February 10, 2014
As we all learned as kids, it's nice to share. That holds true for public sector organizations as well, particularly in tough times. Public sector organizations don't have the privilege of dialing back on scope in challenging economic times. In fact, when the going gets tough, government organizations often have to kick into high gear. And that was the case with state unemployment insurance (UI) programs in the US, which saw spikes in applications when the economy slumped. But in most states the technology infrastructure wasn’t up to the task.
- Legacy systems were on life-support… Colorado’s 25-year-old COBOL-based mainframe systems continued to process unemployment insurance claims, but it was increasingly difficult and costly to find the "doctors" to keep it alive. They had to bring developers out of retirement to maintain it. State officials knew it was only a matter of time before they had to pull the plug on their system.
- …and just weren’t up to the task. Not only did the “look and feel” leave a lot to be desired, the legacy system failed to deliver. The system ran processes in batch mode, meaning that data was typically collected over a period of time (daily, weekly, or monthly) and processed into the system at the end of the period. Daily downtime for processing excluded the possibility of 24-hour availability or even extended hours. The delays and lack of availability frustrated end users who wanted or needed real-time or near-real-time information to make decisions.
- Employees struggled with inflexible interfaces. New labor regulations require changes to interfaces; new audit requirements mean new reports. But nothing about the legacy systems were easy to reconfigure. New features were tacked on to the old system, leaving a patchwork of functionality that required employees to open up to a dozen apps to process a claim or register an employer.
- And, the system was plagued with fraud. Insurance fraud is rampant, and unemployment insurance is no different. Legacy systems and processes were not equipped with modern fraud detection capabilities, and it showed. According to estimates by the Department of Labor, Colorado suffered from a three-year improper payments rate of 16.33% — one of the higher rates across the states — for a cost to the state of $82 million.
Clearly, something had to be done. And, the US Department of Labor (DOL) thought so too. DOL offered big money to modernize insurance systems, but only to states willing to collaborate as a consortium – only to states willing to share.
WyCAN, the consortium of Wyoming, Colorado, Arizona, North Dakota received a series of grants to invest together in a common unemployment insurance system to manage UI tax, claims and benefits, and appeals. The WyCAN project illustrates thought leadership in its business and technology management vision and teamwork in its execution and governance — providing best practices for undertaking a shared technology procurement and services development.
For details on how they collaborated to draft common requirements, issue a joint request for proposal, and select a technology provider to develop and deploy their new UI system, take a look at my recent report, Shared Services: If WyCAN, So Can You!