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$2.1M Saved In Texas-IBM Data Security Merger

AUSTIN (AP) ―

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An independent accounting indicated a Texas-IBM data security merger projected to save the state at least $203 million had already netted some savings, however, the state agencies involved in the project were seeking more funding to make it work.

In 2006 Texas signed a $863 million seven-year contract with IBM Corp. that aimed to save $25 million in the current two-year budget period and $178 million over the years of the contract. IBM will consolidate 31 data centers from 27 state agencies into two facilities in San Angelo and Austin and oversee their operations, according to the deal.

The accounting firm Grant Thornton has found that the project saved a total of $2.1 million in the first six months of the 2008 budget year. In the previous five months, however, the project costs were $1.6 million higher than estimates made before the contract started. Cindy Reed, deputy executive director of the state Department of Information Resources, which oversees the project, said the overage is because of expected transition costs.

"We're pleased with how it is tracking. We're certainly optimistic that it is going to continue to track that way," Reed said in Wednesday's online edition of the Austin American-Statesman.

The deal is projected to save Texas $25 million in 2008 and 2009 and $159 million over the base contract period. The contract includes three optional one-year extensions, the newspaper reported.

Reed said it was too soon to know whether the merger would actually produce the forecast savings.

Meanwhile, 18 of the 27 agencies have requested a total of $71 million in "exceptional items" from the Legislature, whose session begins in January, to cover data center consolidation costs beyond what is in their base budgets, documents submitted for the two-year budget that starts in September 2009 show.

The newspaper said the agencies were asking for the funds to cover their increased use of the data center or new projects, which would not affect the overall cost-savings calculation. But other agencies said they have to rent, rather than own server space, as part of the project, which is hiking expenses.

Reed said no general conclusion should be drawn about how those requests might affect the project's overall cost. She said a higher dollar amount would have been requested from the agencies if consolidation was not a factor.