Cost savings through IT.

States are looking at ways to reduce spending on information technology without sacrificing service to citizens or the business of government. Current IT spending in the states is estimated at $35 billion to $40 billion, typically about 1.5 percent of state budgets.

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A recent survey conducted by the National Association of State Chief Information Officers found that state chief information officers were pursuing two key ways to save money: consolidating and sharing services.

West Virginia, for example, embarked on a cost savings plan four years ago. Kyle Schafer, chief information officer for the governor's Office of Technology, reports that consolidation and standardization have reduced the cost per personal computer from more than $900 to a little more than $400. By centralizing IT organizations and e-mail domains, renegotiating and standardizing contracts, and converging voice, data and video over a single circuit, West Virginia's annual IT spending has been reduced from $51 million four years ago to $43 million today.

Michigan, one of the first states to pursue consolidation, reduced the state's 25 data centers to three and combined disparate e-mail systems. Missouri recently consolidated e-mail service and moved people and equipment under a single IT division, saving the state millions. Kansas also standardized IT tools to increase productivity. California, which has a $3 billion IT budget, is embarking on a plan projected to save $1.5 billion over the next five years that includes consolidation of data centers, servers, networks and software contracts.

IT experts, however, advise against major cuts that would diminish IT security, business continuity and disaster recovery. They say it is important to continue a normal aging program for equipment: If states wait until equipment is old and broken, it will be more costly in the long run to replace than it would be to continue routine upgrades.