Minnesota’s Lean approach to providing better public service was begun in 2008 and has grown into the organization of Lean Teams to study high level cross functional process flows and functional process flows using Lean tools at the work place. Minnesota is well ahead of most states in the wide spread use of Lean although Iowa is a close second.

Results from Minnesota’s Lean Approach
Some of the results claimed by the Department of Administration are striking:
•Birth certificate requests are now processed within 7.5 hours on average, compared with a former average of six days.
•State Soldiers’ Assistance applications are approved in 3.7 days, half the former time.
•Processing time for newborn screenings has been cut 56 percent.

Department of Administration spokesman Jim Schwartz says that’s because Lean’s top priority is better performance, with cost savings a secondary, salutary benefit. At a time when state government seems consumed with dwindling revenues and reduced expectations, Lean’s focus on serving Minnesotans well is a refreshing change.
Minnesota’s Enterprise Lean website

One of the reasons Minnesota’s Lean approach has been so successful is that it has concentrated on finding the best way to provide a service even if it adds processes or requires a more focused attention. With the cost savings calculation removed from the Lean process the “best method” of doing the function can be attained more quickly. The logic here is to identify and establish the “best method” of doing a function before looking at cost savings. Once the “best method” has been implemented in the work place we can set about developing a budget for the function.

Lawrence Rosier’s Recommendations for Government Reform in Minnesota.
The First Phase of my recommendations for government reform has already been implemented in the state of Minnesota with the implementation of its Lean teams. The Second Phase begins by having a Budget Analyst review the results of each of the Lean team’s process flows and determine the staffing required and the costs incurred by the function to establish a budget. The Third Phase is my recommended reform of the Minnesota’s boards and commissions. The Fourth Phase involves major management reform and occurs when the management becomes the Steering Team Management and the functional Lean teams become the Functional Management of the organization.

The Second Phase involves the documentation of the functional process flows developed by each of the Lean Teams. I have found that the best way to do this to lay out the process Flow on a spread sheet and identify the man hours and expenses required for each process. The budget is determined when the number of times during the budget period the function is performed (from historical data) and the calculation of expenses including a staffing base. This establishes a bottoms-up budget for every function in the state. The same functions that are done in many places in the state need only be documented once. The reason for documenting at the process level rather than the functional level is to facilitate revisions. A process that is no longer done or is changed can be easily changed since the budget is known down to the process level. This is the exact opposite of the current top-down way the budget is calculated. The state now knows the actual cost of doing a function. When all the functions’ budgets are summed within a department and the total deducted from the current department budget the result determines a rough measure of the cost of management and support.

The Third Phase is the streamlining access to Minnesota’s boards and commissions. Minnesota has managed its boards and commissions well having only 38 while most other states have more than 100. The reform begins by forming a top level Lean study initiated for the purpose of building a Customer Relations Management CRM State Centralized Portal using a 311 telephone number eliminates a significant amount of red tape. The 24 hour State Services Call Center can provide almost instant service to the public. The CRM does not eliminate the state’s Services Internet Portal but rather supplements it. The telephone portal eliminates the need for the public to search for a specific government organization services and opens the way for the reorganization of the states services system. No longer requiring public interface, boards and commissions can be consolidated into a much more responsive and efficient organizations.

In the old system each board and commission interfaced directly with the public with call takers waiting to take calls. With the CRM telephone portal call takers answer questions fill out initial forms and start any functional processes for all boards and commissions. The board or commission remains in the background but can come forward if necessary to provide services to the customer. Call takers are supported by a Frequently Asked Question (FAQ) database with data provided by each board and commission. See my articles 101, 102 and 154.

The fourth Phase Finalizing the Organizational Reform
First the functional Lean Team becomes the Functional Management Team for each of the board or commission functions. Second many of the mid management levels between the Functional management and boards or commissions Management may become redundant. Each Board or commission’s Management now becomes a Steering Management Team which has the role of guiding and steering the organization while the Functional Management Team deals with the day to day operation of the functions. Steering Management is responsible for “telling” Functional Management “what to do” but not “how to do it”. This is a loose-tight organization with Steering firmly in control of the budget leaving Functional Management free to determine how best to do the job. Those in industry will recognize this as straight from the book “In Search of Excellence- Lessons from America’s Best-Run Companies” by Thomas J. Peters and Robert H. Waterman Jr., Harper and Row, New York, 1982.

This reform brings a positive cultural change to the organization. Employees become members of Teams and are motivated by empowering them to improve their jobs through innovation. By bringing innovation and continuous improvement to the government’s processes the state will have savings through increased efficiency in the future. The reform amounts to a win win situation for government union employees as well as the tax payers of the state by employee empowerment and by ending bureaucratic waste.

What’s different?
The multilevel career path of the former bureaucracy is now reduced to one step from the Functional Management Teams to the Steering Management Team. Gone are the hundreds of hours of endless manipulation of employee evaluations. Gone also is the endless bickering and negotiation over the budget. Performance budgeting is no longer needed once the agency has been properly staffed because the functional teams monitor their own progress and if they start to fall behind they can take their own corrective action.

See the following articles:
Article 151. The Promise of Going ‘Lean’
Article 152. The Process of Replacing Bureaucratic Management With Lean Teams
Article 156. Getting the most out of Lean as used in Government
Article 157. Using Lean to Balance Agency work Loads
Article 160. Minnesota State Government Leads the Nation in Lean
Article 162. Bringing Virginia’s State Government Back on Track
Article 163. Solving New York State’s Roadblocks to Reform

From New York Times By Danny Hakim Published: October 15, 2009.

ALBANY — Gov. David A. Paterson proposed billions of dollars in spending cuts on Thursday and raised alarms about New York’s financial health as the state faces a deficit of nearly $50 billion over the next three and a half years.

The governor’s plan, which seeks to close a deficit for this fiscal year projected to be $3 billion, includes cuts to education and Medicaid as well as a grab bag of other strategies, including creating a tax amnesty program and raiding the state’s environmental protection fund.
The plan, which needs legislative approval, also includes a $2 billion reduction in spending for the next fiscal year, which starts in April.

The Governor’s budget cuts are necessary to solve the state’s immediate fiscal problems. But the state has serious roadblocks to the implementation of the major reforms needed to meet its future obligations. These reforms will require Legislative approval for resting control from employee unions which employees are to be laid off. This is important to when downsizing to be sure to reduce management currently protected by length of service to balance layoffs of lower level newer employees. The reforms I recommend will require significant reductions in the state’s management. The reform moves the state’s government from its 19th century bureaucratic structure to a 21st century team managed organization eliminating several levels of management.

The second major roadblock is in the need for the legislature to take control of the states Information Technology systems reform. Most states including New York have “IBM shops” in these the IT managers are closely connected IBM. These IT managers are the first consulted for advice on the reform of state’s IT systems. In most cases as found in other states the IT manager has recommended an IBM solution using IBM’s computers and proprietary software. This may be acceptable in adding to the present obsolete systems. But where major IT systems are to be reformed and the state wants a new integrated IT system following the wrong recommendation could cost the state $billions. An IBM proprietary recommendation would cut out competitors from doing business with the state and may be illegal.

This occurred in the state of Washington where the IT manager tried to use the obsolete IBM proprietary software in the state’s new centralized Data Center. Fortunately the fact that the new center would not have integrated systems was disclosed to the Governor who replaced the state’s IT manager. The state of Washington is now considering the implementation of a Relational Database Management system.

Third reason for action by the state legislature is that the reforms must be sanctioned by law and not seen as an initiative sponsored only by the governor since the reforms will likely take some years to be fully implemented.

The following is a summary of my reforms to the New York state government.

The Streamlining of New York’s Boards and Commissions Using Lean
I recommend the following approach, organize a select group of employees into a high level Lean Team to study this process to find the best way for the public to interface with government for services similar to what the state of Iowa is doing. Then organize functional Lean Teams in each of the boards’ and commissions’ functions to find the best way of doing each function similar to the way Minnesota is doing it.

Next, I would follow one of the best examples of government innovation developed by the city of Hampton Virginia. (On my website read my Article 101. The Hampton Virginia Innovation story.) With the Hampton Virginia system adapted by the state the public when needing services would call a State Centralized telephone Portal called a Customer Relations Management (CRM) system for services rather than going to each agency. Telephone call takers answer questions take applications and do anything required for the service for all of the 270 agencies. Call takers are supported by a Frequently Asked Question (FAQ) database. The agencies and entities are streamlined and combined with the number of them being significantly reduced to around 25. Service to the public is provided 24/7 with the number of trained call takers on duty dependent on the number of customer calls received.

I further recommend the implementation of a new Centralized Relational Database Management System RDMS similar to that being developed in Washington State. The RDMS is developed completely separate from the current obsolete agency computer systems. No funds should have been wasted on trying to patch the old systems. When the New Centralized Data Center and its systems are up and running the plug is pulled on the old systems.

Another recommendation is for the consolidation of all government services into a single state wide organization. The idea is to combine all support services into a centralized state Shared Services Department (SSD). Within the SSD organization is: Purchasing, Information Technology, Janitorial Services, Waste Management, Travel and expense, and others.
My final recommendation is for streamlining by eliminating levels of government and downsizing the way agencies are organized through the elimination of their bureaucratic structure. The high level Lean Team after completing their work on the reorganization of New York’s board’s and commissions’ is then merged with Top Management to become the Top Management Steering Team. Group Steering Management Teams are formed from mid management with Functional Lean Team Management reporting to them from the lower level.

What’s different from these reforms?
The State of New York has moved from its 19th century bureaucratic organization to the 21st century Steering Management Teams and Functional Management Teams. The state has a Centralized Database facility with a RDMS with query capabilities similar to that of Google and costing far less than the current systems to maintain.

See the details of these reforms in my articles on my website: http://managementconsultant.blogsome.com
Article 151. The Promise of Going ‘Lean’
Article 152. The Process of Replacing Bureaucratic Management With Lean Teams
Article 153. Example of the Advantage of a Relational Database
Article 154. Streamlining Iowa Boards and Commissions Using Lean and More
Article 156. Getting the most out of Lean as used in Government
Article 157. Using Lean to Balance Agency work Loads
Article 158. The Streamlining of Georgia Boards and Commissions Using Lean
Article 159. Mean, Lean Reform In Government Accounting
Article 160. Minnesota State Government Leads the Nation in Lean
Article 161. IBM The Most Costly Hoax of the Century
Article 162. Bringing Virginia’s State Government Back on Track

I feel that I have some responsibility for trying to bring Virginia’s State Government back on track. One should not make such a bold statement as I have done in my “Article 150. The Biggest Boondoggle Ever in State Information Technology without pointing out what the state needs to do to get out of this mess and start anew. To refresh your memory: “The Biggest Boondoggle Ever in State Information Technology”. This is how I described what is happening in Virginia’s Information Technology Agency VITA in an email to Governor Kaine (August 2009).

Unless the VITA contract leads to a Relational Database Management System RDMS solution the present $2.3 billion contract between VITA and Northrop Grumman will be the biggest ever boondoggle in State Information Technology.

I stand by the above conjecture with complete confidence because what ever VITA is doing it is nearly a complete waste of state funds. In fact VITA should never have been tasked at all. VITA was setup to manage and to make all of the 270 or so state agencies’ and entities’ computer systems work efficiently and to do this they contracted with Northrop Grumman in 2005. This was the wrong approach the assumption made then was that there was a computer problem and I agree the state’s computer systems are obsolete stand alone systems sometimes described as silos and there are more than 270 of them. But there isn’t enough money in the state of Virginia and there never will be to fix this problem by patching the old systems together. Five years into the contract and all there is little to show for all the money spent except an integrated email system.

So if this was the wrong problem what should the Legislature have been doing. For all government problems the correct approach is to determine the best way to meet the states obligation organize for that and then investigate how to make it operate efficiently by automating the process. This attempt to fix Virginia’s obsolete IT systems before organizing and streamlining the 270 agencies and entities makes the current approach completely backward.

The real problem should have been stated “How does the state make the process of providing service to the public more efficient?” And after you have determined the best way to do that, then provide the more efficient computer systems support.

I recommend the following approach, organize a select group of men into a high level Lean Team to study this process to find the best way for the public to interface with government for services similar to what the state of Iowa is doing. Then organize functional Lean Teams in each of the agency’s and entity’s functions to find the best way of doing each function similar to the way Minnesota is doing it.

Next, I would follow one of the best examples of government innovation developed by the city of Hampton Virginia. (On my website read my Article 101. The Hampton Virginia Innovation story.) With the Hampton Virginia system adapted by the state the public when needing services would call a State Centralized telephone Portal called a Customer Relations Management (CRM) system for services rather than going to each agency. Telephone call takers answer questions take applications and do anything required for the service for all of the 270 agencies. Call takers are supported by a Frequently Asked Question (FAQ) database. The agencies and entities are streamlined and combined with the number of them being significantly reduced from 270 to around 25. Service to the public is provided 24/7 with the number of trained call takers on duty dependent on the number of customer calls received.

I further recommend the implementation of a new Centralized Relational Database Management System RDMS similar to that being developed in Washington State. The RDMS is developed completely separate from the current obsolete agency computer systems. No funds should have been wasted on trying to patch the old systems. When the New Centralized Data Center and its systems are up and running the plug is pulled on the old systems.

So why didn’t VITA come up with this solution. The answer is nearly all of the people associated with VITA have training or some kind of connection to IBM. So what’s the problem with IBM? Simply this, IBM is in business to sell a proprietary system that shuts out competitors and forces the customers to use its proprietary software. The RDMS is an open software system where an IBM computer could be replaced by a competitor’s computer. Computers can then be purchased simply for their competitive computing power and not just because it will work with the software. At least some of the VITA members must known about the RDMS solution because it has been around for more than twenty years but it is simply not good business for IBM or its friends. VITA for all practical purposes may as well be on the IBM payroll. See my Article 161. “IBM, The Most Costly Hoax of the Century”.

My final recommendation is for streamlining by eliminating levels of government and downsizing the way agencies are organized through the elimination of their bureaucratic structure. The high level Lean Team after completing their work on the reorganization of Virginia’s agencies and is then merged with Top Management to become the Top Management Steering Team. Group Steering Management Teams are formed from mid management with Functional Lean Team Management reporting to them from the lower level.

The Contract with Northrop Grumman should be canceled. The quickest way for that to happen is through pressure from the public. But the reality is that there is going to be a huge fight to keep Northrop Grumman on the job and prevent the loss of the old obsolete systems and especially the obsolete IT jobs with them.

What’s different from these reforms?
The State of Virginia has moved from its 19th century bureaucratic organization to the 21st century Steering Management Teams and Functional Management Teams. The state has a Centralized Database facility with a RDMS with query capabilities similar to that of Google and costing far less than the current systems to maintain.

See these articles on my website: http://managementconsultant.blogsome.com
Article 150. The Biggest Boondoggle Ever in State Information Technology
Article 151. The Promise of Going ‘Lean’
Article 152. The Process of Replacing Bureaucratic Management With Lean Teams
Article 153. Example of the Advantage of a Relational Database
Article 154. Streamlining Iowa Boards and Commissions Using Lean and More
Article 156. Getting the most out of Lean as used in Government
Article 157. Using Lean to Balance Agency work Loads
Article 158. The Streamlining of Georgia Boards and Commissions Using Lean
Article 159. Mean, Lean Reform In Government Accounting
Article 160. Minnesota State Government Leads the Nation in Lean
Article 161. IBM The Most Costly Hoax of the Century

The nation loves its darling IBM but the facts are that IBM costs this nation hundreds of $billions through its proprietary obsolete software. This is perpetuated by its domination of the Information Technology market in government and in business and controlled by its IT managers.

How did this Happen?
This came about mostly by the failure of decision makers in the past who were not computer literate and by the piecemeal stop gap fixing of obsolete stand alone computer application programs. Decision makers in many cases were led astray by self-serving IT Managers who wanted to keep their programmers busy by developing new application programs to make the proprietary system work. Another area where they were lead astray is through focusing on the efficiency of an individual application program and not how it could be integrated with the organization’s overall information systems. The result is the creation stand-alone computer applications which must have separate patching programs written to achieve integration with other application programs. System implementation planning failures are generally the fault of the CEO funding the project. It wasn’t but a few years ago when almost none of management in private companies and in government had any computer experience at all. They relied completely on their IT Manager for planning and implementation of computer systems.

Among computer literate personnel an organization’s computer department is known as an “IBM shop” or a “Digital Equipment shop” meaning that the organization only uses a specific proprietary type of computer hardware and software. When the IBM Operating System software is used all application programs are written to run on it. Meaning that if the organization only has IBM computers you will most likely get an IBM proprietary solution and you are unlikely to get a system that can be integrated with other non-IBM systems. I have observed that most IT managers are more loyal to their “shop” whatever it is than they are to their own CEO. Granted that once you have invested in an IBM solution few if any competitive software or hardware can be integrated with the proprietary system.

Most current proprietary application programs are written with the data they need stored within the application. When data is called for during processing of the application the request goes to a numbered storage location within the application, retrieves the data and sends it back for continued processing. The numbered location is a unique part of how these obsolete systems work. With hundreds of application programs used by the organization each with their own data storage, data is duplicated many times. It is easy to see why the maintenance of them can cost millions more than with the following integrated solution a Relational Database Management System (RDMS).

How Does an Integrated Computer System Work?
The integrated Computer System consists of a network of data processing computers each with application programs loaded on them connected through the network to a number of separate databases each with specific related information stored on them. The databases are called Relational Databases and each uses the Structured Query Language (SQL) in the RDMS.

Systems integration is achieved when separate databases for storing data are created using the Structured Query Language (SQL) database language. This allows IBM or Digital Equipment and other proprietary computers using SQL to access the databases using a unique “name” for the data. The process works this way when an IBM application program needs to retrieve or store data it uses an SQL request to find or store the data. A Digital Equipment computer can also retrieve and store data in the same database. This is similar to the database structure used on the Internet and allows queries to be made easily without having to write a program for the query much like Google. Since this software can be universally used on many different computer platforms once it is developed it can be transported to any of the organization’s computer platforms.

So what’s all this fuss about IBM?
Simply this, IBM is in business to sell a proprietary system that shuts out competitors and forces the customers to use its software. The RDMS is an open software system where an IBM computer could be replaced by a competitor. Computers can then be purchased simply for their competitive computing power and not just because it will work with the software. It is obvious that IBM has known about the RDMS for some time but it is simply not good business for them.

What is this Costing Us?
Nation wide we should take a hard look at shifting from “hardware-centric, expensive, proprietary silos of data trapped in old databases” into new systems with more of the same obsolete systems architecture. These proprietary systems are difficult and expensive to maintain and cannot be easily integrated with other systems.

The failure to manage state resources in all areas but especially in welfare and Medicaid is costing states billions. Most state computer systems are incredibly obsolete with information silos, duplicated data and inability to share information leaving the state vulnerable to open fraud. The management of Medicaid rests on being able to trace fraud and prevent it through the use of a SQL RDMS. This is reason enough to look into the replacement of current obsolete systems besides the significant savings in data processing costs over the old proprietary systems.

VIRGINIA
Virginia hired Northrop Grumman the giant defense and systems-management company in 2005 under a controversial 10-year, $2.3 billion contract to run its computer and communications networks providing IT services to 90 agencies. But the state also pays the contractor for work outside of what the contract covers:
Covered: Supplying new equipment, including laptops and services; running the state data centers; maintaining and repairing computers; and running a help desk.
Not covered: Specialized software that only one agency needs.

It appears that the VITA, Northrop Grumman contract does not include a provision for the development of a centralized IT system. So far NG has spent a good deal of funds on linking all of the Virginia Agencies with a new protected email system and the question of centralized application software and database development is still up to the individual agencies. This has prompted state legislators to ask just what is the state getting for its money.

The shakeup in VITA is an attempt to extract VITA from months of political turmoil and put back on track a shift to privately managed information-technology services beset by delays and mounting costs. Since the RDMS solution is the best and most cost effective solution Virginia’s VITA appears to be floundering making it the biggest ever boondoggle in State Information Technology.

WASHINGTON STATE
In a related situation the question of what the IT architecture should be for the Washington State Centralized Data Center has also surfaced. In a letter to Gov. Gregoire, State Rep. Reuven Carlyle and Rep. Hans Dunshee urged the Governor to seek a second opinion before selling the construction bonds. They wanted her to take a hard look at shifting from “hardware-centric, expensive, IBM proprietary silos of data trapped in old databases” to newer technologies such as the Cloud a proprietary system from Microsoft. It now appears that Washington State is considering the implementation of a RDMS in its new Centralized Data Center.

GEORGIA
Georgia signs $1.2 Billion IT Outsourcing Contracts with Last Vendors Standing By Paul W. Taylor

IBM and AT&T were effectively sole bidders after two other companies withdrew their bids before the apparently successful vendors were announced.

This has all the appearances of another boondoggle in the making since IBM is unlikely to propose a RDMS.

TEXAS
The above award comes on the heels of a decision late last month by the state of Texas to suspend an $863 million outsourcing project with IBM to transfer state records to a centralized computer system. In a letter to state IT officials, Governor Rick Perry said the company had failed to backup the data of more than 20 state agencies.

This Texas boondoggle appears to be just ending.

INDIANA
Ref: Glitches Mar Indiana’s Effort to Outsource Social Services By WILLIAM M. BULKELEY WSJ August 12, 2009

Processing of welfare, food-stamp and Medicaid claims in Indiana was plagued with difficulties when the state outsourced the system to International Business Machines Corp. and Affiliated Computer Services Inc. two years ago. The problem hasn’t been resolved since then.
“There’s a myriad of problems,” said Anne Murphy, secretary of the state’s Family and Social Services Administration. “Error rates are too high. We’re not processing claims within federal guidelines.”
IBM, the prime contractor, along with Affiliated Computer and other firms agreed to run the programs for $1.34 billion over 10 years. Ms. Murphy said she ordered IBM to delay a planned roll-out to the rest of the state — about 40% of the population is currently covered — and to fix the problems by the end of September.

Outsourcing critics say Indiana’s problems show why government functions, particularly human services, shouldn’t be turned over to private contractors. Outsourcing of state-government functions remains rare but is attracting growing interest from states anxious to control costs and avoid capital outlays on new computer systems. Many such projects aim to use digital records to replace paper, much as health-care reformers promote electronic health records. Indiana estimated that outsourcing its benefits operations would save nearly $500 million overall.

The Governor and the state’s Decision Makers have all missed the point that substituting one a bad manual system for an obsolete computer system leads to a second failure. What should be done is for the state to develop a State Centralized Data Center with a RDMS and bring back in house its privatized services.

A WORD OF CAUTION
If you follow IBM around begging them to take your money they will!
Why not ask Google for advice they are the leaders in this technology and they have something IBM does not have, integrity.

Other related articles on my website:
Article 46. Why some Computer System Implementations Fail
Article 84. The Failure to Manage State Resources due to Obsolete Computer System
Article 138. State Information Technology Centralized Data Centers
Article 142. Huge Savings from State Centralized Services
Article 143. Examples of a Relational Database Management System
Article 144. Why States Lose Millions by Using Obsolete Computer Systems
Article 145. The Coming Revolution in Information Technology Systems
Article 150. The Biggest Boondoggle Ever in State Information Technology
Article 153. Example of the Advantage of a Relational Database

From: the Star Tribune Minneapolis, St. Paul Editorial: State gets ‘Lean’ ideas from business “Putting employees in the lead produces positive results”. Last update: April 6, 2009 - 8:38 PM

Department of Administration spokesman Jim Schwartz says that’s because Lean’s top priority is better performance, with cost savings a secondary, salutary benefit. At a time when state government seems consumed with dwindling revenues and reduced expectations, Lean’s focus on serving Minnesotans well is a refreshing change.
Minnesota’s Enterprise Lean website

Comments by Lawrence Rosier
The state of Minnesota with the implementation of its Lean teams is right on target for the First Phase of my recommendations for government reform. The Second Phase begins by having a Budget Analyst review the results of each of the Lean team’s process flows and determine the staffing required and the costs incurred by the function. The Third Phase occurs when the management becomes the Steering Team Management and the functional Lean teams become the Functional Management of the organization.

See the following articles:
Article 151. The Promise of Going ‘Lean’
Article 152. The Process of Replacing Bureaucratic Management With Lean Teams
Article 156. Getting the most out of Lean as used in Government
Article 157. Using Lean to Balance Agency work Loads

From Australian CPA Magazine “Mean, lean reform” by Adam Awty updated: Wednesday, 25 August 2004
Adam Awty investigates the rapid financial reform agenda for Singapore’s public sector and speaks to accountant-general Chua Geok Wah FCPA.

The saying is that good things come in small packages, a saying that certainly holds true for Singapore where the pace of public sector financial management reform has hastened in recent years according to Chua Geok Wah, the Singaporean accountant-general.

‘We see financial reform as a continuous journey. The journey towards developing a more robust public service through better deployment of financial resources is a never-ending one,’ she says.
Chua Geok Wah FCPA was appointed accountant-general on 1 April 2000.

Comments by Lawrence Rosier
When you compare the accrual method of accounting to the cash method used by most states you find that there is a lot of creative accounting going on to balance state budgets. The primary difference between the two methods in matching state revenues with state expenses. The following may help to explain the Matching principle.

Matching principle From Wikipedia, the free encyclopedia
Matching principle is a cornerstone of accrual accounting together with the revenue recognition principle. They both determine the accounting period, in which revenues and expenses are recognized. According to the principle, expenses are recognized when obligations are (1) incurred (usually when goods are transferred or services rendered, e.g. sold), and (2) offset against recognized revenues, which were generated from those expenses (related on the cause-and-effect basis), no matter when cash is paid out. In cash accounting—in contrast—expenses are recognized when cash is paid out, no matter when obligations are incurred through transfer of goods or rendition of services: e.g., sale.

Prepaid expenses, such as worker wages or subcontractor fees paid out or promised, are not recognized as expenses (cost of goods sold), but as assets (deferred expenses), until the actual products are sold.
The matching principle allows better evaluation of actual profitability and performance (shows how much was spent to earn revenue), and reduces noise from timing mismatch between when costs are incurred and when revenue is realized.

See also https://www.cpaaustralia.com.au/cps/rde/xchg/SID-3F57FECB-CC789079/cpa/hs.xsl/2449_3178_ENA_HTML.htm

There are several states that are studying the use of Lean one of these is Georgia. This article suggests how this major streamlining reform of Georgia’s 152 boards, commissions, offices and departments may be approached.

Overview
We will start by getting the legislature and executive branches of the state government to commit to the Lean reforms. An extensive Lean training program will then be started. Next a high level lean team will be appointed to manage and steer the reforms. This is followed by the breakdown of the 152 organizations into functions. A function is identified by the products and services it produces. The personnel working within each function are organized into Functional Lean teams to study the process flows used to produce their product or service and determine the best method. The high level Lean Team will then logically group the 152 organizations into 5 to 10 high level Group organizations.

While all this is going on a separate Customer Relations Management (CRM) team is established to build a State Telephone 311 Portal. The state IT department will develop a Frequently Asked Question Database for each of the new High level Group organizations. This is done to aid the newly trained call takers in answering questions and providing services to the public. The CRM is not intended to supplant the States website services. Once the CRM is up and running further reforms will follow with each high level group organization being managed by a Steering Team. The new group Steering Teams will manage the activities of the new Functional Teams formed from the Functional Lean Teams.

Managing the Hype
Government Personnel as well as the public needs to be informed about the reorganization and consolidation changes that will be taking place. Vocal objections made to the public need to be responded to. Termination rules need to be in place for personnel that refuse to follow directives needed in making the reforms. Manage hype by emphasizing the positive aspects of the reform: “streamlining agencies for improved public services”, “employees will take an active role in improvements and in the management of government”; down play savings.

Establishing a culture of employee innovation through teams is one of the best ways to get an efficient operation with continuous improvement. Because the employee is close to the day to day operation he can detect problems sooner and has the opportunity to come up with an innovative solution before the problem is even known to management. This is an advantage over most bureaucratic organizations where it’s difficult to get employee innovation for three reasons. First employees are generally not asked to be innovative and are intimidated by the culture of the organization. Second if they do have a good idea it is generally ignored due to the competitive nature found at the work place. And the third reason is little or no responsibility is delegated to the employee for making improvements to their work processes. See my article 116.

Initiating the Lean Training
The first steps are to obtain agreement with HRM to provide Lean training personnel who will be Lean trainers for the high level Lean Teams and for others to be trained to fill the role of Facilitators for the Functional Lean Teams. Training of the Facilitators will include monitoring the organization and the election of a team leader for the Functional Lean Teams and training them in how to do Process Flow Charts (PFC). Selected Budgeting personnel will also be required to attend the training sessions in how to do the PFCs. Budgeting personnel will be required to analyze the PFCs determining required man-hour and other associated costs such as mileage for each process of the function.

Functional Breakdown
A Function is the name of a part of an organization that uses a unique set of processes to achieve a product or service that satisfies a specific public need. Processes are the steps required to achieve the desired product or service and are studied by the Functional Lean Team using a Process Flow Chart (PFC) to determine the best way to perform the function.

Because functions can precisely describe a task, breaking down the budget into functions simplifies the budgeting process. This allows functions to be easily excluded or included in the budget as a funded entity. To begin the process I would request all organizations to make a preliminary break down of their current budget into functions. This is done to prepare the way for identifying and organizing a function’s Lean Team.

There is also a benefit when consolidating government organizations. Functions identified as budgeted entities can easily be removed from one department and placed in another by moving the budget and the personnel performing the function.

After each of the functional Lean teams has been organized, elected its leader and is meeting once a week, monitored by a facilitator it will begin work on finding the best way to do their function. I have found that the most effective way for the Lean Team to make a PFC is to tape white butcher paper or brown wrapping paper around the conference room walls. After each Lean Team meeting the PFC can be easily rolled and put up at the next meeting. In order to maintain flexibility each process is written on 8 1/2x11in. paper and taped to the wall allowing for changes to be easily made. I would make two PFCs the first one is of the existing PFC and the second right under it the new improved method PFC. When the PFCs are completed and other improvements are known the budget analyst will review the PFCs to determine the cost savings from the new method. To do this the budget analyst will determine all associated costs for each process and enter the results into a spreadsheet. The total expenditures for the function become what I call the Funding Formula for the function. The budget for the function simply becomes the number of times that the function is expected to be performed in the budgeted year. Staffing is done from the calculated man-hours. The reason this can be easily estimated is that you cannot staff with less than a full person.

Role of the Budget Analyst
The Process Flow Charts done by the Lean teams provide a record of the costs associated with each Function. If a Function or one of its processes were to be removed all of its budget will also be removed. When the new and best method has been documented in the Process Flow Chart it is presented to the Group management. This is an important step which signifies Group management’s support and recognition of the Team’s accomplishments. Upon approval of the new method the Process Flow Chart is given over to the budget analyst to cost out the savings of the new method and to identify the proper staffing for the function. The budget analyst then documents the new method and its costs in a spread sheet which will provide input to the next budget. See my article 137.

The organization is now budgeted at the functional level. This I call bottoms up budgeting and when all the functions are totaled with the Steering Management costs you get the group level budget. This is the opposite of the old top down budget method for departments and agencies. See my article 113.

Consolidating the Many into the Manageable Few
To begin the reform a top level Lean study is initiated for the purpose of combining agency functions through similarity of their process flows developed by the Functional Lean Teams. The functions are grouped under new combined Group management names. This will reduce the number of boards and commissions significantly to about 5 or 10. We can now initiate the balancing of the work loads for each of these grouped sets of functions. What we are doing is planning the best solution or way of doing this set of functions for a period of time usually a week. Work load planning is a common Industrial Engineering technique found in industry.

How Work Load Planning works
All of the new Group management’s functions are grouped according to similarity of the processes done in each function. Note that each function takes a different length of time to complete. In planning the work load the back log in each group of functions is balanced out for the day or the week to keep the work load leveled. Employees are cross trained to do the processes in several of the group’s functions.

We know the employee time required to do each function by using the Lean flow process study for the function. The staffing base for each new agency is established by adding the hours required for each function and multiplying by the number of expected occurrences of the function for the year (from data obtained in past years). When all of the totaled hours are added the result is multiplied by 1.25 to allow for normal working conditions rated at 75% not 100%. The Staffing Base or the total number of employees doing the work in the Group is found by dividing the total hours rated at 75% by the number of hours normally worked in a year. This staffing base plus expenses incurred in the year is documented on a spread sheet for each of the agency’s functions. This becomes the budget for the function. The Total of all the function’s budgets plus the Group’s management costs equals the Group’s budget. The budgeting of functions places the budgeting process more under legislative control.

Building the CRM
The suggested reform of a State Centralized Portal using a 311 telephone number eliminates a significant amount of red tape. The 24 hour State Services Call Center can provide almost instant service to the public not just information. This portal eliminates the need for the public to search for a specific government organization and opens the way for the complete reorganization of the states services system. No longer requiring public interface, boards and commissions can be consolidated into a much more responsive and efficient organizations resulting in the elimination of many management and public interface employee positions. See my articles 101, 102 and 154.

Finalizing the Organizational Reform
First the functional Lean Team becomes the Functional Management Team for each of the Group’s functions. Second many of the mid management levels between the Functional management and Group Management become redundant. Group Management now becomes a Group Steering Management Team which has the role of guiding and steering the organization while the Functional Management Team deals with the day to day operation of the functions. Steering Management is responsible for “telling” Functional Management “what to do” but not “how to do it”. This is a loose-tight organization with Steering firmly in control of the budget leaving Functional Management free to determine how best to do the job. Those in industry will recognize this as straight from the book “In Search of Excellence- Lessons from America’s Best-Run Companies” by Thomas J. Peters and Robert H. Waterman Jr., Harper and Row, New York, 1982.

This reform brings a positive cultural change to the organization. Employees become members of Teams and are motivated by empowering them to improve their jobs through innovation. By bringing innovation and continuous improvement to the government’s processes the state will have savings through increased efficiency in the future. The reform amounts to a win win situation for government union employees as well as the tax payers of the state by employee empowerment and by ending bureaucratic waste.

What’s different?
The multilevel career path of the former bureaucracy is now reduced to one step from the Functional Management Teams to the Steering Management Team. Gone are the hundreds of hours of endless manipulation of employee evaluations. Gone also is the endless bickering and negotiation over the budget. Performance budgeting is no longer needed once the agency has been properly staffed because the functional teams monitor their own progress and if they start to fall behind they can take their own corrective action.

What are the benefits for Georgia’s State Government?
If the state of Georgia wanted to establish a four day week services would not decrease but actually increase from the 24/7 implementation of the CRM. The CRM 25 to 30 call takers would replace the more than 150 or more current call takers. Mid management in the boards and commissions could be reduced by more than 300. If the Steering Management and Functional Management Teams were to be implemented throughout the state government the minimum saving to Georgia is estimated to be $170 million to more than $500 million. See my articles 106 and 116.

Supplement
CRM was originally installed by the city of Hampton Virginia in 2000 and more recently in San Francisco. The Steering and functional management concept was implemented at the McDonnell Douglas Missile Systems Co. in 1983 after my proposal was accepted and approved by Sanford McDonnell CEO of the McDonnell Douglas Corp. The implementation was warmly received by employees and remained in place for more than ten years until the company was disbanded and sold to Boeing in 1997.

In Iowa Lean is used to make state government “work”. We should not be satisfied with just using Lean to make government “work” but organize it to work efficiently.

Here is what Iowa is doing:
From: Lean Legacy in Iowa By Jonathan Walters Governing Magazine August 2009
The aim of the Lean effort was for a leaner, more responsive government. In 2005 the Department of Natural Resources first introduced Lean “Hot Teams” which reduced turnaround time for air-quality permits from 62 days to six days, and for wastewater discharge permits from 28 months to four-and-a-half months (without reducing environmental protection, the DNR claims); the Department of Human Services increased health care coverage for children by 12 percent; the Department of Corrections reduced probation-failure rates by nearly 20 percent; and across all charter agencies, the turnaround time for key personnel actions was reduced from months to mere days.

Here is what Iowa should be doing:
The tremendous improvement in turnaround times for processing government requests is to be hailed as a great leap forward in government. The Lean process flows for the above studies document the Air Quality Function and the Wastewater Discharge Function within the DNR. Lean studies need to be made for the remaining functions found in all the 178 Iowa state services. Optimizing these functions using Lean teams is the first step to the reorganization of Iowa state services. It is obvious that since each of these agencies operated independently they are significantly overstaffed because they do not work together to efficiently process the states work. In other words when there is no work to do the personnel in each of the178 agencies simply wait until there is work to do.

To begin the reform a top level Lean study is initiated for the purpose of combining agency functions through similarity of their process flows developed by the functional Lean teams. The functions are grouped under new combined agency names. This will reduce the number of agencies significantly. We can now initiate the balancing of the work loads for each of these grouped sets of functions. What we are doing is trying to plan the best solution or way of doing this set of functions for a period of time usually a week.

This example may help explain this process. Most states have from 5 to 8 state child service agencies each has one or more functions that they perform. We will group all these agencies under one agency called Child Services. All of the new agency’s functions are grouped according to similarity of the processes done in each function. Note that each function takes a different length of time to complete. In planning the work load the back log in each group of functions is balanced out for the day or the week to keep the work load leveled. Employees are cross trained to do all of the processes in each of the group’s functions.

We know the employee time required to do each function by using the Lean flow process study for the function. The staffing base for the new Child services agency is established by adding the hours required for each function and multiplying by the number of expected occurrences of the function for the year (from data obtained in past years). When all of the totaled hours are added the result is multiplied by 1.25 to allow for normal working conditions rated at 75% not 100%. The Staffing Base or the total number of employees doing the work in the Child Services Agency is found by dividing the total hours rated at 75% by the number of hours normally worked in a year. This staffing base plus expenses incurred in the year is documented on a spread sheet for each of the agency’s functions. This becomes the budget for the function. The Total of all the functions plus the agency’s management costs equals the agency’s budget. The budgeting of functions places the agency’s budget more under legislative control.

This provides some of the background for the suggested reform of an Iowa state Centralized Portal using a 311 telephone number. The 24 hour State Services Call Center can provide almost instant service to the public not just information. This portal eliminates the need for the public to search for a specific government organization and opens the way for the complete reorganization of the states services system. No longer requiring public interface, boards and commissions can be consolidated into a much more responsive and efficient organizations resulting in the elimination of many management and public interface employee positions. See my Article 154.

This should help in understanding where savings will come from in reorganizing a state’s 100 or so agency services. See the following articles:
Article 101. The Hampton Virginia Innovation Story
Article 102. Government Reform of California Agencies and Commissions
Article 106. Where do the Government Reform Savings Come From?
Article 135. Eliminating Road Blocks to Government Innovation
Article 136. The best Example of Why Work Measurement Should be used by Government
Article 137. Role of Lean Facilitator and Budget Analyst
Article 148. Where Less is More Efficient
Article 149. Secret and Not so Secret Methods for Downsizing
Article 151. The Promise of Going ‘Lean’
Article 152. The Process of Replacing Bureaucratic Management With Lean Teams
Article 154. Streamlining Iowa Boards and Commissions Using Lean and More
Article 155. Why not Privatize State Government- All of It?
Article 156. Getting the most out of Lean as used in Government
Article 157. Using Lean to Balance Agency work Loads
Article 158. The Streamlining of Georgia Boards and Commissions Using Lean
Article 160. Minnesota State Government Leads the Nation in Lean

Lean manufacturing or lean production, which is often known simply as “Lean”, is a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination. Working from the perspective of the customer who consumes a product or service, “value” is defined as any action or process that a customer would be willing to pay for. Basically, Lean is centered around creating more value with less work. Lean manufacturing is a generic process management philosophy developed mostly by Toyota.

Lean manufacturing is a variation on the theme of efficiency based on optimizing flow; it is an instance of the recurring theme toward increasing efficiency, decreasing waste, and using empirical methods to decide what matters, rather than uncritically accepting pre-existing ideas.

For many, Lean is the set of “tools” that assist in the identification and steady elimination of waste. As waste is eliminated quality improves while manufacturing production time and cost are reduced. Examples of such “tools” are Value Stream Mapping, Five S (work place cleanliness), Kanban, (pull systems), and poka-yoke (error-proofing). The Value Stream Mapping tool has the greatest potential for applications in government for studying process flows while the other tools also have usefulness in organizing the work place environment.

Toyota uses Value Stream Mapping primarily to study the flow of automotive parts through the various manufacturing processes in its factories this is called in-process inventory. All automotive parts become more and more valuable as labor is expended on the parts going through the processes. The parts in this case in-process inventory just sitting around waiting between processes represents a loss in investment and warrants a Lean team study. The object is to identify all delays and to eliminate them if possible thus shorting the flow time and reducing inventory costs.

The Value Stream Mapping technique is used in government to analyze the flow of documents and or materials currently required to bring a product or service to a consumer.

Implementation of Value Stream Mapping
1. Identify the target product, product family, or service that is in need of reform.
2. Draw a current state value stream map, which shows the current steps, delays, and information flows required to deliver the target product or service. This may be a production flow (raw materials to consumer) or a design flow (concept to launch). There are ’standard’ symbols for representing supply chain entities. This is time dependent mapping showing the time for all processes and losses due to delays.
3. Assess the current state value stream map in terms of creating flow by eliminating waste.
4. Draw a future state value stream map.
5. Implement the future map.

Where is it used?
Value stream mapping is commonly used in Lean environments to identify opportunities for improvement in lead time. Although value stream mapping is often associated with manufacturing, it is also used in logistics, supply chain, service related industries, healthcare, software development, and product development.

Examples of how Lean is applied to government?
Lean Legacy in Iowa By Jonathan Walters Governing Magazine August 2009
The aim of the Lean effort was for a leaner, more responsive government. In 2005 the Department of Natural Resources first introduced Lean “Hot Teams” which reduced turnaround time for air-quality permits from 62 days to six days, and for wastewater discharge permits from 28 months to four-and-a-half months (without reducing environmental protection, the DNR claims); the Department of Human Services increased health care coverage for children by 12 percent; the Department of Corrections reduced probation-failure rates by nearly 20 percent; and across all charter agencies, the turnaround time for key personnel actions was reduced from months to mere days.

3. Lean involves employees. Specifically, the employees who work within the system being improved. We’ve tried employee involvement before, with suggestion programs, quality teams and so forth. While the intent of those programs was good, the focus was too small. Employees may be able to suggest ways to improve their own performance, or the piece of the process they’re involved in. But systems cut across silos. Most employees can only see a part of the whole system. Therefore, what might help them personally be more productive could actually hinder the larger system. Lean projects, on the other hand, involve all the key players in a system (including the customers) to analyze the whole thing.

Lawrence Rosier’s comments on using Lean in Government.
Lean appears to be the most exciting thing to stir government in years and it well deserves the accolades. I support the imbedding of the lean process in every state government. Having said that, there are some issues I have identified, especially with the Lean reformers not going far enough.

Notice in Iowa the hot teams reduced turnaround time for air-quality permits from 62 days to six days, and for wastewater discharge permits from 28 months to four-and-a-half months. This is great news for customers and for the bureaucracy. Bureaucracies seek out anything that makes them look good to the public because it increases the possibility that their budgets will be increased.

Now let’s take a close look at how this was done. The question is? Were state employees just sitting around waiting for something to fall into their In-Baskets and the lean team organized them to jump in and get the job done. Could the new Lean document processing method be an antidote to the old In-Basket bureaucratic management method where “if your In-Basket is empty you don’t have anything to do” So employees let their In-Baskets build up a good sized backlog. After all it doesn’t cost the government anything only the customer has to wait months.

Clearly something is amiss because if the employees doing the processing of these documents could increase the turn around time by as much indicated in Iowa then there may be too many employees or there is an in balance in staffing. The staffing level could be set for processing the largest volume of documents rather than the average number of documents. I suspect the bureaucracy doesn’t even have clue as to what the staffing level should be. The Lean team ended their study by reducing document turnaround times. But this where the Lean team needs to continue their study to determine not only the best processes but also how to balance the staffing base to achieve the savings not only in the reduction of process time but also in employee labor.

The determination of the proper staffing can be easily done because the Lean team knows the time to do the processes and it now must determine the number of times that the process is done over the budgeted time. If the work load proves to vary significantly such as seasonally the Lean team must find the best way to balance this work load. The best way to do this is to find another process to work on in the off times when there is little to do in short balance the work load by combining the activities found in several agencies.

But this is my recommendation for a major Lean study for streamlining agencies, boards and commissions. The Lean study team should include representatives from the agencies, boards and commissions. The best way to do this is by creating a Centralized State 311 telephone portal called Customer Relations Management CRM. See my article 101.

The bureaucratic fiefdoms of hundreds of agencies, boards and commissions need to be reorganized into consolidated Steering Management teams supervising Functional Management teams who do the processes identified by the high level Lean study team. Each Function management team should be tasked with continuing to find the best way to do their jobs.

See the following articles for more information.
Article 101. The Hampton Virginia Innovation Story
Article 102. Government Reform of California Agencies and Commissions
Article 151. The Promise of Going ‘Lean’
Article 152. The Process of Replacing Bureaucratic Management With Lean Teams
Article 154. Streamlining Iowa Boards and Commissions Using Lean and More

Privatize State Government by allowing state agencies, boards and commissions to generate savings to be added to the state’s rainy day fund. Private companies know this as improving processes, increasing productivity and generating profits. But this reform can not be implemented merely by changing a simple government policy statement. The root of the problem is in the way governments are organized and budgeted.

For example a first-class U.S. postage stamp costs 44 cents, up from 2 cents in 1950. Had its price kept pace with inflation, a stamp today would sell for only 18 cents. Instead, stamp prices grew nine times as fast as the general rate of inflation. They outpaced inflation largely because the U.S. Postal Service cannot profit from cost-reducing, quality-enhancing innovation the way that private carriers, such as Federal Express and United Parcel Service, can.

The inability to introduce incentives in government is the driving force for many states to outsource (privatize) government functions. Privatization encourages the search for process improvements leading to profits. Governments prevent improvements to services because there is a law (written or unwritten) against making a profit.

Budgets are set by the legislature and no government entity is going to argue with them if the budget is more than adequate. Most agencies departments and commissions spend all of their budgets because they might over-run their budgets in the future. They certainly do not want the Legislature to cut their budgets. This represents what I call top-down budgeting, “not knowing what the real costs are before funding”, as opposed to bottom-up budgeting “measuring and knowing the real costs before funding”, as used in private industry. This budgeting mindset is deeply embedded in the legislature and in the bureaucratic government organizations.

One of the main reasons that government is so inefficient compared with private companies, besides their bureaucratic structure, is found in the way that funding and budgeting is done. When private companies need to fix a problem they select the Department of the company that “owns” the problem and asks them to come up with the most satisfactory solution. If the problem spans several functions a high level Lean Team is chosen to study the problem and come up with the best solution. That is, to find the best but least costly solution that can be implemented quickly. Once the solution has been identified it is costed-out by industrial engineers or budget personnel, funded by the companies’ management and implemented.

When government encounters a similar problem it is usually first brought to the attention of the legislature by this time the problem is considered to be significant. There becomes an immediate political problem when each political party may or may not consider the problem worthy of consideration. A specific agency may be thought to have responsibility for the problem but they may or may not be asked to come up with a solution. One party may develop a solution to the problem and those against may come up with their own solution. Nearly all government problems are thought to require funding. Therefore there is an immediate effort to determine the funding needed for the solution even before the most satisfactory solution is known. The amount of funding is dependent on the party in power and their perception of the funding required not on the actual funding needed for the most satisfactory solution which may or may not even be known. Once the “solution” is funded it becomes a part of the budget by law. If the problem is thought to be large enough the Legislature may create a whole new agency as the solution. Otherwise the funds are passed to the most likely agency and the matter is thought solved unless the problem arises again at some later date. Note that once the funding becomes law the state’s budgeting personnel have little or no role in determining the level of funding required.

I call this government process Top-Down budgeting where little effort is put into finding the most efficient and effective solution before funding it. This is the opposite of that done in private industry which I call Bottom-Up budgeting finding the most appropriate solution before funding it. The bottom-up solution should be based on a Lean Team study to determine the best method for performing the function. When the best method has been found the set of processes are evaluated using Work Measurement and the development of a staffing base and all other costs are identified. This means that the best method for doing the function and the actual costs in labor and other expenses are known at the time of approval by private companies’ management.

There is hope for state governments the state of Iowa has accepted the practice that Lean studies should be made on problems within government processes. This is a giant step forward because it opens the door for state governments to use the best methods from private industry to find solutions to government problems. Lean has experienced great success in Iowa because it has been used to solve customer turnaround problems cutting months off of public environmental applications. Value Stream Mapping is the primary useful Lean tool used in government. Value stream mapping is a Lean manufacturing technique used to analyze the flow of materials and information required to bring a product or service to a consumer.

However Iowa’s Lean projects have generated little to no savings this is because the reformers are not looking for savings. When you continue to identify savings eventually someone will ask about reducing personnel and the entrenched bureaucracies are not about to let that happen. So what type of solutions do bureaucracies like? They especially like solutions that make them look good with the public because it puts pressure on law makers not to oppose an increase the budget that they want. Any innovation that enhances service to the public like Iowa’s Lean projects and makes the bureaucracy look good is a sure thing to be adopted. This leaves us with bureaucratic government standing directly in the path of generating savings and capitalizing on those savings through reduction in government personnel.

I contend that the 19th century bureaucratic government organization has long out lived its usefulness and should be replaced by a 21st century streamlined organization adapted from the best of private industry and government. I recommend that this reform be begun by initiating a high level Lean team within each agency to make the process flow study to determine the best organizational flow within the agency. When this is completed each Function within the agency is organized into a functional Lean team. Each functional Lean team will do a process flow analysis on the processes done by the function to determine the best method for doing the function. Lean Teams encourage innovation by empowering both management and employees to find the best processes for doing high level cross functions and the processes within functions. This method requires little investment by the state simply redirecting training efforts for this Lean implementation.

Notice the agency is now budgeted by functions and not departments within the agency. A function is defined as the name given to a set of processes for providing the public with specific item or service and its budget is determined by the number of times that the function will be performed during the budgeted period.

The Process Flow Charts done by the Lean teams provide a record of the costs associated with each Function. If a Function or one of its processes were to be removed all of its budget will also be removed. When the new and best method has been documented in the Process Flow Chart it is presented to the top management. This is an important step which signifies top management’s support and recognition of the Team’s accomplishments. Upon approval of the new method the Process Flow Chart is given over to the budget analyst to cost out the savings of the new method and to identify the proper staffing for the function. The budget analyst then documents the new method and its costs in a spread sheet which will provide input to the next budget. See my Article 137. Role of Lean Facilitator and Budget Analyst.

Budgets developed by the bottom-up method differ from the normal bureaucratic budget. What you have now is the real budget for doing the agencies Functions not that phony bloated budget that they present each year. True, you must add in the cost of managing but now for the first time you know what that cost is. This is a bottom-up budget with actual costs for doing the work known. All other costs are for management and fluff (which can be significant). In my experience in industry most unmeasured office areas are over staffed by 10% or more. Once you know what the real costs are for doing the work and top management is working closely with the Teams. The next steps in the government reform process can begin.

First the functional Team leaders become the Functional Management of the agencies functions. Second many of the mid management levels between the Functional management and top management become redundant. Top management now assumes the role of a Steering Management Team. The top level Lean team and possibly some but not all of mid management may become part of the Steering Management Team. Steering Management has the role of guiding and steering the organization while Functional Management deals with the day to day operation of the agency’s functions. Steering Management is responsible for telling Functional Management “what to do” but not “how to do it”. This is a loose-tight organization with Steering firmly in control of the budget leaving Functional Management free to determine how best to do the job. Those in industry will recognize this as straight from the book “In Search of Excellence- Lessons from America’s Best-Run Companies” by Thomas J. Peters and Robert H. Waterman Jr., Harper and Row, New York, 1982.

What’s different? The multilevel career path of the former bureaucracy is now reduced to one step from the Functional management Teams to the Steering Management Team. Gone are the hundreds of hours of endless manipulation of employee evaluations. Gone also is the endless bickering and negotiation over the agency’s budget. Performance budgeting is no longer needed once the agency has been properly staffed because the functional teams monitor their own progress and if they start to fall behind they can take their own corrective action.

Given the amount of budget stress that states are presently under you might think that states would be willing to give up their bureaucratic organizations and downsize their agencies. Even with 42 states under economic stress except in only a few direr cases they still prefer to cut services and raise taxes than downsize. Any recommendation either Lean or any other method that gets its efficiency from reduced personnel has little chance of being implemented. This is why I advocate extensive government reforms.

The major portion of this reform has already been successfully implemented. I proposed the Steering and Functional management organization to the McDonnell Douglas Missile Systems Co. in 1983 with the approval of Sandy McDonnell CEO of the McDonnell Douglass Corp. It was very successful and was used for more than ten years until the Company was sold to Boeing in the late 1990’s. It was built on the Quality of Work Life (QWL, similar to TQM teams) Teams that were in place in 1983. Since then I have developed my unique method for Work Measurement to arrive at a Staffing Base and a solid budget.

I am currently looking for a state agency where I can pilot this reform in state government. But I fear that the only way that this can be done is for the legislature to act because most bureaucratic agencies are unlikely to volunteer its organization for the pilot.

From Governing Magazine’s article “Lean Legacy”
By Jonathan Walters August 2009

Teresa Hay McMahon heads up the performance and results division in the Iowa Department of Management

In January 2008, public- and private-sector officials joined forces to create a “Lean Government Collaborative,” to work with and in state agencies to do process improvement. While the collaborative had Governor Culver’s support, executive-branch reformers such as McMahon were well aware of how ephemeral reform can be when it comes with a label and an elected executive’s name. So she and her allies turned to the legislature once again to try to codify good government in state statute.

Lean in Iowa, “is absolutely flourishing,” says McMahon. And it’s attracting some outside interest, as well. In June, her office hosted a “lean government exchange” that drew 130 people from state and local governments around the country, as well as federal officials, and officials from Mexico and Canada.

Streamlining Iowa Boards and Commissions Using Lean and More.
The following reform consists of more than just using the normal Lean study and implementation to streamline Iowa public services. I will show you how to reorganize the current bureaucratic organization into a Public Service Steering Management Team with the current work of Boards and Commissions being performed by Functional Management Teams.

Consider this reform for managing Iowa’s 178 or so boards and commissions. Currently the state On-line website and Departmental Telephone Directories aid the public in finding the particular organization they are looking for to provide a specific service such as: answering a question, making a request or filling out an application. But with this new reform all Iowa state public queries can be handled through a centralized portal using a 311 telephone number. The 24 hour State Services Call Center can provide almost instant service to the public not just information. This portal eliminates the need for the public to search for a specific government organization and opens the way for the complete reorganization of the states services system. No longer requiring public interface, boards and commissions can be consolidated into a much more responsive and efficient organizations resulting in the elimination of many management and public interface employee positions.

What is the system called?
The system is called Customer Relations Management (CRM) and uses a similar call center to that of a 911 center.

How does it work?
Each Telephone Call taker is trained in doing the current public service business found in one of several areas: State Offices, State Departments or State boards and Commissions. Calls are directed to the specifically trained call taker. That individual is assisted by a frequently asked Question (FAQ) database developed for each Office, department, Board and Commission. There must be trained personnel on duty at all times. See my Article 101. The Hampton Virginia Innovation Story, where CRM was first implemented in 2000.

How do you make this reform?
I recommend that this reform be initiated by a high level Lean team making the process flow study to determine the best organization for Iowa Services. The study will map customer interface with desired services to arrive at the most effective and efficient process flow. This is followed by the setting up of the State Services Call Center (the CRM).

While the high level Lean team is doing the high level study each agency function is organized into a functional Lean team. The functional Lean teams will do a process flow analysis on the processes done by each function to determine the best method for doing the function.

Notice the organization is budgeted by Functions and not boards and commissions. Boards and commissions can be used to describe the umbrella organization for several functions. A function is the name given to a set of processes for providing the public with specific item or service and is budgeted by the number of times that the function will be done during the year.

The Process Flow Charts done by the Lean teams provide a record of the costs associated with each process. If a process were to be eliminated all of its costs are also eliminated. A Process Flow Chart is done for each Function and if an entire Function were to be removed all of its budget will also be removed. When the new and best method has been documented in the Process Flow Chart it is presented to the top management. This is an important step which signifies top management’s support and recognition of the Team’s accomplishments. Upon approval of the new method the Process Flow Chart is given over to the budget analyst to cost out the savings of the new method and to identify the proper staffing for the function. The budget analyst then documents the new method and its costs in a spread sheet which will provide input to the next budget. See my Article 137. Role of Lean Facilitator and Budget Analyst.

Did I say budget? What you have now is the real budget for doing the boards’ and commissions’ Functions not that phony bloated budget that they present each year. True, you must add in the cost of managing but now for the first time you know what that cost is. This is a bottom-up budget with actual costs for doing the work known. All other costs are for management and fluff (which can be significant). In my experience in industry most unmeasured office areas are over staffed by 10% or more.

Once you know what the real costs are for doing the work and top management is working closely with the Teams. The government reform process can begin. First the functional Team leaders become the Functional Management of the Public Service functions. Second many of the mid management levels between the Functional management and top management become redundant. Top management now assumes the role of a Steering Management Team. The top level Lean team and possibly some but not all of mid management may become part of the Steering Management Team. Steering Management has the role of guiding and steering the organization while Functional Management deals with the day to day operation of the boards’ and Commissions’ functions. Steering Management is responsible for telling Functional Management “what to do” but not “how to do it”. This is a loose-tight organization with Steering firmly in control of the budget leaving Functional Management free to determine how best to do the job. Those in industry will recognize this as straight from the book “In Search of Excellence- Lessons from America’s Best-Run Companies” by Thomas J. Peters and Robert H. Waterman Jr., Harper and Row, New York, 1982.

So where are the savings?
In each of the 178 offices there must be at least one person available for taking public phone calls during working hours compared with as few as 24 (my example estimate) manning the phones 24/7. Note that this is more than a telephone answering service the business of the state is conducted by the CRM. When you combine these savings with the elimination of some boards and commissions, significant savings can be achieved. The number of current service call takers is reduced from 178 to 24 and more than 356 lower management positions may be eliminated for an estimated savings of $20 million.

What’s different?
The multilevel career path of the former bureaucracy is now reduced to one step from the Functional management Teams to the Steering Management Team. Gone are the hundreds of hours of endless manipulation of employee evaluations. Gone also is the endless bickering and negotiation over each of the board and commission’s budgets.

Now for the sad tale?
Lean has experienced great success in Iowa because it has been used to solve customer turnaround problems cutting months off of public environmental applications. Iowa’s Lean projects have generated little to no savings this is because the reformers are not looking for savings. When you continue to identify savings eventually someone will ask about reducing personnel and the entrenched bureaucracies are not about to let that happen. So what type of ideas do bureaucracies like? They especially like ideas that make them look good with the public because it puts pressure on law makers not to oppose an increase the budget that they want. Any innovation that enhances service to the public like Iowa’s Lean projects and makes the bureaucracy look good is a sure thing to be adopted.

Given the amount of budget stress that states are presently under you might think that states would be willing to give up their bureaucratic organizations and downsize their boards and commissions. Even with 42 states under economic stress except in only a few direr cases they still prefer to raise taxes than to downsize. Any recommendation either Lean or any other method that gets its efficiency from reduced personnel has little chance of being implemented. This is why I advocate major government reforms.
See the following articles for more information.
Article 156. Getting the most out of Lean as used in Government
Article 157. Using Lean to Balance Agency work Loads

Mending Safety Nets with Technology
How a nonprofit start-up turned a process full of vertical hurdles into a client-centric safety net.
By Feather O’Connor Houstoun | September 9, 2009

Feather O’Connor Houstoun
is president of the William Penn Foundation, which is dedicated to improving the quality of life in the Greater Philadelphia region.

As a recovering public official who worked across many different program areas, I’ve marveled at how often we rationalize the continuation of practices that should have been augmented or replaced by technological advances. Sometimes the reason for missing an opportunity to innovate is limited resources, but more often it’s failure to look at the problem from a different perspective.

A multi-sector partnership, consisting of a state government, the federal government, and a start-up nonprofit, has transformed this cumbersome inefficient system into a streamlined process. Thanks to this stunning breakthrough, eligible but non-participating seniors are drawn toward benefits that could make a significant difference in their quality of life.
The nonprofit start-up, Benefits Data Trust, is the hub of a new outreach and enrollment system that combines a multi-agency back-office innovation with the individual agencies’ need to qualify applicants separately for each program. By cross-referencing information from federal, state, and private databases and membership rolls, it identifies individuals likely to be eligible but who are not receiving benefits. It then uses direct-marketing strategies to inform them that they may be eligible, and finally, supports them through the application process, often submitting the application on their behalf.

This is an example of using a Relational Database to store in one place the identification and address of an elderly or impaired individual such that the database allows a single enrollment for the person for several agencies. Each agency would require that the applicant fill out the paper work for each agency.

The method described above has been around for about twenty years it replaces the siloed eligibility determination used in multiple agency application programs. It uses a single centralized client Identification relational database to store a clients ID and address which can then be used for the processing of several agencies’ application programs. I use the same idea as that in the above article in the same way as one of the relational databases in my recommendation for a State Centralized IT Relational Database Management System RDMS.

I use this ID relational database to store all of the States households as input to many application programs: Medicaid, Driver’s Licenses, Voter Registration ID etc. I have recommended that the State RDMS be developed by a state IT or several states and funded by the Federal Government’s Dept. of Homeland Security. The ID RD can be linked together as a part of a national ID RDMS for the REAL ID mandate.

See my Articles:
Article 138. State Information Technology Centralized Data Centers
Article 142. Huge Savings from State Centralized Services
Article 143. Examples of a Relational Database Management System
Article 144. Why States Lose Millions by Using Obsolete Computer Systems
Article 145. The Coming Revolution in Information Technology Systems

Many cost savings proposals fail to get implemented in bureaucratic government especially with strong government employee unions. Any improvement that gets its efficiency from reduced personnel has little chance of being implemented. This is why I advocate the replacement of the Bureaucratic Organization with a Management Steering Team and Functional Teams. The following steps describe the process for making this reform.

A. Getting Top Management Support
This is a critical step for without top management support this reform is going no place. In some cases the top manager may have to be replaced with a reform manager.

B. Lean Training
Lean training is widely given throughout the organization both to the top managers and lower level employees as well. The focus of Lean is on making the processes of the organization more efficient. Out side training consultants may have to be brought in to train the internal trainers in Lean methods. Value Stream Mapping is the primary useful Lean tool in government. Value stream mapping is a Lean manufacturing technique used to analyze the flow of materials and information required to bring a product or service to a consumer.

C. Organize Lean Teams
Organize Lean Teams where recognized process flows exist within the Agency both for high level cross functional process flows and low level process flows within a function. The high level Lean Teams are made up of personnel who actually work in cross functional management and the Functional Lean Teams are from the work place where the function’s processes are performed. The best people to do an analysis of processes is Lean trained employees who actually do the work whether this is a high level skilled team or employees just loading trucks it is up to the team to define the best practices for doing the job.

D. Lean Team Meetings
I recommend flexibility in meeting times for busy managers this may be one hour before work while they are fresh in the morning or the setting aside of an entire day during the week. In any case the Lean Management Team should meet at least one time a week. The first order of business is to get organized by electing a leader of the Team by secret ballot.

Functional Lean Teams may require the services of a Lean trained facilitator to assist in getting the team organized and electing its leader. I would suggest that these teams meet for at least one hour each week. I propose that the process flows be done by the team on a large Process Flow Chart taped to the wall of the conference room with each process taped to the wall chart. This provides a flexible way of making changes to the chart during its construction. The method should start with the current process flow and to that is added the improved process flow.

E. Top Managements Role
Top management’s role is to encourage the implementation of Lean by being supportive of the Teams. They should send representatives at times to the Team meetings showing complete management support.

F. Costing Out the New Lean Process Flow Method
A Lean trained budget analyst will cost-out the savings between the old method and the new method and identify the staffing and other budget costs associated with the new method. Once this is done the budget including the staffing is established for this set of processes. The new method with the savings is presented to top management.

The Process Flow Charts provide a record of the costs associated with each process. If a process were to be eliminated all of its costs are also eliminated. A Process Flow Chart is done for each Function and if a Function were to be removed all of its budget will also be removed.

What you have now is the real budget for doing the Agency Functions not that phony bloated budget that the Agency presents each year. True, you must add in the cost of managing the Agency but now for the first time you know what that cost is. This is a bottom-up budget with actual costs for doing the work known. All other costs are for management and fluff (which can be significant). This is an example of Work Measurement in my experience in industry most unmeasured office areas are over staffed by 10% or more. Once you know what the real costs are for doing the Agencies work and top management is working closely with the Teams the government reform process can begin.

G. Replacing the Bureaucracy with Steering Management and Functional Management
First The Lean Management Team is combined with the new Steering Management Team headed by the Agencies top manager as team leader. The Steering Management Team has the role of guiding and steering the organization. Some but not all of mid management may become part of the Steering Management Team but most mid level managers between the Functional management and Steering Management will become redundant.

The Lean Team leaders in each function become the Functional Management Leaders of each of the Agencies functions. Functional Management deals with the day to day operation of the Agencies functions. Steering Management is responsible for guiding and setting the direction of Functional Management in “what to do” but not “how to do it”. This is a loose-tight organization with Steering firmly in control of the budget leaving Functional Management free to determine how best to do the job.

H. Role of Support Services
Management Support service functions such as: Human Resources, Information Technology, Budgeting, Auditing, and Facilities become part of a Centralized Agency Support Organization. Each support service may have a single representative on the Steering Management Team.

So where do savings come from in this reform? If the Agency has never had Work Measurement performed and most have not, the minimum savings is at least 10% plus the savings from all the Lean activities this may be a minimum of 5% or more plus the reduction in management personnel which could be another 5% for a total of 20%. If this reform is done though out the entire State Government you can see that the savings become significant.

It’s the latest, buzziest trend in government management. Just don’t call it a fad. By Ken Miller |Governing Magazine May 21, 2009

Ken Miller is the founder of the Change and Innovation Agency and the author of Governing’s book We Don’t Make Widgets: Overcoming the Myths that Keep Government from Radically Improving. His Better, Faster, Cheaper blog covers government efficiency. E-mail him at ken@changeagents.info.

What exactly is Lean Government? It’s a mindset and a discipline to increase our capacity to do more good. There are four key steps:
1. Be clear about your purpose and bottom line. What good are you trying to create?
2. Know what customers want and what they value.
3. Build great widgets. Permits, child abuse investigation reports, substance abuse counseling programs, tax audits and so on.
4. Find a way to make the widgets better, faster and cheaper. Notice the sequence. To paraphrase Peter Drucker, the father of modern management, it does no good to make more efficient that which should not be made at all.

In these incredibly tough budget times, you would think government agencies would be working extra hard to find ways of doing things more efficiently. Unfortunately, leaders across the country are grabbing the same old playbook — hiring freezes, travel restrictions, delaying maintenance and so on.

That’s why the aftermath of this budget crisis is the perfect time to use the principles of Lean to radically rethink what we do and how we do it. We should use this time to help policy makers understand the potential of improving the operations of government. Will it succeed? If we can overcome our limiting beliefs, get past the language barrier and tap into people’s desire to make a difference, then we’ve got a real shot. In the meantime, I’m going to get my acid-washed jeans out of the dryer, put on my Snuggie and Twitter you about the progress.

Comments by Lawrence Rosier
This is an excellent article and I advocate the use of Lean by all Governments and I agree with the author’s objections to the Total Quality Managements approach to using quality tools for solving defects in widgets when this is not the problem in government.

In my own proposal for Lean Teams I emphasize the same analysis of processes that Lean uses to determine the best way to do a set of processes. Lean teams are actually management teams and working level teams. TQM has failed in many instances in bureaucratic government especially with a strong government employee union. Any recommendation either TQM or Lean that gets its efficiency from reduced personnel has little chance of being implemented. This why I advocate the major reform of government with the replacement of the bureaucratic form of organization with Management Steering teams and Functional teams. Both using Lean at the multi process high level and at the Functional team level in the work place.

The best people to do an analysis of processes is the employees who actually do the work whether this is a high level skilled team or employees just loading trucks it is up to the team to define the best practices for doing the job. I propose that this be done by the team on a large Process Flow Chart on a conference room wall. Once this is done a budget analyst can cost-out the savings between the old method and the new method and identify the staffing and other budget costs associated with the new method. Once this is done the budget including the staffing is established for this set of processes. I call this method Work Measurement where this not done i have found that over staffing can be as much as 10%.

Too often Lean is seen only as tool that top management uses for the development of high level processes but for day to day continuous improvement Toyota still uses the TQM teams to implement Lean at the work place level.
Governing Magazine The Promise of Going ‘Lean’

Nation wide we should take a hard look at shifting from “hardware-centric, expensive, proprietary silos of data trapped in old databases” into new systems with more of the same obsolete systems architecture. These proprietary systems are difficult and expensive to maintain and cannot be easily integrated with other systems.

This is how I described what is happening in Virginia’s Information Technology Agency VITA in an email to Governor Kaine and forwarded to Jeff Schapiro of the Richmond Times-Dispatch earlier this month.

Unless the VITA contract leads to a Relational Database Management System RDMS solution the present $2.3 billion contract between VITA and Northrop Grumman will be the biggest ever boondoggle in State Information Technology.

In response to my email I received on September 4, 2009 a letter of explanation from Leonard Pomata Secretary of Technology of the Governor’s office. The letter referred to some of the accomplishments that have been achieved so far in the contract along with a list of the current investigations under way. The investigations center on missed contract milestones and cost overruns.

Virginia hired Northrop Grumman the giant defense and systems-management company in 2005 under a controversial 10-year, $2.3 billion contract to run its computer and communications networks providing IT services to 90 agencies. But the state also pays the contractor for work outside of what the contract covers:
Covered: Supplying new equipment, including laptops and services; running the state data centers; maintaining and repairing computers; and running a help desk.
Not covered: Specialized software that only one agency needs.

It appears that the VITA, Northrop Grumman contract does not include a provision for the development of a centralized IT system. So far NG has spent a good deal of funds on linking all of the Virginia Agencies with a new protected email system and the question of centralized application software and database development is still up to the individual agencies. This has prompted state legislators to ask just what is the state getting for its money.

VITA’s new chief information officer George F. Coulter has sacked or reassigned several senior executives of the Virginia Information Technologies Agency, according to state government sources. The casualties apparently include critics of Northrop Grumman. The shakeup is an attempt to extract VITA from months of political turmoil and put back on track a shift to privately managed information-technology services beset by delays and mounting costs. Since the RDMS solution is the best and most cost effective solution Virginia’s VITA appears to be floundering making it the biggest ever boondoggle in State Information Technology.

WASHINGTON STATE
In a related situation the question of what the IT architecture should be for the Washington State Centralized Data Center has also surfaced. In a letter to Gov. Gregoire, State Rep. Reuven Carlyle and Rep. Hans Dunshee urged the Governor to seek a second opinion before selling the construction bonds. They want her to take a hard look at shifting from “hardware-centric, expensive, IBM proprietary silos of data trapped in old databases” to newer technologies such as the Cloud a proprietary system from Microsoft.

In an email to Governor Gregoire I suggested that Carlyle and Dunshee were correct if the new architecture did not provide for an integrated system then the $180,000 cost for moving the old systems to the new Data Center would be a loss. I ignored the Carlyle and Dunshee proposal for the proprietary Cloud system for the more flexible RDMS. It now appears that Washington State is considering the RDMS which I proposed.

GEORGIA
Georgia signs $1.2 Billion IT Outsourcing Contracts with Last Vendors Standing
By Paul W. Taylor
On November 21, 2008 Georgia Technology Authority Director Patrick Moore was alongside Governor Sonny Perdue to announce the signing of a pair of contracts totaling 1.2 billion intended to consolidate and outsource the state government’s IT operations. The larger of the two, worth $873 million over eight years, was awarded to IBM to take over infrastructure — from the raised floor data centers, mainframes, services and disaster recovery to PC and laptops. The other will pay AT&T $346 million over 5 years to manage network services for the state. Both contracts have two one-year renewal options.

IBM and AT&T were effectively sole bidders after two other companies withdrew their bids before the apparently successful vendors were announced.

This has all the appearances of another boondoggle in the making since IBM is unlikely to propose a RDMS.

TEXAS
The above award comes on the heels of a decision late last month by the state of Texas to suspend an $863 million outsourcing project with IBM to transfer state records to a centralized computer system. In a letter to state IT officials, Governor Rick Perry said the company had failed to backup the data of more than 20 state agencies.

This Texas boondoggle appears to be just ending.

INDIANA
Ref: Glitches Mar Indiana’s Effort to Outsource Social Services By WILLIAM M. BULKELEY WSJ August 12,2009

Processing of welfare, food-stamp and Medicaid claims in Indiana was plagued with difficulties when the state outsourced the system to International Business Machines Corp. and Affiliated Computer Services Inc. two years ago. The problem hasn’t been resolved since then.
“There’s a myriad of problems,” said Anne Murphy, secretary of the state’s Family and Social Services Administration. “Error rates are too high. We’re not processing claims within federal guidelines.”
IBM, the prime contractor, along with Affiliated Computer and other firms agreed to run the programs for $1.34 billion over 10 years. Ms. Murphy said she ordered IBM to delay a planned roll-out to the rest of the state — about 40% of the population is currently covered — and to fix the problems by the end of September.

Outsourcing critics say Indiana’s problems show why government functions, particularly human services, shouldn’t be turned over to private contractors. Outsourcing of state-government functions remains rare but is attracting growing interest from states anxious to control costs and avoid capital outlays on new computer systems. Many such projects aim to use digital records to replace paper, much as health-care reformers promote electronic health records. Indiana estimated that outsourcing its benefits operations would save nearly $500 million overall.

Note that the Governor and the state’s Decision Makers have all missed the point that substituting one a bad manual system for an obsolete computer system leads to a second failure. What should be done is for the state to develop a State Centralized RDMS and bring back its privatized services.

The problem with outsourcing IT systems is that with an IBM contractor you more likely end up with an IBM solution. So what’s wrong with that? Just this IBM builds their own proprietary systems which can not be integrated with the rest of the states systems in short the same old stand alone systems that most states already have. This occurs because those in charge of letting these contracts are lacking in the fundamentals of RDMS knowledge. IBM and others are taking advantage of them to sell their own proprietary software.

The Amateur Approach to Downsizing

Donald Rumsfeld provides us with a good example of what I call the amateur top down approach from my articles 92, 104 and 146. The method is a kind of knee jerk approach. You know that the organization is overstaffed and you guess at how many employees you can remove without shutting down operations. Note that this method does not provide a way of finding out where and the over staffing occurs and by how many personnel. This method generally involves across the board cuts which punishes the best managed areas by cutting into their capability to provide services and has no effect on real overstaffed areas. This is also one of the best incentives to overstaff a bureaucratic organization.

“Five Ways to Downsize Government” By: Donald H. Rumsfeld
Published In: Heartland Perspectives Publication Date: August 4, 1995
Publisher: The Heartland Institute

Eliminate Bureaucracy
Congress should move swiftly to cut management and get personnel costs under control. It is guaranteed that there are more managers and more staff in the federal government than are needed. In less than seven months, Scott Paper Company eliminated 11,200 people, one-third of its workforce. The company cut 71 percent of the headquarters staff, 50 percent of management, and 20 percent of the hourly employees. If the national government is as overstaffed as was Scott Paper, some 140,000 government managers could be cut immediately, saving taxpayers billions of dollars.

The Secret Approach to Downsizing

I call this the secret approach because it is used secretly by major downsizing Management Consulting firms among them a firm which I was trained by, Alexander Proudfoot of Chicago. The primary method they use is called Short Interval Scheduling. After time-studying both shop and office functions (Work Measurement) a reporting system called Short Interval Scheduling is implemented. The Short Interval Scheduling reports made to management guarantees that production and services will not be interrupted and if there is a problem management will know about it within a few hours. In some of my articles I have called this method the Cost and Schedule approach. See my Article 12.

The following is a detailed example of my personal experience using Alexander Proudfoot techniques. This is an example is of a company wide downsizing operation made by Alexander Proudfoot. The client company was Clark Equipment at the Battle Creek, Michigan plant. Clark Equipment is a well-known forklift manufacturer. The company was under heavy competition from Japanese competitors using TQM and had to resort to extreme measures to survive. My assignment was in the Production Control Department and was to analyze the function, “servicing the manufacturing assembly line”. Several forklift drivers were involved in the transporting of parts on a timely basis to the manufacturing areas either to and from individual milling machines or directly to the assembly line of a particular forklift product.

My approach was to time study all the activities necessary to the servicing of the forklift production line. I followed and timed each forklift driver into the storage yards and counted the number of parts loaded on each pallet for each trip making sure that I had missed nothing. The number of parts to be loaded on the pallets was specified by the Production Control Planning System. My job was to be sure that the pallets were fully loaded or contained all of the parts required. At the assembly line the pallets of parts were placed near the assembly line so that they could be easily moved to the assembly line worker as needed. The study of the manufacturing areas took me about two weeks.

Now let’s do the data analysis. I needed to determine what “Product” was being produced by the Function. This appears to be difficult but what you must do is to break down all of the processes observed and find its smallest element. In other words this element or a multiple of it can be found in all the processes being performed in doing this function. Since all processes involved a forklift I found that the shortest process was when a forklift moved a pallet from its dropped location near the assembly line to the assembly line. I called this process a “forklift move” and the name of the element became “Move”, which I determined to be one minute long. This was very convenient because the entire analysis was done in minutes. If the Product “Move” had been five minutes long you would simply divide the total time for each process by five to get the number of move elements. Since each pallet moved had parts on it for more than one forklift and since I had counted and recorded the number of parts on all of the pallets we can analyze each pallet to determine if more than one part is required for each forklift. Adding the total time for the forklift driver to go to the storage area count the number of parts needed put them on a particular pallet and bring the pallet to the assembly area gives us the time to the drop-off place near the assembly line. To that we add the one minute required for a second forklift driver to bring the pallet from the staging area to the assembly line worker. We divide this total time by the number of parts moved (adjusted for the number of parts required per forklift). This process is repeated for all the pallets. When added together we know the total time spent in servicing this particular forklift product’s production line.

We cannot assume that all work will be performed at the standard 100% rate so we assume the actual rate is closer to 75% for staffing which adds 25% more time to the total. Multiplying this total adjusted time to service one forklift product by the current production rate (forklifts per month) gives us the adjusted time spent by all the forklift drivers for the month. When we convert the time in minutes to hours and divide this by the standard hours worked per month by a forklift driver we arrive at the total number of forklift drivers required at this particular production rate.
Given the total adjusted time to service one forklift product we can calculate Staffing levels for any manufacturing rate. It was also determined that since all the forklift products contained nearly the same number of parts the analysis could be used for all of the companies forklift products made on this particular production line.

Now let’s review the actual results of this analysis. During the study I stayed focused on the processes being performed and the time actually being spent. But since the analysis was being done in the cold of winter I noticed that every time I stopped by one of the four or five warming huts five or six people would get up and leave. Since I had no idea what these people were supposed to be doing I paid little attention to them. The results were shocking to the Clark Company senior management when they discovered that the actual number of employees required could be reduced by sixty a more than 50% reduction. The annual savings adjusted for today’s dollars amounted to more than one million dollars. If I had not conducted the study myself I probably would not have believed the results. After the removal of the redundant employees the Short interval Scheduling reporting was implemented.

So what’s wrong with this method of downsizing? Nothing if the plant is in danger of shutting its doors and quick solution must be had. But the method destroys employee morale by such severe measures and may create a permanent problem with unions resulting in ill will lasting for years. The Short Interval Scheduling reporting system forcibly maintains employee productivity. The costs are high in that there is little or no employee innovation for continuous improvement to the work methods. Note that this approach is used by Alexander Proudfoot through out the plant and in the office areas. It’s a real killer for morale and employee innovation. This is a very expensive operation because Management Consultants receive a substantial fee for their efforts.

The Lean and Work Measurement Method

The objective of the amateur method was simply to reduce personnel mostly likely to meet a short fall in the budget. The objective of the Management Consulting secret method is simply to downsize to known level determined by Work Measurement and to maintain production and service levels using the Short Interval Scheduling reporting system.

The objective of the Lean and Work Measurement method is to replace the 19th century bureaucratic structure found in industry and government with a downsized streamlined 21st century organization with fewer levels of management that encourages innovation by empowering both management and employees. To do this I recommend the adoption and use of the best techniques from business and government.

Bureaucratic Organizations have a reputation for resisting change but it is difficult for them to reject a method that brings innovation to the organization. That method adapted from industry is Lean. Value Stream Mapping is the primary useful Lean tool in government. Value stream mapping is a lean manufacturing technique used to analyze the flow of materials and information to bring a product or service to a consumer. Lean brings innovation to high level cross functional processes and to lower level functions. The low level Lean Teams meet once a week to discuss how to improve the processes that they use in their daily work. Their activities bring continuous improvement to the methods used in doing their job. A Lean Team objective is to study their job Function by making a Process Flow Chart of the current job processes followed by a second Process Flow Chart of the improved method. A budget analyst costs out the new method to determine the cost savings and the Team presents these savings to top management of the Organization. See my Article 137. Role of Lean Facilitator and Budget Analyst.

Top management’s role is to encourage the implementation of Lean both at the high and at the functional level. They should send representatives to Team meetings showing complete management support. Each functional Lean Team elects it own leader to chair the meetings and over see the making of the Process Flow Charts. The Top Management must support the Lean implementation or they should be replaced.

The Process Flow Charts provide a record of the costs associated with each process. If a process were to be eliminated all of its costs are also eliminated. A Process Flow Chart is done for each Function and if a Function were to be removed all of its budget will also be removed.
What you have now is the real budget for doing the Functions not that phony bloated budget that the Organization presents each year. True, you must add in the cost of managing the Organization but now for the first time you know what that cost is. This is a bottom-up budget with actual costs for doing the work known. All other costs are for management and fluff (which can be significant). In my experience in industry most unmeasured office areas are over staffed by 10% or more.

Once you know what the real costs are for doing the Organization’s work and top management is working closely with the Teams the reform process can begin. First the functional Team leaders become the Functional Management of the Organization. Second most of the mid management levels between the Functional management and top management become redundant. Top management now assumes the role of a Steering Management Team. Some but not all of mid management may become part of the Steering Management Team. Steering Management has the role of guiding and steering the organization while Functional Management deals with the day to day operation of the Organization’s functions. Steering Management is responsible for telling Functional Management “what to do” but not “how to do it”. This is a loose-tight organization with Steering firmly in control of the budget leaving Functional Management free to determine how best to do the job. Those in industry will recognize this as straight from the book “In Search of Excellence- Lessons from America’s Best-Run Companies” by Thomas J. Peters and Robert H. Waterman Jr., Harper and Row, New York, 1982.

What’s different? The multilevel career path is now one step from the Functional management Teams to the Steering Management Team. Gone are the hundreds of hours of endless manipulation of employee evaluations. Gone also is the endless bickering and negotiation over the organization’s budget. This method requires little investment by the organization by redirecting training efforts to this implementation. See my articles: 103,104,106,119,132,135 and 137.

Lawrence Rosier’s most significant achievement was the proposal and acceptance by Sanford McDonnell CEO of McDonnell Douglas Corp. in 1983 of a modification to the company’s Quality of Work Life (QWL) implementation. The modification replaced the existing bureaucratic organization with a two tier organization consisting of Steering Management and Functional Management for the McDonnell Douglas Missile Systems Co. This management style was enthusiastically received by employees and was used successfully for over ten years until the sale of the company to Boeing in the late 1990’s. In 2005 he came up with his method of building on to the QWL implementation by replacing it with Lean and using Process Flow Charts to determine Work Measurement and a Staffing Base necessary for downsizing. The QWL team’s name was unfortunately confusing in 1983 has been renamed the Lean Team which better describes what they actually do.

Atlanta’s four-day workweek has unexpected results.
By John O’Leary from Governing.com September 2, 2009

…Like many cities, Atlanta was facing a big projected revenue shortfall, between $60 million and $80 million. To generate savings, Mayor Shirley Franklin chose to institute a furlough program. Starting in December 2008, all municipal employees (except certain public safety workers) were shifted from 40 hours per week to 36 and began working four days per week, nine hours per day. Cost savings were generated through a commensurate 10 percent decrease in pay, as well as additional savings from decreased energy usage in municipal buildings.

In late June, with the support of Mayor Franklin, the city council voted 8-7 to increase city property taxes by more than 40 percent. In light of this tax hike, officials chose to discontinue the reduced work schedule.The furlough programs were mostly ended at the beginning of July, and Atlanta’s employees are back to the old nine-to-five.

Let’s take another look at what is going on here city employees working 36 hours per week still produce the same as when they worked 40 hours per week. This proves that the city is at least over staffed by 10%. I have stated in numerous articles that where Work Measurement is not used there exists at least 10% over staffing. But since the city of Atlanta does not do Work Measurement over staffing is most likely more than 10%.

My recommendations for Mayor Franklin is to continue the 36 hour work week, repeal the 40% increase in city property taxes and implement the following reforms to the city of Atlanta government.

I recommend two major reform initiatives one is the streamlining of service to the public. You can reduce their number of offices by the implantation of a Customer Relations Management 311 telephone portal and give 24/7 service to the public. Read how Hampton Virginia did this in my Article 101. The Hampton Virginia Innovation Story and Article 154. Streamlining Iowa Boards and Commissions Using Lean and More. See also other articles: 102 and 141.

The objective of the second reform is to replace the 19th century bureaucratic structure of the Atlanta city government with a downsized streamlined 21st century organization with fewer levels of management that encourages innovation by empowering both management and employees. This method requires little investment by the city but the redirecting of training efforts for the implementation of Lean Teams. The method uses Work Measurement to establish a staffing base for the city’s functions. See details of how to do this in my articles: 103,104,106,119,132,135 and 137.

With State Governors encouraging employees and the public to come up with savings suggestions and with the formation of a Government Reform Committee what should be the governor’s next steps.

Example Step 1. State Centralized Pubic Service Portal
For example the Government Reform Committee has managed to consolidate more than one hundred Commissions and Agencies into fifty. But there is a problem all those Commissions and Agencies were originally separated so that the public could easily find the office providing the service they needed. The solution is to build a Customer Relations Management (CRM) state telephone portal where the public can call a 311 number (similar to a 911 call) to get the services they need. A customer call is answered by a call taker, logged-in, then directed to one of several expertise areas for service. Each expertise call taker is specially trained for giving service to some part of the fifty Commissions and Agencies. The call takers are assisted by a customer log-in Relational Database (RD) and several Frequently Asked Question RDs. The FAQs with answers are collected from each Commission and Agency and loaded into the FAQ RDs. The CRM gives 24/7 service to the public while reducing the number of employees answering service phones by more than one hundred. See Articles: 101, 102 and 141.

Example Step 2. State Centralized Government Services
The idea for states is to combine all government support services into a centralized state Shared Services Department (SSD). Within the SSD organization is: Purchasing, Information Technology, Janitorial Services, Waste Management, Travel and expense, and others. The RDs that support the services should eventually be developed as a part of a state Centralized IT Data Center as in Example Step 5. See also Article 142.

Example Step 3. Decision for Major State Government Reform or Downsizing by Lay-offs
The governor must decide with his staff and the Government reform Committee whether or not to pursue major state government reform or resort to the standard method of downsizing by layoffs. Announcing that layoffs are coming can cause a number of problems. Personnel that know that layoffs are coming may perform poorly on the job while others with special skills may seek employment elsewhere. And another big problem the state does know where to make the cuts. These problems all lead to poor service to the public. Even employee furloughs cause interruptions in public services. See Article 146.

Should the decision be made for major state government reform the following steps are best taken:

Example Step 4. Implement Total Quality Management
Announce publicly the new direction of the state government to form Total Quality Management Teams and support this with a new state employee policy statement.

Example of a state employee policy statement:
Our dedication to principles of simplicity, innovation, and public trust has made us one of the most forward looking states in the nation. We are committed to achieving public service leadership by living our values and embracing strong principles.

Teamwork and Synergy:
We achieve synergy through the skills and ideas of all participants. Through collaboration, we strive for win/win solutions to issues and problems. Personal success is realized through team achievements.
See Articles 116.

I have recommended that reforms begin with the implementation of Total Quality Management (TQM). This reform brings a positive cultural change to the organization. Employees become members of Work Improvement Teams (eventually self directed teams) and are motivated by empowering them to improve their jobs through innovation. By bringing innovation and continuous improvement to the government’s processes the state will save $ millions through increased efficiency in the future. The reform amounts to a win win situation for government union employees as well as the tax payers of the state by employee empowerment and by ending bureaucratic waste.

The implementation of TQM is followed by the use of Work Measurement to set staffing levels using Process Flow Charts. And this is followed by replacing the current organization with a two tier form of government based on Steering Management and Functional management. See my articles 103, 104, 132, 135, 136, 137 and 146.

Example Step 5. Managing State Resources by a state IT Centralized Data Center
Most states have been developing or purchasing stand alone application programs which store their own data internally. When it becomes necessary to link one application with another a special linking program has to be developed so that an application program can share data with another. This obsolete system is more costly to maintain than a Relational Database Management System (RDBMS) using SQL (Structured Query Language). A RDMS has a different architecture, an application program does not store its data within itself but rather stores its data in separate relational databases (RDs). All application programs in the system can access any of the relational databases (RDs) as it needs data for running its application. This means that the amount of stored data in a RDBMS is significantly less since it is not duplicated over and over as it is in the old application programs.

This step obviously requires significant funding but the returns far out weight the investment. Note I suggested that the RDBMS be developed by one or more state IT departments, funded by the Federal Government and given to the states to facilitate a complete integrated system. The Federal Government’s Dept. of Homeland Security could tap into the system for a national driver’s license database.
See Articles 84, 120, 138, 143 144 and 145.

The following article from Stateline gives one of the best overviews of how states are coping with the current recession. It highlights the problem of where to make cuts but offers no solution But I do in my comments.

Budget cuts test state personnel policies
By Christine Vestal, Stateline.org Staff Writer August 27, 2009

Forced to dramatically cut payrolls, some states are finding low-cost ways to boost employee morale, even as they struggle to maintain basic human resource functions such as training, recruiting, hiring and regular performance reviews.

In 2009, more than 800,000 state employees were affected by budget cuts – mostly through unpaid days off, or furloughs. Hundreds of workers were laid off and thousands of positions were left unfilled, putting additional stress on those left behind. For the fiscal year that began July 1, states already have announced payroll cuts affecting at least a million workers and the numbers are expected to spiral even higher.
Despite these pressures, the Pew Center on the States is urging state policymakers to find creative ways to ramp up proven personnel practices so that shrinking state workforces have the support they need to continue to deliver quality government services.

Comments by Lawrence Rosier
The key message is that states do not know where to make cuts in personnel and still maintain government services. The reason they do not know is that they have not implemented Work Measurement in their government organizations. Once Work Measurement has been implemented they will know what Departments and Agencies are over staffed and how many personnel are needed to maintain government services. This is where precision cuts have an advantage over across the board cuts. Across the board cuts harms areas where government services are under staffed and has little to no effect on other bloated areas of the bureaucracy.

I have recommended that reforms begin with the implementation of Lean Teams. This reform brings a positive cultural change to the organization. There is a high level management Lean Team which focuses its studies on the high level processes of the organization and low level functional Lean Teams. Employees become members of Lean Teams (eventually self directed teams) and are motivated by empowering them to improve their jobs through innovation. By bringing innovation and continuous improvement to the government’s processes the state will save $ millions through increased efficiency both now and in the future. The reform amounts to a win win situation for government union employees as well as the tax payers of the state by employee empowerment and by ending bureaucratic waste. This is followed by the use of Work Measurement to set staffing levels using Process Flow Charts. And this is followed by replacing the current organization with a two tier form of government based on Steering Management and Functional management. See my articles 103, 104, 106, 147,148, 149, 151 and 152.

I became aware of the failure of my Company’s computer systems in 1986. While on the staff of the Vice President of Manufacturing I was asked to look at the problems with the company’s aging IBM computer systems. I did this in an unusual way over the objection of our IT manager I put up a wall chart of blank paper and had the “users” of the systems tape their part of the system on the wall. Each user added their application programs and showed where the data needed to run the application program came from. After a few days all of the users had put up their part of the system. The result was astounding for the next week all of the departments of the company had a chance to view the wall chart. What was discovered was that there was very little integration between application programs most were standalone with data being keyed in by hand with the application producing a printed report. One major fault was the passing of a 3x5 card of items required for manufacturing to purchasing personnel to enter into the purchasing application program. Our fix for the problem was to program entirely new applications with separate relational databases called a Relational Database Management System (RDMS). The project failed when the IBM data processing personnel refused to help program the new system. The revolution has been a long time coming since me and others have known for more than twenty years how to fix this problem.

More and more people are using the internet query methods made popular by Google and others allowing the easy search of Relational Databases throughout the world. They will demand that IT Managers stop this insane practice of continuing the development of obsolete computer systems. The failure to manage state resources in all areas but especially in welfare and Medicaid is costing states $billions. Most state computer systems are incredibly obsolete with information silos, duplicated data and inability to share information leaving the state vulnerable to open fraud.

Systems integration is achieved when separate databases for storing data are created using the Structured Query Language (SQL) database language. This allows IBM, Digital Equipment and other Vendors using SQL to access the databases. The process works this way when an application program needs to retrieve or store data it uses an SQL request to find data or store data it needs in separate relational databases. This is the similar to the relational database structure used by Google on the Internet and allows queries to be made easily without having to write a program for the query.

Most of the public including government and academics still are not aware of the problem. They seam to be unaware that the programming skills used in the obsolete systems are no longer needed for the new RDMS. The following is one example where academics are concerned about the loss of competent IT workers when the real problem is how to get competent RDMS workers and what to do with obsolete IT workers. In short “they just don’t get it”.

Dusty Data By Katherine Barrett & Richard Greene
Governing Magazine August 20, 2009
How to hang on to IT staff? Very few states, counties or cities want competent IT workers to leave their jobs. Although the recession may have led to some loosening of the job market, once a technology expert is familiar with the workings of a particular entity, she’s worth her weight in gold-sheathed silicon. Enter the University of Arkansas, where professors Margaret Reid and Myria Allen, along with colleagues at Baylor University and Florida State University, have some answers. In a presentation they’ve put together, the academics offer some keys to hanging on to these cherished employees. Among their suggestions: Help employees avoid becoming exhausted from overwork; provide an environment that is conducive to continual learning and change; make sure they work for knowledgeable managers; and provide the chance to receive cross-training. The absence of these elements is responsible for a big chunk of IT turnover.

So why is a revolution required to get the new RDMS? The revolution is in the State IT Departments after all you can not expect someone worth their weight in gold-sheathed silicon to give up their powerful knowledge for a new system that makes them redundant.

What is needed is for one state to develop or lead the development of the nearly 50 application programs and 30 relational databases to run the state’s Centralized IT Systems. And since the new software can be universally used on many different computer vendor platforms once it is developed it can be replicated on most other state computer platforms. I have recommended that the federal government pay for the development of this state computer system and then make it freely available to all states for their implementation. See my articles 120, 138, 143 and 144.

There is an incredible lack of understanding of computer systems mostly of a technical nature among state Decision Makers who time after time turn to the wrong people for advice on how to fix their state’s computer problems. Bad IT decisions come about mostly by the failure of Decision Makers in the past who were not computer literate and by the piecemeal stop gap fixing of obsolete stand alone computer application programs. Decision Makers in many cases are led astray by self-serving Information Technology (IT) Managers who wanted to keep their programmers busy by patching and developing new application programs for their obsolete systems.

System implementation planning failures are generally the fault of the Decision Makers funding the project. It wasn’t but a few years ago when almost none of the leaders in government had any computer experience at all. They relied completely on their Information Technology (IT) manager for planning and implementation of computer systems. Even today the situation is not much better. Faced with throwing out all of the present computer applications and implementing what is needed a Relational Database management System (RDMS). IT managers fight to continue their obsolete systems pointing out the cost of bringing up a new RDMS. This argument pales in light of the losses to the state from Medicaid fraud and the inability to manage state services over and above the added cost for maintaining the present obsolete systems.

But what if the Federal Government were to fund the state’s development of their computer applications and RDBS? This is exactly what I have proposed in my Article 120. Homeland Security is trying to find a way to link all of the states’ motor vehicle registration databases through an unfunded mandate called the Real ID. On the surface this appears to be nearly impossible task since nearly all of these databases have been developed as proprietary systems.

The answer is to have the federal government fund the state’s development of the software application program for a state motor vehicle Relational Database (RD) and give the software to each of the states. Each state would then load the new RD with the motor vehicle data from their old proprietary database. Since the state RDs are easily linked this would provide a giant national motor vehicle RD which could be easily accessed by law enforcement and Homeland Security. See my Article 120 and Article 138.

Among computer literate personnel an organization’s computer department is known as an IBM “shop” or a Digital Equipment “shop” meaning that the organization only uses a specific type of vendor computer hardware. It also means that only IBM or Digital Equipment software is used. When the IBM Operating System software is used all Application Programs are written to run on it. The result is that if the organization only has IBM computers you will most likely get an IBM solution. And you will not get a system that can be integrated with other non-IBM systems. What I have observed is that most IT managers are more loyal to their “shop” (vendor specific system) whatever it is than they are to state Decision Makers. The same problem occurs when Decision Makers seek to contract out services few of them seam to be aware that they are getting a proprietary solution when they contract services to an IBM shop nor do they seam to care about the cost except when there is a major failure and yet they still don’t know what went wrong.

Problems in Missouri:
Most states including Missouri have been developing or purchasing stand alone application programs which store their own data internally. When it becomes necessary to link one application with another a special linking program has to be developed so that an application program can share data between them. This obsolete system is more costly to maintain than a Relational Database Management System (RDBMS) using SQL (Structured Query Language). A RDMS has a different architecture, an application program does not store its data within itself but rather stores its data in separate relational databases (RDs). All application programs in the system can access any of the relational databases (RDs) as it needs data for running its application. This means that the amount of stored data in a RDBMS is significantly less since it is not duplicated over and over as it is in the old application programs.

Missouri is still using IBM’s DB2 databases which have been obsolete for the last twenty years. It is a part of the state’s aging computer systems which is a stand alone system and can not be integrated easily with other systems. See my Article 143.

Problems in Washington State:
From The Olympian August 4, 2009
Rep. Reuven Carlyle, a Seattle Democrat and software entrepreneur, says the state is making a mistake with the data-center portion of the project, which accounts for $180 million of the $255 million project cost. Carlyle said it ignores the biggest problem, the state’s aging pieces of information technology that do not have the ability to talk
to each other.

Carlyle is correct if this project does not upgrade the states information technology (computers and software) allowing for the ability to talk to each other then this project is one huge boondoggle. The answer is in making computers and software independent. Software should be easily integrated with other software and able to run on any off-the-shelf computer. This allows for the flexibility of upgrading to a newer faster computer from any supplier without having to rewrite all of the software which runs on the current computer. If the state of Washington is not using the above RDMS architecture or one of similar capability then it is indeed making a $180 million mistake.

Problems in Indiana:
Ref: Glitches Mar Indiana’s Effort to Outsource Social Services By WILLIAM M. BULKELEY WSJ August 12,2009
Processing of welfare, food-stamp and Medicaid claims in Indiana was plagued with difficulties when the state outsourced the system to International Business Machines Corp. and Affiliated Computer Services Inc. two years ago. The problem hasn’t been resolved since then.
“There’s a myriad of problems,” said Anne Murphy, secretary of the state’s Family and Social Services Administration. “Error rates are too high. We’re not processing claims within federal guidelines.”

IBM, the prime contractor, along with Affiliated Computer and other firms agreed to run the programs for $1.34 billion over 10 years. Ms. Murphy said she ordered IBM to delay a planned roll-out to the rest of the state — about 40% of the population is currently covered — and to fix the problems by the end of September.

IBM and the state said they expect to resolve difficulties by then. Problems were partly caused by a surge in aid applicants hurt by the recession and severe flooding in the state last year, Ms. Murphy said.
Defenders of the outsourcing say the programs were clogged with paperwork and riddled with inefficiencies before the changes. Republican Gov. Mitch Daniels, an outsourcing advocate, blasted the old system as a “monstrous bureaucracy.”

Outsourcing critics say Indiana’s problems show why government functions, particularly human services, shouldn’t be turned over to private contractors. Outsourcing of state-government functions remains rare but is attracting growing interest from states anxious to control costs and avoid capital outlays on new computer systems. Many such projects aim to use digital records to replace paper, much as health-care reformers promote electronic health records. Indiana estimated that outsourcing its benefits operations would save nearly $500 million overall.

Note that the Governor and the state’s Decision Makers have all missed the point that substituting one a bad manual system for an obsolete computer system leads to a second failure. What should be done is for the state to develop a State Centralized RDMS and bring back its privatized services.

The problem with outsourcing IT to run social systems is that if for example IBM is the contractor you more likely end up with an IBM solution. So what’s wrong with that? Just this IBM builds their own proprietary systems which can not be integrated with the rest of the states systems in short the same old stand alone systems that most states already have. This occurs because those in charge of letting these contracts are lacking in the fundamentals of RDMS knowledge.

Problems in Texas:
The state of Texas in 2007 ended a $899 million contract with Accenture Ltd., under which the computer-services firm was supposed to process applications for children’s health insurance, food stamps and Medicaid, amid widespread reports of failures to give applicants their benefits. A spokesman for Accenture said the company and Texas mutually agreed to discontinue the contract.

After the contract began, some 1,500 state workers became employees of Affiliated Computer, a big Dallas-based outsourcing company. Although IBM is the prime contractor on the deal, Affiliated gets the lion’s share of the revenue, according to a person familiar with the matter. Affiliated referred questions about the contract to IBM. IBM declined to comment further.

This is just another example of a boondoggle of misspent state funds. The State of Texas needs to develop a State Centralized RDMS and bring back its privatized services. If my recommendations for the elimination of bureaucratic government are followed the state will be able to operate these services for less cost than a private company. See my Article 112.

Problems in Virginia:
Ref: Candidates for state IT chief emerge by Jeff E. Schapiro Richmond -Times Dispatch Aug 12, 2009.

…(The hiring of)Virginia’s information-technology chief, whose first task will be to salvage the state’s troubled relationship with Northrop Grumman. …The Northrop Grumman agreement with the state is to manage computer and related services under a 10-year, $2.3 billion contract — state government’s richest privatization deal.

If my hunch is correct this could be the biggest boondoggle of misspent state funds ever! Northrop Grumman is unlikely to use a RDMS.

See the following articles for more information:
Article 46. Why some Computer System Implementations Fail.
Article 84. The Failure to Manage State Resources due to Obsolete Computer
Article 101. The Hampton Virginia Innovation Story
Article 102. Government Reform of California Agencies and Commissions
Article 103. Reforming Bureaucratic Government the Subtle way by Bringing Innovation to Government
Article 106. Where do the Government Reform Savings Come From?
Article 112. Using Surplus Government Employees to Take Back Privatized Contracts
Article 120. Collaborative Innovation between States and Federal Government
Article 138. State Information Technology Centralized Data Centers
Article 142. Huge Savings from State Centralized Services
Article 143. Examples of a Relational Database Management System

Most states have been developing or purchasing stand alone application programs which store their own data internally. When it becomes necessary to link one application with another a special linking program has to be developed so that an application program can share data with another. This obsolete system is more costly to maintain than a Relational Database Management System (RDBMS) using SQL (Structured Query Language). A RDMS has a different architecture, an application program does not store its data within itself but rather stores its data in separate relational databases (RDs). All application programs in the system can access any of the relational databases (RDs) as it needs data for running its application. This means that the amount of stored data in a RDBMS is significantly less since it is not duplicated over and over as it is in the old application programs.

First example: in the obsolete system a resident of a state can have his name and address stored in every application’s data that he has come in contact with. That is in: the state vehicle records, the state income tax records, the voter registration records, unemployment records, state higher education records, criminal justice system records, and others. If the person moves to a new address all of these records are obsolete and need to be updated. This where the cost of maintaining the obsolete systems is much more than the single address data found in the new (RDBMS).

The logic of what should go into a State Centralized Data Center’s new relational databases is not always straight forward. But for this example the first relational database (RD) created I would name the “Resident Household RD”. This RD would contain the unique identifiers of a resident of the state: the name, the address, the age, a physical description (height, hair color), driver’s license, social security number, a picture and the finger prints of the person. If the person is not a US citizen the country of origin should be noted. All the state’s application programs when seeking the name and address of a resident would query this RD first to retrieve the data.

Second example: the state Voter Registration application program would query the Resident Household RD first when updating a resident’s voting status. The voting status of the resident would then be processed in the state’s Voter Registration’s application program and stored under the residents name in the state “Voter Registration RD”. Note that this is one of the best opportunities to process a change of address along with the annual driver’s license renewal application.

Third example: a resident applying for Medicaid assistance would need to identify himself by first filling out an application in a state Medicaid office. If the applicant should supply any piece of information on their application form that is different from that in the Resident Household RD they could be arrested for attempted fraud. If the interview is done on the phone to the state Customer Relations Management service and the applicant is suspected of committing fraud. The applicant should be directed to the nearest state office to fill out an application form and upon the submission of the false information be arrested on the spot. If the applicant submits a valid request the information is entered into the Medicaid application program, processed and saved to the Medicaid RD.

Fourth example: a resident applying to Homeland Security for disaster aid could be quickly identified by accessing the Resident Household RD. If the applicant submits a valid request the information is entered into the Homeland Security application program processed and saved to the Homeland Security RD. Disaster aid could be awarded in some cases on the spot rather than six months later.

Note that in each example the application program is completely separated from the RD. This system is much more cost effective not only because the data storage is smaller but also because the application programs can be run on any vendor computer and the computer can be upgraded with out having to rewrite the application or the RD software.
So why don’t all the states use the RDMS? Cost is the reason, none of the current application programs and their attached databases can be used they must be scrapped and replaced by the new system.

In 2005 the Federal Government i.e. Homeland Security put an unfunded mandate requirement on the states to comply with the Real ID system by linking each state’s driver’s License databases into a nation wide system. This initiative has failed because each state has its own unique proprietary Drivers License application programs resulting in a virtual impossibility to link these to a Federal system. With the Resident Household RD implementations in each state the Real ID initiative becomes a possibility. But this is only one part of a state’s RDMS. This is why I have recommended that the Federal Government pay for the development of all of the new state Application Programs and RDs. I am aware of two states Washington and Colorado that are interested in the development of a Centralized RDBMS. They should combine their efforts with funding from the Federal Government in the development of a Centralized RDBMS which could then be made available to the rest of the states. Each state would implement the new systems by bringing up the new application programs and RDs on their new updated computers in a Centralized Data Center facility. The data from the old systems would then be copied into the new RDs and after all tests are completed the old system is then shut down.

See the following articles:
Article 46. Why some Computer System Implementations Fail.
Article 84. The Failure to Manage State Resources due to Obsolete Computer System
Article 102. Government Reform of California Agencies and Commissions
Article 106. Where do the Government Reform Savings Come From?
Article 118. Examples of Cooperative Innovation
Article 119. Not Just Another Grass Roots Movement to Reform Government
Article 120. Collaborative Innovation between States and Federal Government
Article 138. State Information Technology Centralized Data Centers
Article 142. Huge Savings from State Centralized Services

I advocate that state governments adopt the best management practices found in private business and government. One the best I have found is that put into operation 10 years ago by the Boeing Company the Shared Services Group (SSG) headed by its President Tom Copes. The mission of Shared Services is to “enable Boeing competitiveness by providing effective services at an affordable cost”.

The idea for states is to combine all support services into a centralized state Shared Services Department (SSD). Within the SSD organization is: Purchasing, Information Technology, Janitorial Services, Waste Management, Travel and expense, and others.

One way that Boeing’s SSG improves the bottom line is through economies of scale, such as the leverage it has in purchasing of support equipment and supplies. That extensive list ranges from office supplies and computers to janitorial services, tools and safety glasses. By establishing standards and consolidating purchasing contracts SSG saved Boeing more than $750 million in 2007. The improvement in the quality of its support services is one of its goals. An approach by SSG is the use of a value stream mapping technique to gain end user perspectives and make improvement to its processes.
SSG uses Lean + tools through-out its organization to achieve productivity and total cost improvements.

To Gain more insight on Lean + I recommend the following explanation and a list of Lean + tools at:
Throughput Solutions Lean Manufacturing website: http://www.tpslean.com.

From the Throughput Solutions website:
Self-Directed Work Teams
Through the natural evolution of the Lean work environment, associates begin to work more as interdependent teams in order to accomplish area and company goals. When this begins, it is time to support the transition to a self-directed workforce, capable of managing their own areas with greatly reduced supervision and oversight. Self-Directed Work Teams, to a large degree, voluntarily interact with internal customers and suppliers to improve area effectiveness and effectively deal with area issues.
Implementation: Once you’re ready to begin formalizing Self-Directed Work Teams, we take eligible teams through a series of team-building exercises geared toward increasing trust, cooperation, communication, and responsibility for self and others. This is a truly incredible and powerful process that results in personal and group change to allow for a very rapid, but consistent evolution of the team.

Teams quickly learn to function at a basic level, determining simple things like who reorders consumables, how to adjust schedules, and resolving minor area issues. Later, team development may include providing input on hiring, discipline, advanced area troubleshooting, and production scheduling (within the area). Effective self-directed work teams yield highly competent and capable employees with a genuine investment in area and company success.

The Self Directed Work Teams are the same as my recommended Work Improvement Teams (WIT). To understand how these teams are to be used let’s examine Purchasing as an example.

The first thing to do is to break Purchasing into its logical functions. The purchasing of tools and supplies appears to be a logical function because the processes are different from the purchase of personal computers which is another function. Similar items may use the same processes as that used for computers such as copying machines and printers. The point is that each function has a unique set of processes and these determine what a function is, not what is being purchased. Although the Lean + Tools should be used where they apply I recommend Process Flow Charts for determining the function’s staffing base.

The self directed work team follows my recommendation for the elected WIT leaders to take over the management of the Function. Along with my further recommendation for Steering Management.
Steering Management has the role of guiding and steering the organization while Functional Management deals with the day to day operation of the Agencies functions. Steering Management is responsible for telling Functional Management “what to do” but not “how to do it”. This is a loose-tight organization with Steering firmly in control of the budget leaving Functional Management free to determine how best to do the job. Those in industry will recognize this as straight from the book “In Search of Excellence- Lessons from America’s Best-Run Companies” by Thomas J. Peters and Robert H. Waterman Jr., Harper and Row, New York, 1982.

All the functions found in a centralized state Shared Services Department (SSD) should be dealt with in a similar manor like in the above Purchasing example.

See the following articles:
Article 21. Centralized Purchasing- The Best Way to Balance State Budgets
Article 22. Functional Restructuring of State Government rather than Departmental Restructuring.
Article 28. Making Centralized Purchasing Work using Aggressive Negotiation
Article 46. Why some Computer System Implementations Fail.
Article 47. Changing the Workplace Environment to get Innovation.
Article 49. Practices that Encourage Teamwork and Continuous Improvement.
Article 50. Implementing Work Improvement Teams With Government Employee Unions.
Article 101. The Hampton Virginia Innovation Story
Article 102. Government Reform of California Agencies and Commissions
Article 103. Reforming Bureaucratic Government the Subtle way by Bringing Innovation to Government
Article 104. Down Sizing State Government the Easy and Safe Way
Article 106. Where do the Government Reform Savings Come From?
Article 137. Role of TQM Facilitator and Budget Analyst
Article 138. State Information Technology Centralized Data Centers

Amidst the hand wringing there is much activity the elimination of boards and agencies and the combining of others. There are also employee buyouts for early retirement, furloughs of state employees and the sale of state surplus property: real estate and automobiles. The elimination and deep cuts in services: for children, health care and education are gut wrenching for state legislatures. There is a renewed search for the essential core of services which the government must (or can) provide. And after 2010 there is 2011 the year when conditions are supposed to start getting better.

The reality of these efforts may not be as desired for example the process for “the elimination of boards and agencies and the combining of others” eliminates some public services. But unless there is a significant reduction in personnel why bother just moving personnel from one office to another increases rather than decreases costs. Buyouts for early retirements may help this year but these positions will be replaced by new hires when times are better costing the state more.

Now is the time to start thinking positive about new solutions to government. The biggest obstacle is the common belief in government that anything you do must be funded and since there are no funds reforms cannot be made. And that funds spent on reforms could be better spent on essential services. But the reality is that the investment in some reforms can save the state $millions and while continuing or improving state services.

Consider this reform for managing the hundred or so agencies, boards and commissions in state government. Currently most state Online Agency Directories aid the public in finding the particular organization they are looking for to provide a specific service such as: answering a question, making a request or filling out an application. But with this new reform all public queries can be handled through a centralized state 311 telephone number. The 24 hour State Services Call Center can provide almost instant service to the public. This portal eliminates the need for the public to search for a specific government organization. This allows for the complete reorganization of the states services system. No longer requiring public interface, commissions and agencies can be consolidated into a much more responsive and efficient organizations resulting in the elimination of many management and public interface employee positions.

Consider this example from the state of Connecticut’s website with a clickable list of 115 Boards, Commissions, Departments and Offices including the Governor’s.

All Agencies and Offices in Connecticut State Government are listed alphabetically below with hyperlinks to available websites. You may also use the State Government Telephone Directory for information on how to contact any of these agencies and offices.

• 1. Accountancy, State Board of
• 2. Administrative Services, Department of
• 3. African-American Affairs Commission
• 4. Aging, Connecticut Commission on
• 5. Agricultural Experiment Station, Connecticut
• 6. Agriculture, Department of
• 7. Attorney General, Office of the State
• 8. Auditors of Public Accounts
• 9. Banking, Department of
• 10. Blind, Board of Education and Services for the
• 11. BlUe Ribbon Commission on Housing and Economic Development
• 12. Business Advocate, Office of the
• 13. Capitol Child Development Center
• 14. Charter Oak College
• 15. Chief State’s Attorney, Office of the
• 16. Child Advocate, Office of the
• 17. Children and Families, Department of
• 18. Children, Commission on
• 19. Children’s Trust Fund
• 20. Claims Commissioner, Office of the
• 21. Comptroller, Office of the State
• 22. Commission on Child Protection
• 23. Commission on Fire Prevention and Control
• 24. Commission on the Deaf and Hearing Impaired (CDHI)
• 25. Commission for Educational Technology
• 26. Connecticut Commission on Culture and Tourism
•
• 105. Tax Department (Revenue Services)
• 106. Teachers’ Retirement Board
• 107. Transportation, Department of
• 108. Treasurer, Office of the State
• 109. University of Connecticut
• 110. University of Connecticut Health Center
• 111. Veterans Affairs, Department of
• 112. Victim Advocate, Office of the
• 113. Water Status, State of Connecticut
• 114. Women, Permanent Commission on the Status of
• 115. Workers’ Compensation Commission

My Revised 311 Portal to Connecticut Agencies Departments and Offices

There is no right way or wrong way of combining different parts of this list but there probably is a better way. I first numbered each of the 115 items to make sure that none were overlooked. I made no attempt to eliminate a board or an Agency only to provide a logical pathway for the Telephone Answerers to get to each of the 115 items Through 3 gateways: State Offices, State Departments and Other State services. The system is called Customer Relations Management (CRM) and uses a similar call center to that of a 911 center. Each Telephone Answerer is trained in doing the current public services provided by the items found in either: State Offices, State Departments or Other State Services. This means that there must be at least three or more trained personnel on duty at all times.

So where is the savings? In each of the 115 offices there must be at least two personnel taking public phone calls. That amounts to 230 personnel answering the phones during working hours compared with as few as 24 (my example estimate) manning the phones 24/7. Note that this is more than a telephone answering service the business of the state is conducted by the CRM. When you combine these savings with the elimination of some departments and agencies significant savings can be achieved. The main reason for the listing of the 115 offices is so that the public can find the state service that they want.

A call is directed to the individual with knowledge in one of the following three areas. That individual is assisted by a frequently asked Question (FAQ) database developed for each office in the selected area. See my Articles 101. and 102.

State Offices:
7. Attorney General
Law: 6. 15. 20. 41. 42. 43. 51. 57.
58. Fiscal Analysis
108. Treasurer: 1.
107. Transportation

State Departments:
2. Administrative Services:
3. Agriculture: 5.
9. Banking
50. Education: 25. 27. 30. 38. 106. 109. 110.
52. Emergency Management and Homeland Security: 23.
68. Insurance: 104. 115.
92. Public Health: 4. 24. 28. 29. 44. 110. 113.
93. Public Safety
94. Public Utility Control
95. Public Works
100. Social Services
Children Services: 13. 14. 16. 17. 18. 19. 22. 46. 47. 48.
Disabilities: 48. 47. 46.
82. Motor Vehicles
103. State Contracting Services
97. Revenue: 34. 102.

Other State Services:
Economics: 11. 26. 33. 39. 40. 45. 49. 129.
Environment: 32. 36. 50. 53. 54.
Military: 35. 81. 83. 101. 111.
Women and Minorities: 3. 96. 114.

Note that there are 10 children service offices These should probably be combined into one office. Now this is important, all the functions and the processes to do each function should be identified and Work Measurement should be used to determine the proper staffing base for all of the above offices including the Children Service Department. See my Articles 103 and 106.

Business creates two types of jobs service jobs and manufacturing jobs. Both are needed to pull to us out of our current Great Recession. But it is the manufacturing jobs that exports goods and supports the Nation’s balance of payments. America’s is losing the battle the dollar is eroding fast and will could be replaced by the Euro as the world’s leading currency.

The problem is we have not followed “the Principle of Economic Self Interest” at the international level. The Principle of Economic Self Interest is used by cities to compete with other cities for new businesses and government installations. It is also used at the state level for the same reasons. But somehow the understanding of this concept at the federal level has been lost and worst of all tax incentives for outsourcing have been provided to manufacturers who send jobs out of the country. The idea is simple to build the economy by providing jobs which in turn multiplies the economy through worker spending at local businesses. We see the violation of this rule by all the US manufacturing companies that are going to China and other third world countries in search of cheap labor. See my Article 99. Understanding the Principle of Economic Self Interest.

Most of these jobs were lost because of two factors, powerful union pressure for a larger piece of the pie and incredibly poor decisions made by manufacturing management.

So what is the nature of these bad decisions? It is not so much bad decisions but the bureaucratic management making these decisions. Most poorly managed manufacturing companies have bureaucratic management that is no different from that found in government. Incapable of reforming its 19th century management practices the company looks only at two factors raw material costs and labor costs. Unable to control its raw material costs it seeks the lowest world wide labor cost it can find. When they talk about Labor costs they are only referring to union labor costs which are diligently measured using Work Measurement (mostly time study). But they never measure overhead employees and allow unnecessary over staffing with multiple layers of management in its bloated bureaucracy. At the same time corporate management is rewarded with huge salaries and other perks.

In contrast the competition Toyota and Honda use the Total Quality Management form of organization to get innovation in its work force. Yes they have unions but the members realize that their fate is closely tied to the fortunes of the company they work for. When sales are not so good the union may even forgo asking for a raise. Most of their corporate leaders use mass transit to get to work rather than chauffeured limos.

Case in point Warren Buffett, who is 78, was intrigued by the entrepreneur behind BYD, a Chinese electric car manufacturer headed by a man named Wang Chuan-Fu. The company itself is frugal. Until recently, executives always flew coach. He was appalled when he learned that Ford, which lost billions last year, had staged a gala at the Hotel George V during the Paris auto show. By contrast, the last time BYD executives traveled to the Detroit auto show they rented a suburban house to save the cost of hotel rooms. Last fall Berkshire Hathaway bought 10% of BYD for $230 million mainly because of its CEO.

The point is that there are serious problems in the way many American companies are managed most are still using the 19th century bureaucratic organization with all its flaws. These poorly managed companies are more likely try to solve their financial problems by seeking cheap labor abroad rather than reforming themselves.

But there is an alternative to just accepting fate and allowing companies to close down. Local governments need to fight to save these jobs by requesting the companies to reform themselves. They should be implementing Lean Teams, using Work Measurement for staffing its overhead employees and reduce the levels of management. Given the cost of a company building a plant in China and transporting the manufactured items back to the US there is a good chance for a reformed company that the move may not be economically feasible.

To avoid further losses of manufacturing jobs when troubled companies come to local governments seeking tax relief it should be given only if the company can show progress in reforming itself by shedding its bloated bureaucratic management. Unions should also be prepared to make concessions to save their jobs.