How Michigan's consolidation plan kept wolverines from the door

Michigan’s Department of Information Technology has shaved millions of dollars from the cost of its operations over the past decade by reducing its footprint, consolidating resources and offering managed services to state agencies. 

Take, for instance, its secure file transfer management system. “We have thousands of file transfers every single day,” said Carol Sherman, the state’s director of data center operations.

This can amount to a terabyte of data or more every month moving among 13 state agencies and 5,000 external partners, each with its own formats and processing requirements for handling data and transactions. 


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Rather than have each agency handle the routing and security of its own transactions, file transfers are managed centrally through a MessageWay platform from Ipswitch, which allows workflow and formatting policy from each agency to be applied automatically to data.

“As a data center operator, I like standardization,” Sherman said. “We don’t have 25 or 100 FTP servers running out there. That’s costly.”

By using single systems for statewide services, the state can save on hardware, maintenance and software support and licensing while providing services more efficiently. With centralized file transfers, “we can send some files to three or four departments at the same time without multiple transfers,” she said.

Standardizing on MessageWay is a small part of ongoing consolidation efforts that have helped Michigan weather the worst economic downturn in 70 years. Michigan Gov. Rick Snyder estimates that the state will end the current fiscal year with a $457 million budget surplus. That amounts to little more than 1 percent of the state’s $40 billion annual budget, but for a state whose manufacturing base has suffered badly in the recession, any surplus at all looks good.

The IT Department can claim credit for only a small part of the surplus, and its consolidation efforts began long before the current downturn. They date back to the 1990s when the state consolidated 15 Unisys mainframes to a single server. This was followed by telecom and print center consolidation projects and continued with a data center consolidation that began in 2004. The state has closed down 37 data centers and now is operating with three, and one of those is likely to be closed eventually.

Two data centers needed

“From a cost perspective, I don’t want to maintain three data centers long-term,” Sherman said. “I need two for redundancy,” but the third is hosting applications in a facility shared by several agencies, and it did not make sense to move everyone out. But it probably will be closed as the agencies leave the building.

The data center consolidation saved the state an estimated $19 million in its first five years, with the largest savings coming from avoiding capital costs to upgrade legacy facilities. It also eliminated significant hardware maintenance and lease expenses and opened up more than 29,000 square feet of state-owned floor space for other users.

From 2008 to 2010, the IT Department was able to save the state more than $45 million by focusing on service provisioning for agencies. It advanced this program in 2011 by instituting MiCloud, a state-operated cloud platform that uses the state’s fiber backbone to offer agencies infrastructure as a service and virtual machine provisioning in less than 30 minutes.

These reorganizations that replaced distributed, siloed systems and services with enterprise services were accomplished by getting the support of top managers and working with customer agencies, Sherman said. It is not always easy, but “you can do it. You have to manage it.”

The state has used MessageWay since the mid-1990s for file transfer, and it stayed with the platform when it was rebid in 2008. Other companies offered competitive solutions, but MessageWay was working well and already was integrated into state systems, so it was hard to beat.

“We’ve used it for more than 10 years and we were happy with it, so MessageWay won with a best-value bid,” Sherman said.

MessageWay manages the exchange of electronic files among agencies and between agencies and their outside partners, such as vendors, health care providers, banks and schools. It is a software solution running on a Sun Solaris server, written in C++ to provide high power-to-weight, said Greg Faubert, vice president of technology sales for Ipswitch. It handles data inside the enterprise perimeter, accepting outside files in any format so that other parties do not have to conform to it.

“It’s an advantage to minimize outside resistance” by not requiring third parties to conform to agency formatting requirements, Faubert said.

The server accepts files through VPNs, Secure FTP or other protocols. When the file hits the MessageWay server, the recipient is identified and the proper policies are applied. Decryption can be done as necessary and content can be examined to determine attributes so that it can be put into the proper format for processing. Files can be validated against lists of active vendors if necessary before they are delivered.

File format management

“Each of the agencies has a different file format that their applications depend on,” Faubert said. The ability to manage multiple formats centrally for different agencies reduces internal resistance to using the system by not requiring them to adapt existing applications to new formats.

The formats are specified in policies created for each recipient, which are managed in a central console. Establishing policies for each agency and for workflow between agencies is the heaviest lifting in setting up the system. Existing policies in other systems can be imported, or they can be set up manually. Once policy is established, rules for handling a new outside partner can be set up in less than an hour.

MessageWay also applies security policies, encrypting data to the required level for sensitive information, which can include credit card, health care, personally identifiable information and other sensitive data. It uses Proxy+ to separate the enterprise from the Internet, and no data or credentials are left in unprotected areas of the network.

The work on the state’s IT systems is not yet complete, Sherman said. “There are lots of projects to do.” The current project is standardizing data center management on a single toolset. At the same time, shifts such as the adoption of new devices by end users also have to be accommodated.

“We're seeing a lot of movement in the mobile environment,” she said. “It’s a little bit of a challenge,” especially with the variety of mobile tools that need to be accommodated. “I have to offer it. You focus attention where you can.”

Establishing standardized, centralized services make it easy to create a business case for offering services to entities across the enterprise. Sherman’s data center now provides services for state executive branch agencies and some courts, and she would like to be able to serve county and local governments as well.

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