for the city. i think it is important that we still have that pressure. i would like to insert the recommendation from our budget and legislative analyst about having a report back on june 1, 2001. i do appreciate the work that is happening. i am not blaming one department. i know multiple departments are involved in this, we have a large bureaucracy, and it is not just a part of technology. there are multiple departments that have to come to the table and be willing to do this work for consolidation. since this impacts multiple departments, it seems like an appropriate way to push and put pressure on that plan. pressure on that plan. supervisor chu: thank you. >> i know that you have heard these comments from me directly. when we discussed this in june of 2010, what we were doing, we were looking for cost savings.

the idea was that by september of 2010 but have a road map of how we were going to save this money. we did some work, had some answers by september. the conversation was kicked to november, december. now we are in april. from my perspective, for better or for worse, the reason we are at where we are today -- confirmed in study after study, as we all know, we have dozens and dozens of by t. fiefdom's around the city that are not working together, that are engaged in their own expenditures, spending $200 million per year in i.t. yet every department is unwilling, i think, to work collectively together with each other and the department of technology. it has taken us almost one year

to come up with a plan. and we are just doing data center consolidation, which just represents -- $70 million of the total $200 million of the city wide annual i.t. operations. what i hear from supervisor kim, and i have had this conversation on a number of occasions with many of you here, it is very frustrating to talk about this and ask departments to come together and find savings. before there -- there could be years before we see any actual savings in the budget process. i do not know what we can do short of having conversations around the i.t. reserves. i understand the challenges of doing this right now. on the other hand, this has been a very frustrating experience for me, sitting in these meetings. we need some help and assurances

in what it will take to actually see and squeeze out cost savings. what will we do in the next two months, when the mayor's budget office -- what sort of cost savings can we expect to see for 2011, 2012? what are the plans to move beyond what i view as years of i.t. bureaucracy delay and lack of work in doing what we need to do? >> supervisor, i am the mayor's budget director. i understand and share the frustration. obviously, i m in a role where i need to balance the budget. no one would be happier to see cost savings out of this than meat. one thing i would like to point out is -- i think that it is worth noting that when we put these reserves on the budget, and i've worked with you -- i

understand the reasons for doing that -- we put the reserves on in the budget to move the program along, hoping and anticipating that we would be cost savings. we put the money on reserve in the budget to force the data center consolidation to move forward. we have not seen the savings, but the data center consolidation did move forward. it is fair to say that the department of technology have done what we asked. it may have been slower than anticipated, but it is worth noting that there is a positive thing that has happened. this project has moved forward as a result of the discussions we have been having a year dan thatand at coyt over the last y- and-a-half. i would have loved to see savings come forth from this effort, but as you explained, as

we look at the economics of this project, it requires an upfront investment to construct a facility to house the new data center equipment. had that not been the case, we might have been able to see some short-term savings. but that is simply not how the economics of this project work. there are two things here. the desire for savings and also the fact that we did, over the course of the last year, with your help and guidance, selected set of projects that we wanted to pursue that we defined as a city as i.t. consolidation. we are moving forward with those projects. unfortunately in this case we have not been able to pull the cash out. i think that there is a positive effect. the city departments, the

department of technology, they're working collaborative leigh better than they had been previously. especially before the process that we started over the last year and a half. it is not to say by any means that it is perfect, but i think something good is happening here. supervisor chiu: i absolutely appreciate the work being done on data center consolidation. but we know that the point of i.t. reserves was to incentivize to find savings. we went through this to figure out how to consolidate the data center, but at the end of the day if we could not find savings that represented 3% of the i.t. budget, should i lose hope as our ability as a -- in our ability as a city government to manage these functions in a good way? >> i absolutely do not think that we should do so. i guess the point i am trying to make is that our strategy for

achieving those savings in the way that we thought we would get there was through data center consolidation. i guess the next step is to identify other initiatives that we can pursue. hopefully those will yield better savings. the vehicle to get those savings was data center consolidation. that is how wide you did in this particular case. -- that is how i viewed it in this particular case. >> from my -- supervisor chiu: from my perspective, when the next budget submit all comes to us, when the department of technology comes back before this committee, our colleagues will be looking for those ideas. one thing we would like to emphasize -- the big challenge that we have in the city, as a city the department of technology has one-third of the

overall budget. two-thirds of the city's budget rests in the several dozen groups of i.t. throughout the city. that is not how an efficient organization should be structured. your centralized i.t. groups should have at least a majority, if not two-thirds, of the system. we have the exact opposite ratio. i am looking at savings that we can find from all city departments, particularly the major departments. we cannot go in this direction of allowing individual i.t. groups to continue to do business as usual. this is not how we have to work at this time. given the advances in technology that should be driving down costs. >> thank you. given the comments you have made, -- supervisor chu: thank you. given the comments you have

made, it would be worthwhile to look at these improvements again. john and i have had conversations about where the other opportunities might be on master contract savings. in addition to other potential savings for telecom. i think to the point of supervisor chiu, we would not be where we are without the staffers on reserve. supervisor murphy? -- supervisor mirkarimi? supervisor mirkarimi: can we back up a little bit? i think i am the senior member on this committee, on this issue. my, how time flies. part of that motivation in those earlier conversations that been involved in to some of the good work steps president chu

and others have taken up in pursuing consolidation projects, that this was supposed to arrive at a idea of greater efficiency within city government. hopefully those efficiencies of data management, of the i.t. functions, would somehow also make it easier for the public, the people, to find some benefit in this particular endeavor that we are striving for as well. somehow, i am wondering, is there some sort of capture track that helps us to identify those by other empirical savings or in time savings? efficiencies whatsoever? so far, to date, no information has been provided to help us anticipate an answer to that question or to be able to answer that question now.

>> supervisor, this is an interesting conversation that i know we will have throughout the budget process, as someone who has worked on multiple consolidation proposals for many years, we all often have this issue or rise. as consolidation proposals, be a technology or other units in the city, the more complex they are, typically the greater the up- front cost and the harder they are to implement in terms of resources and time required. part of the conversation we are having here today about consolidation in the time line for data centers is heavily the time that it takes to construct a new physical facility for us to use, creating an unfortunate but realistic delay that comes from the time and effort required to construct, and other costs that comes with it -- that comes with it in years later.

we have talked about consolidating health centers, recreation clinics around the city. whether the changes physical or a resource, often there is a delay in time. we see this effect in your point of investment and time required. >>supervisor mirkarimi: a very good point that does not come up enough. but the psychology of us having a debate about whether to close or consolidate fire stations, something that is very front and center in front of the general public is one that sort of folks the kind of debate where, on this question, this is invisible. this is a ghost part of what helps the engine run of our city

government. that people do not see and realized in terms of direct and indirect benefits. yet, it really is the central nervous system, if you think about it, of exactly how our government is running. if it is running efficiently at the dollar rate that we can justify. i have note -- for example, i have no basis to conclude -- compared to other cities what they spend on a level of data management and i.t. performance the way that we do here. it might be worth just giving some reference, what other cities are striving to do. you know,, modern cities like san francisco, of course. kidding, tongue-in-cheek. but i mean cities that have

similar challenges per capita, etc. in this case, consolidation has been completely astute by voters and in the general public. things near and dear to their hearts. in this case we have consented to the idea that this is the right thing we should be pursuing because of how torturous the information and data systems at, say the police department, others, it is just a relic. it has been screaming for this kind of intervention. we get that. the bottom line on our minds is that you would think that the theory is with modernization and consolidation, yields would come from a particular dividend of savings. we are not sure what the savings are, but we are hearing that some might be delayed.

delayed release. what i would love to understand is efficiencies. where are the efficiencies that help us make a government run better? this is that nervous system that makes it that much more effective, both internally or in the public. you might not be able to answer that now, but no one has ever been able to present that to us. that has helped to underscore this particular achievement, consolidation. >> if i may respond to the supervisors comments and questions. again, i think that we are at somewhat of a crossroads in our discussion on technology and how it supports the city is a nerve center. when i came three years ago, there was not a clear understanding of how much was spent, a citywide, and i t. the magnitude and challenge of

the opportunity, perhaps it may have taken too long in the view of people, but we are at that point now, having that conversation strategically. are we spending enough? how do we benchmark against other cities? i know that we are getting that data. los angeles, chicago, new york. other cities that we typically judge ourselves against in terms of spending and what busy roi benefit of technology in terms of overall city spending. fire stations do not operate without technology. hospitals do not operate without technology. it is an underlying element of how we provide the importance to the customer facing city services. as we enter the city's budget discussions over the next few months, we will be able to provide you with that data so that you have taken textual view of how we are performing in

relationship to large municipal organizations around the country. that will help you, maybe, i think, provide us with challenges or areas that we could focus on where we could do better. i think that the department of technology is here to offer its services, be a spokesperson, facilitate conversations. it is not the problem of a single department. anit is an i.t. problem across the city. we are willing to come together and have that conversation about how we support the city and are we doing the right thing. supervisor mirkarimi: on the question of the reserves, i hear the concerns expressed on what it means if the reserves are released in totality. i also hear the caveats

expressed by our colleague. i am open-minded about whether we want to release them are not. it seems to be the motivation if we are able to hold back some of the money. at least it works in these kinds of situations with other departments, hopefully. but if that is not the case, then, you know, i will remain open-minded. this has been a bit of a torturous cycle. i am hoping that we are seeing the light at the end of the tunnel here in terms of what consolidation actually means. but it seems a long and winding road. supervisor chu: we have not yet taken public comment on this item. let's do that first and come back to the item before us. are there any members of the public that wish to speak on this item?

public comment is closed. just to the item over all, just some thoughts on it. when you talked about there being a way for a proper motivation for the reserve to be maintained, the one thing is that when we first put the reserve on the table, we said we would do that to the extent that pending an update on i.t. consolidation efforts for the data center -- from everything i've heard, even though the department has been delayed and not gone the way that people thought it would, they have done everything we have asked them to do in terms of consolidation. at the new facility there are plans to do it at the airport. i believe they have met that criteria. in terms of having it reserved in place to create incentive for motivation, i think the department has demonstrated that they are delivering on the project.

i do not know what further motivation could there be to lay off or spend more money, as they have done everything we have best of them. the potential for not releasing the reserves is important, given where we are in our time line. if we made the decision not to release reserves, the apartments would quickly have to figure out how to make that gap. we are not talking about small numbers. we are talking about $1.5 million from the health department. it is not insignificant for the department in terms of how it is that they will figure this out. given what we have to do and 60 day layoff requirements, we could really benefit from one month of salary savings, meaning cuts will be larger than anticipated. that is why i would be supportive of maintaining reserves.

on the issue of releasing partial reserves, the issue for this committee is the agenda in coming months. already, we have arboretum items coming up. we have several supplementals coming in through committee, in addition to the deliberations in may and june. realistically there is a way to revisit and make sure we are making progress. i am not sure the partial reserve would be the way. frankly, we would have to hear this item again and we would hear this same information again. there are many things to focus on. perhaps a better use of time rather than telling you to come back and data consolidation, instead of coming back improving the same thing over and over again, why not tell us about the opportunities for short-term savings and where there would be if we were to move forward with projects like funding

master release changes. it would be better served in terms of where the budget is going, rather than dwelling on this issue. that would be my thought on the reserves. so, committee members, we have the release of reserves. is there a motion for anything here? supervisor mirkarimi: yes, i very much agree with much of what she said. i would like to offer a slightly different consideration. i would certainly be amenable to releasing the reserves, but i am not sure that i would want to do all of it. by understand the hectic pace we are confronted by. yet we want the trains to keep rolling forward. if i am not mistaken, there is a report due back in two months or so. and i correct on this?

>> per the recommendation of the budget analyst, we would be able to provide the report to you. supervisor mirkarimi: i would be open to releasing half of the reserves today, relatives in condition to that report, let's see the progress of the report. we would then release the remainder on balance. what would that achieve? who knows. we are hoping the desired effect. i think that that might make us feel a little bit better, just about the trajectory we are on right now. and the fact that this is only about obviously until the rest of this budget cycle. supervisor chu: with the mayor's office like to respond to a partial reserve -- with the mayor's office like to respond to a partial -- would the

mayor's office like to respond to a partial reserve? >> the plea that i would make would be that i certainly agree, this conversation is not over and of the purpose of doing a partial release would be to give us a vehicle to continue to have that conversation. my plea would be, number one, what exactly are we going to try to achieve over the next three months? but what is the goal of continuing to rally -- to leave that reserved in place? the reason that i ask, if we look at who is here -- the finance directors and chief information officers of our biggest apartments are here. this issue is very important to them. they have this uncertainty in their budget with a very short time line in front of them.

in addition, we are in the process of cutting their budgets. this kind of uncertainty over what is going on while we are trying to make additional cuts, i think that is difficult for the department as they try to manage through the last three months. i understand the point that you are trying to get, there are things that we still want to accomplish here. i would argue that it would probably be operationally, in terms of our time and synergy for the budget process, it would make more sense to have that conversation as a part of the budget process than to have us come back in a month and half in believe that operational uncertainty as they try to help us figure out how to operate the larger budget. that would be likely and request of the committee. supervisor chu: mr. president?

supervisor chiu: let'to remind folks of where we were last year, i recommended cutting this full amount. we will find a way for cost savings in short order that did not happen. while i did come here open and moving forward to releasing i.t. reserves, we understand the frustration that done enough work is being done. one question that i have for mr. wagner, do you expect various i.t. departments to be coming back with significant cost savings proposals for 2012? i am wondering if that could be the metric by which we decide to release half of the reserves? >> just so that i understand,

are you referring to the consolidation proposals? or are you asking whether they are making additional i.t. cutts as part of their budgets? supervisor chiu: i am asking about both. in the next few weeks, has it been made clear to the heads of each department that they need to continue to look for savings. if they had come from consolidation, that would be great. we want to make sure that there is that because progress for the next fiscal year. >> supervisor, you have a lot of major departments in the room. from my perspective, we have not issued them instructions to simply cut their i.t. budgets. we have given them reduction targets. as we always do, we have worked with them to understand whether

i.t. savings can be a part of that goal. in terms of citywide direction, guidance and policy direction that we have been taking has been centered around discussions that have gone on through development above five- year i.t. lamps -- development of the five your i.t. plan. -- fisa your -- five year i.t. plan. i would be open to hearing john's thoughts on that or whether there are recommendations for specific initiatives that she would like us to pursue. i think that that is the big picture. we asked departments to make

reductions in proposals that they can meet best. some of those reductions will involve by tea, others involved reduction in other operating costs. -- involve i.t., others involve production in other operating costs. >> -- supervisor chiu: without i.t. reserves, this work will like it done. it has been pulling teeth to get to where we are today. i am not particularly confident that in the next couple of months we will get to a place where we want to be. i am asking for some assurance an understanding of how that will happen. if the supervisor's idea of hanging on to these reserves is a way to make sure that this gets done in the next couple of weeks, it makes sense to me.