical support for staff that work with families, and the department received eight proposals from software companies in 2021, but only three met eligibility criteria.

The state ultimately chose Deloitte, and spent nearly $30 million on the project, which went live in January 2022. But employees say their workflow hasn’t been as effective since.

Caseworkers have described it as cumbersome, saying they need to use dozens of steps and duplicative actions just to complete a single task, and that files saved in the system later go missing. It’s additional stress on a department that faces staff vacancies and long waitlists to connect families with resources, the Maine Morning Star reported in March.

In her annual report in 2023, Christine Alberi, the state’s child welfare ombudsman, wrote “Katahdin is negatively affecting the ability of child welfare staff to effectively do their work, and therefore keep children safe.”

Katahdin, too, received recommendations from a bipartisan oversight committee to improve the system earlier this year. Recommendations included factors beyond just the software, like improvements to the court system, recruiting more staff and addressing burnout.

States Newsroom sought to determine if any of the recommendations had been implemented, and to confirm that the department was still using Katahdin, but the department did not return a request for comment.

A fall 2023 report shows that California has also struggled with the maintenance of its statewide financial system that performs budgeting, procurement, cash management and accounting functions. The program, called FI$Cal, has cost about $1 billion since it began in 2005, and last fall State Auditor Grant Parks said that despite two decades of effort, “many state entities have historically struggled to use the system to submit timely data for the [Annual Comprehensive Financial Report].”

The state, which is famously home to tech capital Silicon Valley, has its own department of technology, which oversees the strategic vision and planning of the state’s tech strategy. But the department landed on the Auditor’s “high risk” list in 2023, with Parks saying the department has not made sufficient progress on its tech projects.

Government v. Corporate Tech Rollouts

When a government rolls out a new software system, two things are happening, says Mark Wheeler, former chief information officer of the City of Philadelphia. First, they’re replacing a system that’s been around for decades, and second, they’re introducing workers to technology that they may see in their private lives, but aren’t used to operating in a government setting.

Sometimes, he said, governments spend a lot of time planning for the day a system goes live, but don’t think about the long learning curve afterward. They spend years defining functionality and phases of a product, but they don’t designate the real resources needed for “change management,” or the capacity for teams to engage with technologists and become a part of the transition to using the new technology.

Wheeler suggests that departments train new hires in advance of a rollout so certain people can fully focus on the technology transition. Learning these new technologies and building new internal processes can become “a full time job” of its own, Wheeler said. The people who are touch-points for their department with the new systems will also need to form relationships with the software companies they’ve chosen to ease the transition.

Huge software rollouts call follow either an “agile” or “waterfall” approach — agile focuses on continuous releases that incorporate customer feedback, while waterfall has a clearly defined series of phases, and one phase must reach completion before others start.

“We get this message over and over again that government needs to operate like a business, and therefore all of our major technology transformations need to operate in this agile format,” Wheeler said. “Well, if you don’t properly train people and introduce them to agile and create the capacity for them to engage in those two week sprints, that whole agile process starts to fall apart.”

Another way these tech transformations differ between private and public sectors is that there are often project managers at private corporations who oversee the many facets of a project and “own” it from start to finish. Between constant iteration on its improvement, thinking about its long term health, the care and growth of a project, Wheeler says, corporations tend to invest in more people to see transitions through.

Wheeler acknowledged that it can be frustrating for residents to see huge budgets dedicated to government projects that take time to come to fruition and to work smoothly. But his main advice to state or city governments that are on the precipice of a huge change is to invest in the change management teams. When a government is spending potentially hundreds of millions of dollars on a new solution, the tiny budget line of some additional personnel can make or break the success of a project.

And finally, Wheeler says, governments and residents should keep in mind the differing expectations and priorities, between private and public sectors when comparing them.

Tech transformations at large companies are mostly about meeting a bottom line and return on investment, while governments are responsible for the health and safety and stability of their societies. They also require the feedback and inclusion of many, many stakeholders and due process procedures, Wheeler said, and they have to be transparent about their decision-making.

Governments also just aren’t known to be super great with change, he said.

“As much as the public says they want government to move quickly, when you propose a very big change, suddenly everyone wants to question it and make sure that they have their say in the process,” Wheeler said. “And that includes technology pieces so that will slow it all down.”