Information Technology Authorization Committee
Friday, January 18, 2002
9:00a.m. - Noon
ASU Downtown Center, #368, Phoenix Arizona 
Minutes 

Present

Absent:

Call to Order at 9:00 a.m. by Chairman Rick Zelznak.

Director’s Report                                                                                       

Approval of November 16, 2001 Minutes, including Executive Session
Motion by Dr. Lewis to approve with corrections on Executive Session; Second by Al Crawford.  Approved

Project Approval
 Arizona Department of Environmental Quality                                 Exhibit 3
 l Telecommunications for ADEQ’s New Building
Frank Somers, Government Information Technology Agency Oversight Manager
DEQ:  Bob Rocha, Jim Ryan, Russ Brodie
DOA:  Jim Price, Tara Roesler

Dr. Gentry     Of the three options here; you’re comparing two.  Which two out of the three are you comparing?
Frank Somers         That has been a source of confusion and contention. In trying to explore what the prices, figures and functions were for the ATS offering, we really got three different prices.  I had a problem nailing down what the features and functions were for the various prices proposed.  ATS proposed a basic service, which is voice only.  Notice the date on this is January 11^th.  ATS pulled SL100 off the table on Monday.  This was published and mailed to you one week ago.  We are comparing one and two.  
Dr. Gentry     Your cost differences now are favoring option one?
Frank Somers         Yes, there are some additional cost items that need to be considered for the ATS option.  DEQ has three remote offices in Phoenix, Flagstaff and Tucson.  All three have phone systems in the 8-12 year old range, reaching the end of their useful life.  Those systems will need to be replaced in the next 3-5 years.  That would be an additional expense to ADEQ.  The reason we don’t have an apples to apples comparison here is that the ATS proposal is a Mall-only main office proposal and DEQ VoIP solution covers all locations, all telephones, all employees in a converged IT network.
Laraine Rodgers    The proposal from ATS is for a portion of what service, main office only?
Frank Somers         Right.
Laraine Rodgers    So it is a subset and for that portion it is $1M more. A picture is starting to frame in my mind.  That’s a pretty startling graphic.
Frank Somers         We think there is an economic justification and the DEQ Director met with the Chief of Staff last night to discuss this.  They agreed there was $1M difference between these two proposals.
Laraine Rodgers    It’s more than $1M because we’re not looking at the whole picture.  To me, there is an issue which is we don’t have a plan from ATS, a long-range plan?  We have talked about this in previous meetings many times and it is a concern. 
Frank Somers         We do not.  You’re right, there are additional costs and we have not nailed those costs down, but know they are probable, a number of cost items DEQ would have to pay if they don’t go with the Voice Over IP (VoIP) solution as they have proposed.
Laraine Rodgers    We’re being asked to look at something that is really separate from a very systemic issue over all the State.  Isn’t it our responsibility to look at individual programs in the context of the big picture?
Frank Somers         Very much so.
Rick Zelznak            That’s one of the things that makes this evaluation pretty complex because what this tells us is we need a plan to migrate this State to VoIP.  DEQ is not the only agency interested.  It’s incumbent, I think, upon us and DOA the service provider to put together a plan, lay out a path to move to VoIP.  This project comes at a time where there are a lot of time constraints moving into a new building; however, at the same time, we do lack an overall plan.  Do we utilize the switch to implement VoIP or do we go to a more distributed type approach like DEQ is proposing?
Laraine Rodgers    If we look at the enterprise architecture, I know it’s not here yet and if we understand that with the enterprise architecture if we were to approve what DEQ is saying, there could be a conversion possibility in two years, then it makes a decision that to me is one we can talk about. 
Al Crawford  The enterprise architecture is why we’re headed toward an IT structure, so it sounds like a first step.
Rick Zelznak            Two of the principles in this recommendation are that VoIP is where we’re moving to and we have to effectively share our resources.
Laraine Rodgers    Is DEQ aware of this, have you seen the enterprise architecture plan?
Dr. Lewis      It would seem to me that with the thought of the CIO council already indicated that the VoIP is the direction they want to go with the idea that would fit the target architecture for the State that is IP based with the one condition that remains in your recommendation which is that DEQ would work to see how to extend.  As the pilot of doing this, it seems to me it is the obvious thing we should do.
Dr. Gentry     It is.  We need to reword that condition.
Dan Murphy When DOA was here, one of the things they talked about was a lack of fair comparison that, in fact, when agencies do their process, they don’t include all the cost related to services provided.  Has Government Information Technology Agency verified that in fact this $1M difference includes all those issues that could change staffing, all the things they talked about?
Frank Somers         We have, to the greatest extent we were able to do that.  Over process of several weeks we have been presented with and DEQ has been presented with a series of different costs each time we meet and a different menu of features.  You get confused after a while, which proposal are we talking about or which cost are we talking about, how come it’s $200,000 more than last week or $200,000 less, and so forth.  These two proposals – the ATS proposed solution and the DEQ solution are not apples to apples comparison.
Dan Murphy Where I was going is what I thought I heard is staffing support, which is included, DOA has staffing they provide that support when agencies go off and do something different, do they always include the cost of the staffing that is provided by their agency or that they will have to add to this new technology new skill sets?
Frank Somers         One of the problems DEQ has had with the proposal is that part of the costs proposed by ATS included 2 FTEs to maintain DEQ’s phone system while DEQ has 2 FTEs they would like to assign to that maintenance.  When DEQ said we’re just not going to need those folks, ATS said, but they did not respond by reducing their cost.  To respond to Laraine’s point, we have asked ATS for a business plan.  We told Director Hibbs and ATS.  Government Information Technology Agency can and will support DOA and ATS providing DOA and ATS make the following commitments.  DOA and ATS will prepare a comprehensive business plan encompassing all appropriate telecommunication areas in the state, their present value and operating cost, useful life, estimated date of replacement and estimated replacement cost.  This business plan should include strategies for migration to new technology, ATS capital investments, etc.  With regard to the business plan, DOA and ATS should implement a line of business financial analysis utilizing elements of the competitive government process.  For this line of business, the analysis would include cost of services for both the State operated, consolidated approach and the current cost of these services under the present model.  These costs would be compared to an invitation for quote with cost and outsourcing the line of business.  DOA and ATS should provide a service level agreement including financial realities for failure to perform.  Finally and most importantly, DOA and ATS should make a commitment to the State that an agency would pay one penny more for ATS service than could be provided by a third-party vendor.  We think these are good principles, they are goals and we think ATS can work toward.  They are not there yet.  We don’t have a business plan. 
Laraine Rodgers    What was sent by whom to whom?
Frank Somers         It was sent by Director Zelznak to Director Elliott Hibbs and we cc’d the world to make sure ATS folks were aware of it.
Laraine Rodgers    Was your response agreed to?
Frank Somers         I don’t think so.
Rick Zelznak            There were originally committed to come back to present consolidation plan at February ITAC.  My understanding is they are still on track.
Laraine Rodgers    To answer this letter?
Rick Zelznak            Yes, to come up with this consolidation service level agreement.
DEQ presentation

Dr. Gentry     What do the two full-time personnel do?
Jim Ryan      We have about 8 databases to maintain to keep our system in place, maintenance on the phone switch, they run interior lines, they do installation, change the leads, we have people moving throughout the facility.
Dr. Gentry     In other words, those guys are keeping your old telephone switch going.
Jim Ryan      Correct.
Dr. Gentry     If you went to a new solution, some of that $250,000 cost may be reduced.  I’m questioning the statement, no matter which option is selected; you have the lowest cost because those two personnel associated with the old switch may be reduced.
Jim Ryan      Two of two.  One person you have no back up.  If we go with the ATS solution, we’ll need one body for backup.  If we go to the IP telephony side, we might compress the amount of maintenance required when we still have to have support.  Fundamentally, I don’t see us getting away from two people in the near future.
Dr. Gentry     Technical comments.  Everything I’ve read about BOIP, as it changes, there is a huge savings there with VoIP compared to the old analog switches.  I am suggesting you may not need two full-time personnel to do that function with the VoIP solution.
Al Crawford  Why does it go to $55,000 after year 5?
Jim Ryan      The note is paid off, we own the equipment, basically 6 after including licensing, maintenance and refresh.
Al Crawford  You’ve got an obsolescence cost I don’t see factored in there.
Jim Ryan      We included a refresh factor in year 6 and out figuring every dollar you spend on your voice side means the dollar drops on the data side, that you have a convergence.  The dates (inaudible) are the dates for the last 10 years when there are statewide network that ? reasonable dollars.  We’re going to go through a refresh in our network anyway.  I have to show our network refresh and it will definitely impact the liability of the dollars here.
Laraine Rodgers    Is this project developing in conjunction with your big picture? 
Jim Ryan      We’ve been working over two years at basically putting our network so it is complying with all these standards (inaudible).  It’s been our plan all along.
Laraine Rodgers    You talked with vendors other than Cisco in terms of the life span.  Is 5 years just a refresh if fine, other people (inaudible) VoIP, they don’t have to replace after 3 years or upgrade?  This is what you heard?
Jim Ryan      Yes.
Dr. Gentry     Throughout all those years, are you going to have maintenance costs the systems support to include software upgrade to go with the hardware?
Jim Ryan      Yes.
Dr. Gentry     That’s an important point because it will be involving capability.  You want to be sure of new software releases coming out with different features, corrections of problems in existing stuff.  You want to have access to that.  You’ve got it covered?
Jim Ryan      (inaudible).  Those costs are included here; those will be done on a case by case basis -- licensing, maintenance, etc.
Dr. Lewis      That’s the $55,000?  That’s what is budgeted to keep it current and maintain it?
Jim Ryan      Yes.
Dr. Lewis      For the first five years, is the lease purchase on the hardware, software and maintenance included?
Jim Ryan      Yes.
Al Crawford  Not everybody’s on board.  DOA’s not on board.
Dan Murphy What is the per unit cost of this system as measured by the number of handsets or devices?  How many lines?
Russ Brodie            We’re basing it on 1,000 users even though we have about 950.  The biggest expense is the phones, about $240,000.
Dan Murphy How many telephones on desks do you have?
Russ Brodie            We estimate about 850.
Dan Murphy 850 divided by is what per unit?
Russ Brodie            $224 depending on phone type, single line, etc.
Jim Ryan      If we go with the ATS phone system, their phone is analog, $100,000 per year, for what?  We’re looking at $240 for five years and being told through Cisco they will have at least a 10-year shelf life; whereas if we go with ATS, it’s $100,000 for same number of phones, approximately, when you pay that forever.  The economics is obviously there for the IP phone.
Dan Murphy I’m trying to get at what the industry standard is per handset as estimated by experts.  What your comparison is to industry standards.
Jim Ryan      We have those numbers but not on handset per unit.  I apologize.
Dr. Lewis      The cost – you’re going to be paying per handset the $200 plus neighborhood for 850?
Jim Ryan      Correct.
Al Crawford  What other VoIP suppliers have you talked with besides Cisco?
Jim Ryan      Nortel and PR. 
Al Crawford  It may be the most expensive.  You’re a captive customer.  If the whole State were to go this way, you might get better prices.
Jim Ryan      We can’t wait for a plan to come into play…
Al Crawford  I understand.  I’m not sure you justified that this is the right way to go.
Laraine Rodgers    I don’t think there is any argument that VoIP is the way to go.  With the commitment overarching on the part of the State, if every group that comes in has their wonderful approach, we can listen to you; it’s not that your presentation is incomplete or analysis is faulty, it’s where is the overarching accountability and plan?  If you want a prototype of the pilot, if you will, for the State, who is in charge, who is the person actually doing that?  That isn’t an issue with you, we have responsibility to look at the big picture, as well as the individual project.

Jim Ryan      We’ve been trying to work in partnership with the ATS on a pilot and we have such a divergence in how we’re going to implement that it’s like, in the time the clock ran out, so you ladies and gentlemen have to address that.  I am not in a position to address that issue.

Bob Rocha   We are willing to work with DOA and ATS, be the pilot, work to create that pilot together.  As Jim points out, we have to move into a building on July 9^th, we have equipment not up to snuff and we have to meet a budget condition.
Laraine Rodgers    When is the start date for this completion date of 6/1?
Jim Ryan      By 2/1.  We’re into negotiations, just need approval by integrators, then go out for the best deal on lease purchase.  The Cisco people are working in hand with us.  We start immediately after this meeting if we get approval.
Bob Rocha   The financing contractor is already in place.
Laraine Rodgers    I’m not sure what is in the by-laws with Government Information Technology Agency or state regulations?  How do we do something like that?  We think there is an overarching issue clouding our ability to fully understand.  How do we address that?
Rick Zelznak            It’s unfortunate that DOA is not here to present their side of the story.  I think, as a committee to look beyond the specific project in front of us and look on a statewide basis.  We’ve not addressed part of it.  John may be in a position to address it.
John McDowell, Technology Planner, DOA    (mostly inaudible, not near a microphone) 
Jim Ryan      We are in synchronization with the standards in place because Government Information Technology Agency has approved our 3-Year Plan and they are also following the enterprise architectural plan.  We’re not out of sync with strategy or oversight, only ATS.
John McDowell       Statutorily, ATS, Legislature is to be the focal point for telecommunications for Executive Branch agencies.  The State contracts are in place for results of work DOA has done to provide those options only to the State.  Now they need to move to the next level.  (inaudible)     
Rick Zelznak            I think DOA is interested in VoIP and they see urgency in being able to bring up two large buildings on the Mall within the next six months.  They see considerable risk to go in the red.  A VoIP-type solution in their current environment because they don’t have the experience or technology.  It will be a learning process over the next six months while they’re also getting agencies moved into buildings.  I believe their desire is to wait, get through that process creating a business plan to move to VoIP and take a look at different options.
Al Crawford  Too many aspects in information technology are cost driven and if you miss that event with an upgrade, you are out of sync for the life cycle of that equipment.  Isn’t it worth taking a little bit of risk to stay in sync with what the rest of industry is doing?
Dr. Blessing The condition staff recommended for this project makes a lot of sense.  It does require that methods be explored to integrate with ATS.  You don’t have a project manager identified yet but it doesn’t include anyone from DOA.  I know it’s a little unusual but could that be changed?
Al Crawford  I would propose that the condition be changed to read: 
ADEQ and ADOA must explore methods to integrate.
Dr. Blessing I agree with that but on this particular project, the addition of DOA experience to assure there is a conduit putting them on your project management team is in order.  Is that acceptable?
Jim Ryan      We made recommendations 8 months ago that we should go jointly, should be a team approach.  We proposed we could take over the operation of the VoIP of the whole building and basically, over time, we could provide the function to ATS then they could absorb us. 
Dr. Blessing I think condition could be expanded including date they would come back and talk to us about how they have formed that integrated team.  Next meeting perhaps?  They’re not willing to come to the table…
Jim Ryan      I’m not saying that.  We have a timeline.
Dr. Blessing But with ATS on the project.  I’m suggesting the condition include a date that you come back and talk about how this integration has been operationalized.  Separate from this project, I continue to be frustrated with this ATS planning, the absence thereof.  It is just unacceptable in this environment.  Is there any way to entice them to participate in a more cooperative manner?  Resolution or motion?
Rick Zelznak            We can’t do a condition, obviously.  We can express the will of the committee.
Frank Somers         The committee that we need a starting point to know what direction folks are going to go and how these technology issues will be approached in the next six months to one year, especially since there are a number of other agencies that have the same telecommunications challenges and going to move into new buildings with aging equipment, etc.  We need to know what are you folks going to do to explore this new technology or integrate it where we’re at?  What additional investments need to be made in our current equipment, the SL 100, to take care of the 12,000 customers you have?  How are you going to address these pricing differences between old-technology and what you’re offering to State customers, etc.?  We could write a letter expressing the sense of the committee that we feel nine months is excessive to have a plan and where telecommunications is going to go forward and how.  We would like to see a shorter time frame on that, again restating what we have stated in the past, which is what we’re looking for in a plan is a fairly comprehensive inventory assessment of where we are, where we're going, what it will cost in the next year and long-term.
Jim Ryan      Like Mr. Crawford was saying, a starting point is always needed.  The marketplace is always positioned.  This shouldn’t be a problem.
Dr. Gentry     The risk we’re looking at here is interoperability problems.  You say the VoIP marketplace is stable?  Let me comment, the marketplace is not stable.  There are issues associated interoperability between different VoIP solutions from different vendors.  We need some feedback on what are going to be Arizona standards for VoIP?  Suppose ADEQ, you proceed with a set standards and then anyone else in the State of Arizona who wants VoIP should follow the same set of standards.  That way we can insure that if we extend this outward, all those on the TCIP network there will be interoperable.  The issue is significant.  The other features of the VoIP equipment and how they do standards and apply enforcement could produce inoperability problems.  Government Information Technology Agency may be able to help us out by coming back with standards we will use.  If anyone is proposing a different solution that has additional standards in there that are incompatible, make sure we understand these solutions, we can reprogram the devices so that we don’t get locked into a single vendor.  I will end by saying I’m familiar with Cisco-AVVID solutions and it has some very real propriety features to focus on and make sure you know what you’re doing.
Tom Betlach            This issue goes to the core of everything this committee has been struggling with since its inception.  With enterprise issues and the silo approach of agencies and the belief tossed around in here through a shared services approach.  The State should garner economies of scale that should result in savings, yet we continue to see time after time the silo approach come in at a lower price than what the State says it can offer through ATS or supposed enterprise-wide solutions.  My first frustration lies in the fact that I only heard half of the story, only what DEQ has talked about in terms of what their pricing is, what their potential costs are, what their purchase costs are, what their ongoing costs are.  All I saw was a red bar representing a cost for DOA.  Maybe it was in here and I missed it, but I didn’t see all the detail how DOA is getting to their estimated cost associated with their offer back to DEQ in terms of services.  If I’m relying on the pricing model, I don’t have a lot of faith in that.  John talked about the consultant working on pricing.  It goes beyond that.  So much is fixed cost and the more you bring people on, you should be able to reduce the rates you are charging everybody.  The question I have goes to the group we haven’t heard from -- that would be DOA.  How are these costs calculated?  Maybe we could get a better sense of comparing what DEQ put on the table versus what DOA is talking about. 
Rick Zelznak            I think it speaks to getting back in a consolidated fashion, the consolidation analysis DOA is working on right now to determine if all the services were to be centralized, what would the ultimate cost be?  Fortunately, we’re talking a big participant here, 1,000 handsets and that still will require an additional cost on a statewide perspective based on $1M more.  There are savings associated with that because of the consolidation of 300,000, but the net cost we’re looking at is still about $700,000 on a statewide basis.  DOA has joined us and they can present their side.
Tom Betlach            I would like to hear in terms of how their costs were determined.  My other point is disappointment.  The building has been coming out of the ground for the last 1-½ years, here we sit, having been forced to make a decision here and now when this issue should have been resolved some time ago.  It seems ludicrous that this committee is being forced because we have to get rolling and people need a dial tone when they get into the building.  It shows a lack of planning that we couldn’t get to a decision point sooner than this.  I’m very frustrated by it.
ADOA Presentation
Tom Betlach            I know what their costs are.  They have detailed their costs of bringing on new technology and paying for them.  What are your costs in terms of being able to provide them these services?
Tara Roesler            What we have done is applied to what they asked for, an incremental cost.  They are making the assumption that the base cost of the rate of $31 and $20 are accurate.  When you take those and say I’m going to have these incremental increases in cost and spread them over extended population base, those rates can drop if they’ve gone entirely multi-line solutions 2746.  The rates were based prior years.  We come up with total cost of the organization, then have rates that recover our cost based on total cost of the organization.  There will always be a problem and there is a problem we addressed and we’re starting to address only with the agency two months, which says you have to get to the basis of your cost and go back to ground zero, which is to say what is in the expenses that does make up and determine the rates?  First, everything in the expenses, part of the telephony issue.  In other words, do you have general government functions that should be funded from a different funding source?  I don’t know if any of you know it, but the State switchboard, which is the general cost of doing government, is included in the rate.  The Legislature has not funded that; they elected to fund that general cost of government – the phone books we all get.   First we need to figure out what things really belong in the telephony rate structure and what things don’t.  Second, from ADOA’s standpoint and what I recommend for our Director, is we have to look at expenses.  Every expense has to be tied to a product or service and we have to determine every expenditure is value-added.  Then we go through and eliminate those non-value-added expenses from the expense structure.  Third, we need to look at expenses that are justified and make sure we’re paying a reasonable cost for them.  Once the expenses are down to the level reasonable, then we can begin to look at studying breaks to recover those costs.  The rate structure that exists applies to all of government because we have to recover from each agency identically under OMB-87 we cannot charge one agency or the Federal government different than we are charging everyone else.  We have to look at developing the rate structure.  Right now, if you have a line and it’s on a single line phone, you pay $20 under the improved rate structure for the State of Arizona.  If you have a line and it’s on a multi-line, you pay $31, the approved rate structure.  If we are redoing the rate structure, which we need to do, to turn it upside down and redirect based on final costs we come with, a line is a line and it may not be $31 or $21, it’s going to be something else.  The problem today, to be brutally honest with the committee, is we have to do that work.  We also have to do a business plan from a business point of view.  What is the long-range plan for the State of Arizona for providing telephony service?  What is our potential customer base, what is our product line?  We talk about telephony, we talk about Voice Over IP as if they are mutually exclusive items.  We don’t believe they are mutually exclusive items, there has to be a business case for this type of service provided and a business plan, meeting with the customers, meeting with customer agency will give us that insight.  That plan is not done.  In answer to your question, you have $1M rate differential based on today’s rates adjusted only for the fact of the volume of bringing ADEQ of working with that existing rate structure.  We believe that could be the worst case scenario because once we do the proper expense plan, once we do the proper excess? plan, once we establish a defensible rate structure and policies to support that rate structure, we believe the cost will come down.
Dr. Lewis      The million dollars represents structure on the Mall, we’ve been told, doesn’t represent DEQ’s other three facilities.
Tara Roesler            The million differential is apples to apples differential.  We took DEQ’s total cost, which includes all their external facilities, which is $2.8M of 2002 budget.  We then put our numbers for providing service to the Mall and for North Phoenix and added to it the other costs they would continue to have for their remote locations.  That is where we come up with $3.8M over that same five-year period.  The $1M differential is an agency differential.
Tom Betlach            Providing the same service?
Dr. Lewis      That’s not what you said.
Dr. Gentry     As I understand, all of your costs are based on the old analog voice service solution and you’re competing against a VoIP solution.  There is a huge technology gap and you can’t get there.  You can never compete with a VoIP solution because it is cheaper than the old style analog solutions.
Tara Roesler            What we have is a situation right now is where the switch can migrate to VoIP SL100 from Nortel.  We’re not telling you Nortel solution is the right one.  We believe VoIp is, in fact, an area that needs to be explored by the State of Arizona.  We’re concerned and very much appreciate your comments about the issue of compatibility and whether Cisco or Nortel is going to be compatible.  We believe we have to come up with a business plan that identifies the business needs of the State of Arizona that addresses it from a technology standpoint, as well as from a financial standpoint, as well as for what these agencies really need to do their business.  VoIp may not be what everybody needs.  Some clients may need it bases on the applications they will apply to VoIP technology.  Others may not.  We have issues of call centers and how well VoIP will work with call centers.  The problem is we’re here with an agency today that’s going to come on the Mall on July 1 and it would be nice if we had a business plan.  It would be nice if we had priced it all out two months into this, from my standpoint; I can’t give you those numbers today.  I can’t tell you I think we have a plan, we’re going to look at every single cost we have, refining the rate structure to more accurately reflect the cost of providing each individual service in the product line.  That is an exercise that is not done today.
Rick Zelznak            Can you give us an idea of when the business plan could be done and when you think the funding plan could be done and implemented?
Tara Roesler            We’re estimating to do all of that – the financing plan and business plan –we need to talk with agencies and know what their needs are.  We are estimating nine months.
Laraine Rodgers    Seeing agencies one at a time or planning a session where everybody would come to the table with the information?
Tara Roesler            We need to develop strategy because large agencies have different needs from medium and small.
Laraine Rodgers    When will you come up with the strategy?
Jim Price       As soon as possible.
Laraine Rodgers    By next month?  I don’t know what “as soon as possible” means.
Jim Price       We can certainly put together a strategy outline for what we’ll be doing to prepare the business plan and certainly have that next week or next month.  It would require the full participation of every agency, especially the large ones with their own funding sources greater than what mid- to small-size agencies have in affecting their own or standalone solutions.  We would have to bring them in to come up with a comprehensive approach.
Dr. Blessing I would like you to be as objective as you can in responding to this question.  What’s the downside to treating this project as a pilot for Voice over IP proposal, having DOA participate on the project management team, here you need another pilot, learning from it and I realize it’s precedent setting in terms of standards, but trying to help shape that to the best of your ability and moving this one forward.
Jim Price       Objectively, I think a pilot should have been in order several months ago.  I think DOA would feel a lot more comfortable with the approach at this stage if the pilot has actually been implemented.  There is an issue of cost.  We have approached some other vendors with pilot equipment there is a cost associated with that.  There would be in this particular case.  In this case it not a pilot, it is full purchase of a functioning system.
Dr. Blessing It is not statewide; it would be an experience-gaining effort.
Jim Price       On the plus side, we would be understanding the whole implications, ramifications of VoIP implementation.  On the downside, there are thousands of people moving onto the Mall in the next several months.  That poses a risk for DOA’s participation in the process.  They would be overextended.  DEQ is one of 14 agencies moving into that building.  We have the other building going up, as well as the backfill to replace people leaving existing facilities on the Mall.  Second concern is there has a sizeable investment made in the existing telephone and call center system environment, some of which I believe was approved by the committee a few years ago.  Dr. Gentry is right, the systems are not fully interoperable, and the standards aren’t there to assure that kind of integration.  We would, in essence, effectively be supporting or having to support two separate systems that may in fact not be able to communicate as effectively as if we had a system-wide approach for telephony, call centers and data-enabled applications.  That would be in my estimation the biggest concern at this point.  We’re not saying Nortel or Cisco are bad or the better solution.  If we’re going to go to Cisco VoIP versus the solution, we would need to have an exit strategy that would address every handset that is in place today on the Mall, including all the call center agents associated with the Nortel-based call center and Cisco.  It would be far reaching analysis that would have to be done.  Tara’s also right in that with Cisco VoIP implementing and what it would mean is essentially replacing a part of the technology term a traditional voice-based telephone system where they tack and click system.  We’ve been down this path before in other venues, mainframe for instance.  We have the S & A network dedicated link green screens attached to everybody’s terminal with a proprietary network that only allows those terminals to talk to a mainframe.  Over time, the introduction of our Cisco routers and, if available, Nortel routers, we have changed the way we interact with that machine.  The mainframe, though, is still there.  It didn’t happen overnight, it was a very systematic approach that allowed us to eliminate some of the older technology where it made sense to eliminate and maintain it where it was cost effective to maintain until such time that could replace the entire platform with the packet switch equivalent to the SL100 network.  It is very complex and a huge undertaking and not that it affects one agency, it affects practically 120 agencies because they interface with State mission critical systems in a number of different ways, whether it be with other agencies or with DOA or all of the above, on campus or off campus, statewide.
Dan Murphy I’m still not convinced we’re comparing apples to apples on cost.  Again the agency includes overhead, those four things in its analysis which, I understand, DOA has to include on per-line chart.  Second, the City of Phoenix just completed a seven-month study by Gartner Group on replacing its current switch telephone network.  We have about 22,000 lines and in brief summary, we’re still going through that analysis.  Gartner said to us that we should proceed with great caution on VoIP.  Maybe an agency by itself is small enough that it’s not as great a risk.  They did not believe something with 22,000 lines would be able to move to VoIP until three years out.  It’s some sort of hybrid approach with VoIP, so just a little background with what we’re going through.  Also as I recall, but don’t quote me, I believe Gartner estimated about $1,000 per handset as the industry standard on a cost of a phone system.  I was trying to get to that earlier.  Does that include support, upgrades, and the ongoing sort of thing?  Seems it’s somewhere around $1,000.  Coming from a central agency, much like DOA for the city, I think, although it sounds like we’re in a predicament with this agency right now, it could set a bad precedent for the State to allow agencies to go out on its own.  If the State would be like the city, you have agencies say DEQ did it, they did it at less cost in a deal you’ll never be able to compete.  If it moves forward, needs to be understanding this is not the norm.
Dr. Gentry     I think what they’re saying is that a VoIP PC-PBX would have trouble with 22,000 lines.  If you want to put 22,000 users on one of these new PC-PBXs, it might fail today.  All you really need to worry about is interoffice interoperability.  I kind of like the idea of project pilot.  Why don’t we do it with our eyes open on interoperability standards and do it where economically justified?
Tom Betlach  I agree with what Dan (inaudible).  Once one agency on the Mall gets off of this service, the pressure will be there from other agencies to have that same capability, especially in tough budget times because they will be able to cherry pick the lower rate and DOA will get stuck with fixed costs (inaudible).
Dr. Blessing If we accept this clearly as a pilot with the ?tables where there wouldn’t be any others approved until we had tested in ?, we might be able to…
Dan Murphy Could it be a pilot in that DOA runs or is responsible for and the agency works with them versus having the agency take the lead?  Maybe we need to look at different approach and it may be Cisco or Nortel in order to work with the state infrastructure.
Laraine Rodgers    I have a similar thought and wasn’t thinking of DOA necessarily.  They could be a part of it because of ATS and DEQ.  I go back to the enterprise architecture that really is pulling this all together.  It is a standard and is just DEQ and DOA doing it and Government Information Technology Agency has the accountability to put together the enterprise architecture.  That’s really a key aspect to this.  This is going to be the plan to encompass all those plans.  Using the experience of private industry, this is not a five-year thing to do an enterprise architecture plan, so everything should come together pretty well.  That’s why GITA’s focus and DEQ could be the project director/manager and DOA, like you suggested earlier, could be on there too – an integrated project team is not only common but also recommended as critical.  They are all stakeholders and I think it important for that team.
Rick Zelznak            I have no doubt you can implement this and do it well and be up and running July 1^st.  I have no doubt the costs are less for them to do that.  To your point about apples to apples comparison, my understanding is the two agency Directors got together and there is an agreement there is $1M difference between the two, so no doubt the cost is less on the DEQ side.  However, lack of long-term planning.  If we do pilot Cisco with DEQ, we also need to look at what are the criteria, what do we look at on this pilot, how do we know who actually got something that’s good?  Then, what is the transition plan because we would have to transition either to Nortel VoIP or Cisco VoIP, solution.  At the same time, we have a considerable switch, a Nortel switch, we would have to transition out of.  Those things need to be worked through if we do approach a pilot.
Laraine Rodgers    There is a convergence architecture plan that has to be the central.  None of the agencies should be doing any sort of technology initiative of any kind without referring to that core enterprise architecture model.
Rick Zelznak            We heard you loud and that’s why we’ve got one now.
Laraine Rodgers    We had planned for it.  What needs to be implemented is, starting today, every agency needs to recognize that and be aware it exists.  Maybe they already are.  That shouldn’t have to come to ITAC; that should just be happening as part of how the agencies do business.
Rick Zelznak            DOA, can you all respond to the issue of doing a pilot, being on a project team?
Jim Price       We can certainly support the pilot.  We have to defer to our Director as to which direction he wants to take this agency.  We would ask that if a pilot were approved, that a moratorium be placed effective immediately on any other VoIP proposal this group would be reviewing in the coming months because I think we all agree there will be proposals coming along.
Rick Zelznak            I would definitely support that.
Jim Price       In the meantime, we would have the opportunity to develop a more comprehensive business plan addressing this and other telecom-related issues and have something in sync with the enterprise architecture.
Dr. Lewis      I have real concerns about nine months delay in this when we have all these other agencies starting to come online.  I really do.  We’ve been asking for this plan for awhile and it doesn’t seem to be there.  It isn’t something that’s out of the blue, just came up – it needs to be done.
Laraine Rodgers    I think I heard Tom say and I’m concerned.  How many thousands are moving to the Mall this year?  This is 800 people.  What are they using?  Who has that plan?  Does someone have a “move on the Mall” plan?
Jim Price       Yes, it’s been funded and DOA will be responsible for delivering services.
Laraine Rodgers    Would be responsible, so take me down the left side of the plan.  Who are all the agencies moving on?  Where are they today?  Will they need VoIP?
Jim Price       I couldn’t name them off the top of my head.
Laraine Rodgers    I don’t need the agencies as much as I need to know where they are today and will they need VoIP?  Is DEQ one of first adopters?  Have others happened?  How many are left?
Jim Price       Of the agencies we spoke to today, they have traditional telephone services, most of which is Centrex services for other like systems. 
Laraine Rodgers    What are their needs going forward?  To move to the Mall, what do they need?  Are you looking forward to do that?
Jim Price       Yes.
Laraine Rodgers    So this is the only agency that has any needs other than what you are capitalized to do and it is planned?
Rick Zelznak            There are a couple of agencies on the Mall either currently with ATS or not with ATS that are exploring VoIP -- Department of Education and Department of Corrections, --both with ATS.  DES is exploring similar technology, they currently have it, they are not ATS customers, but are on the Mall.
Laraine Rodgers    Which is always going to be covered in the enterprise architecture plan and convergence plan, correct?  That concept of putting it together is an integral part of implementing. 
Jim Price       I would like to address Dr. Lewis’ concern.  We share your concern.  There are agencies planning their own implementation of VoIP and we hear this through Government Information Technology Agency.  Those groups, I believe, if you’re going to have an enterprise-wide approach that addresses the business, financial and technical requirements, they have to be done in tandem, not in silos, not independently and not coming before you at the last minute.  We’re having to react to these things, like Tom pointed out, every time one sprouts up.  There needs to be that kind of synergy and cooperation to get us to that point.
Al Crawford  These aren’t done in a closet, are they?
Jim Price       We’re not in a closet!  We’ve been working with DEQ for about 1 ½ years; we’ve not worked with Corrections or Education or DES for their VoIP.
Dr. Gentry     When working with other agencies, are you offering them VoIP option and the associated cost savings to go with that technology compared to being stuck in the old analog solutions?
Jim Price       We have discussions of VoIP but it’s not an offering because we are driven by our customers’ demand.
Dr. Gentry     Customer demand phone service to be low cost and I’m saying there’s a new technology out there called VoIP that ought to be considered across the board.
Jim Price       We agree.
Dr. Gentry     That’s the only way you’re going to be cost competitive.
Laraine Rodgers    If everybody is in agreement, why does this not happen?
Rick Zelznak            I don’t think everybody is necessarily in agreement.
Laraine Rodgers    I think everybody is in agreement that we want our state to be run effectively, efficiently and so on.  What is inhibiting someone saying we’re going to make this happen?  Is that a statute that has to be drafted?
Rick Zelznak            I think there is a number of tactical things and one we’re faced with right now is the need to implement and bring these agencies on the Mall in an orderly fashion to give them dial tone by July 1 and that is somewhat of a hindrance to looking at VoIP right now on DOA’s side.  I don’t know if that differs basically what you communicated to us.
Jim Price       For implementation of the project?
Rick Zelznak            Yes,
Jim Price       Absolutely.  If you don’t have the experience to at least with a great degree of competence to be able to succeed in getting people with VoIP, regardless of vendor, by July 1^st.  There are tight time lines and significant amounts of engineering …
Al Crawford  So this will be a learning for you.
Jim Price       Yes, it will.

Motion by Al Crawford:
ITAC approve the project with the conditions as follows:

DEQ and ADOA/ATS must jointly participate in the project management of the ADEQ VoIP project.

ADEQ and ADOA/ATS must explore how they will integrate the ADEQ VoIP system into the ADOA environment and report their findings at the ITAC meeting scheduled for February 15, 2002.
Second by Dr. Lewis and Dr. Blessing