The grim statistics taped on a corner bookshelf in Eric Steen’s office serve as a daily reminder of the odds he’s fighting as the chief of a massive California state government technology overhaul.
Item No. 1 on the list: “Average success rate for IT projects is 32 percent.”
Item No. 2: “Large IT projects deliver 56 percent less value than predicted.”
Item No. 3: “Failure rate of IT projects with budgets greater than $1 million is almost 50 percent higher than for projects with budgets less than $350,000.”
The list, part of a PowerPoint presentation created by the 47-year-old Steen, both sobers and energizes him daily as he oversees work on the Board of Equalization’s Centralized Revenue Opportunity System, or CROS. The project aims to expand the tax- and fee-collecting agency’s online services, improve accuracy, streamline operations and pump another $200 million into the state’s coffers annually by using data analysis to find errant tax filers and cheats. It’s supposed to cost $309 million, according to current state estimates.
Steen, who agreed to be profiled by The Sacramento Bee as part of a series of back-room stories about the CROS program, knew the odds when the five-member board hired him in 2011. In a state government averse to public accountability for public failure, Steen comes across as a rare bureaucrat willing to put himself personally and professionally at risk.
“When I interviewed for this job, I was told that the board wanted one throat to choke,” he said with wry smile during a recent interview. “A single point of responsibility, so that they could hold that person accountable to drive success.”
Since then, he has become one of the more vocal IT honchos in California’s vast state government, willing to publicly criticize what he sees as needless bureaucratic obstacles to the CROS project.
During a June 23 Board of Equalization meeting, for example, Steen called out Department of Technology officials, including Director Carlos Ramos, for requiring the CROS team to submit a long-term planning schedule before the project could pick a private-sector contractor. In Steen’s view, the demand made no sense and needlessly delayed the project for four months.
Since salaries and other expenses are running at about $700,000 per month, Steen said, holding back until October adds $2.8 million to the CROS project’s total cost.
Besides, he added, the CROS team had submitted seven such schedules in the last year – including two in June. The last one was 34 pages, he said, but technology department authorities, who have the final say on state IT projects, still wanted more detail.
The demand, he said, was akin to asking a homeowner for specifics about a second-floor addition to a house before settling on a contractor and drawing up blueprints for the work.
“If this is a harbinger of what’s going to come during implementation, then it’s likely CROS is going to cost a lot more and take a lot more time than it ought to,” Steen told the board. “At best, this is a distraction. At worst, we go down the road to another failed state IT project.”
After hearing Steen’s assessment, Republican board member George Runner was on his side. He joked, “I guess that’s why they call them ‘control agencies’ and not ‘assist agencies.’ ”
Department of Technology spokeswoman Teala Schaff said Steen has it backward. The planning requirement aims to avoid unanticipated problems down the line that have hobbled other state IT initiatives.
The list of boondoggles includes the state’s stalled payroll system overhaul ($250 million spent so far), an abandoned court records network (scrapped after burning through $500 million-plus) and an underperforming professional- and business-licensing project (now budgeted for more than three times its original $27 million cost estimate).
“We have learned from these horrible, expensive lessons,” Schaff said, and the department stands by its demand for more information from the Board of Equalization before authorizing the next phase.
Steen: “To be fair, we’re dealing with public dollars. We have to be judicious, above scrutiny. But do I think it needs to take as much time as it does? No.”
Steen’s career path took the scenic route to the 10th-floor office in the Board of Equalization’s high-rise headquarters in downtown Sacramento. After a stint in the Army, he graduated with a degree in English from Sacramento State in 1994. He considered teaching but instead broke into the IT industry as a technical writer for a small consulting firm.
“That opened up an opportunity to get into database design and development,” Steen said during a recent interview. He learned the business through on-the-job training he said, and took classes to gain skills.
He eventually landed a position with the IT arm of global conglomerate Deloitte. His colleagues there were tech-heads and “MBAs from tier-one schools,” he recalled, while he was the self-taught guy with a liberal arts degree from a state college.
“I kept waiting for someone to say, ‘All right, Mr. Steen, you’ve had your fun. Let’s go back down to the bush leagues.’ ”
Steen had moved on to a consultant position with Trinity Technology when he heard that the tax agency was hiring a project director for CROS.
The job is unusual in the state’s IT corps, because it answers to an independent board of five publicly elected officials. Most technology managers work in departments under gubernatorial control. So while the CROS chief must work with Gov. Jerry Brown’s technology branch and the Legislature, the position is administratively and politically on the outside.
“My first thought was, ‘That’s really not me,’” Steen recalled. “I thought of myself as a consultant.”
California’s state IT corps routinely loses workers to private-sector firms that pay more, but after thinking it over, Steen went against the grain and applied for the job. He was lured by the chance to beat the odds, to launch a successful state technology project.
“I was really frustrated with seeing the (IT) failures throughout the state, so I wanted an opportunity to come in and make different decisions,” he said.
Consultants are “always whispering into the ear of the king,” Steen said. “But this job, you get to come in and make decisions. ... You get to be the king.”
But as he would quickly learn, he said, “It turns out this isn’t a monarchy.”
Overhauling a state computer system starts long before flipping the “on” switch. Old data must be converted into a form that the new system can use. Old methods of gathering data must be analyzed to determine how they will mesh with the new program. All of the old operations that the new project will take over must be mapped and scrubbed for errors to avoid glitches when the new program comes online.
Those tasks and other painstaking prep work, called “the pre-implementation phase” by IT experts, are key to being one of the 32 percent of computer projects that succeed.
CROS will eventually consolidate 107 separate systems, Steen said, and interact with several others. A breakdown, even just for one day, could have serious consequences, since the Board of Equalization collects about one-third of California’s government revenue – about $60 billion last year.
When Steen arrived in 2011, the tax agency didn’t have a written list of its patchwork of data processes or how they linked to one another. There was no single catalog that documented how it collected information. Over the years, when obstacles arose, employees would just find ways to work around them.
“There was all this mission-critical work being done all around. Employees just wanted to get the job done, so they’d build something on the side,” Steen said. “An Excel spreadsheet, 3-by-5 note cards, whatever, but only two or three people would know about it.”
The data itself must be scrutinized, cleaned up and made uniform. Names, addresses and identification numbers, for example, must be correctly formatted or the new system might reject them. Much of the old data were keyed in by hand from forms submitted on paper.
Then there are legalities to consider. What must the new system do to comply with the law? What data should be publicly available? What information should be protected?
Then all of that, every process, every bit of data formatting, every source of information, has to be documented and mapped.
So early on, Steen began preaching the gospel of pre-implementation.
“People were understandably reluctant to give up their best (people),” he said, but over time “there’s been an increasing willingness to do the work.”
Steen, however, still doesn’t know when CROS will launch.
Will the Technology Department accept the next plan? When will the state sign up a vendor and for how much? When will the Legislature approve funding? What unforeseen obstacles will block progress?
“Best case, we could be done three years from now,” Steen said. “Worst case, six.”
The percentages, he knows, are against him.