Section 1: Portfolio Overview

  1. Purpose
  2. Convergence of Business Mission and Information Technology Vision
  3. IT Plans, Proposals and Acquisitions Process
  4. Overview of Infrastructure
  5. Analysis
  6. Challenges and Opportunities
  7. Solutions: Current and Future IT Investments
  8. Prioritization Process

A.  Purpose  [top of page]

The Information Technology (IT) Portfolio is a summary of key information about the Washington State Liquor Control Board's (agency) investment in technology - computers, computer software, networks, facilities, services and IT staff.

The portfolio provides:

  • a context for making informed decisions regarding the use of information technology

  • information that encompasses both the business and technology domains
  • a baseline compilation of information about the agency's applications, projects and investments that enhances the ability of decision makers to assess probable impact of technology decisions.

The portfolio is an effective tool to communicate how technology is currently used in the agency and to link potential technology investments with business strategies.  The information will help decision makers determine potential return on various investments and to better assess associated risks of investments.

The end result will be informed technology investment decisions that directly contribute to the agency's mission and direction.


 B.  Convergence of Business Mission and Information Technology Vision  [top of page]

The Washington State Liquor Control Board was formed in 1933 with the passage of the Washington State Liquor Act -- also known as the Steele Act.  The Liquor Control Board is a three member part-time board appointed for six year terms by the Governor.  The Board's primary responsibility is policy-making regarding the sale and distribution of beverage alcohol.  This is accomplished through licensing, controlled distribution and merchandising systems, education and enforcement. 

The agency's 2005-2007 biennium budget is $199,613,952 with 1038 FTEs.  The Director manages the daily operations of the agency.  There are three operational divisions and three support divisions to carry out the mission. 

Business Operations

  • Business Enterprise Division (Retail, Purchasing, Distribution)

  • Enforcement and Education Division

  • Licensing and Regulation Division

Administration & Support

  • Director's Office (Communications, Public Records, Forms, Rules, Internal Policies)

  • Human Resources Division

  • Administrative Services Division (Finance & IT)

In support of the mission, Information Technology Services is committed to improving the agency's public service, business operations, and financial position with the use of contemporary business systems and computer technologies.  The strategic plan, discussed in Section 2, provides direction and business strategies that will be implemented over the next 5 to 7 years.  
C.  IT Plans, Proposals and Acquisitions Process  [top of page]

IT investment decisions are driven by the agency's strategic business plan.  Potential investments are reviewed and prioritized by the Executive Management team during the budget development process and throughout the biennium.

The agency complies with Sections 902, 903 and 904, the state competitive acquisition process for personal and purchased services, and follows the rules and best practices developed by the Office of Financial Management, General Administration and Department of Information Services.  All contracts are reviewed and approved by the Contracts Manager and filed with the appropriate authorizing agency.  Employees who are involved in contracting are required to complete a training course in Personal Services Contracts.


 D.  Overview of Infrastructure  [top of page]

The agency is headquartered in Olympia, Washington and employs approximately 1038 FTEs in six divisions - Licensing, Enforcement, Business Enterprise, Administrative Services, Human Resources and the Director's Office.

There are seven regional enforcement offices and five satellite enforcement offices throughout the state.

There are 161 state liquor stores that sell beverage alcohol products to retail customers.  Some stores sell non-retail to licensees such as restaurants, hotels and sports facilities.  There are 154 contract liquor stores in smaller communities that do not have enough population to support a larger state liquor store.  

The Liquor Board's Distribution Center supplies product to all of the retail outlets.  The Distribution Center is located in Seattle, Washington.

The network diagram shows a high-level view of the IT infrastructure.  Most locations are connected via a wide-area network to Headquarters in Olympia.  Enforcement offices are connected via T1 lines.  The Distribution Center is connected via T1 lines.  State liquor stores are  connected via fractional T1 lines.  Contract Liquor Stores connect to the Board's network via a virtual private network.

Headquarters is connected to the state Department of Information Services (DIS) via multiple T1 lines.  DIS is the Board's Internet Service Provider as well as the primary provider for voice and long distance services by way of third party vendors.

There are over 1200 PCs in use in the agency.  PCs in each facility are connected via a local-area network.  Mobile employees access the network via a remote access server.  Of the 1200 PCs, approximately 570 serve as Point-of-Sale registers.

Production and development servers are located in Headquarters and the Distribution Center.

One IBM iSeries computer runs the majority of the Board's production systems.  An IBM RS/6000 runs the Warehouse Management System.  40 rack-mounted servers provide network and application services like Email, Web site, domain control, directory services, file and print sharing.  In fiscal year 2007, virtual machines and a storage area network were introduced into the infrastructure.

The IT infrastructure is supported by Information Technology Services, a part of the Administrative Services Division.  ITS provides centralized support from Olympia and is staffed by 42 FTEs.  


E.  Analysis  [top of page]

In June 2004, the Gartner Group, Inc. was commissioned to prepare a benchmark report comparing the LCB's IT infrastructure, IT budget and workload to other similar public and private entities.  The complete report, A Comparative Analysis of IT Spending, makes a number of key observations about the capacity of the infrastructure.

"Summary of Current ITSD Operations

A.  Strengths
WSLCB supports a diverse user base in 12 major locations and 315 store locations in Washington State with a minimum investment in IT staff and technology. Using both high-level spending ratios and more detailed staffing ratios and resource comparisons, no opportunities to further reduce costs were uncovered.  IT services provided are not only cost efficient, but generally delivered effectively (using problem resolution rates as the primary criteria).  Hardware and software currency for the most part is acceptable.

B.  Weaknesses
 Investments in IT are generally considered highly leveraged, in that IT costs on a per-unit basis continue to decline, while labor and facility costs on a per-unit basis continue to grow.  ITSD has achieved a very aggressive IT cost structure, but has done so with a noticeable degree of risk associated with network services and applications development and support.  This risk may manifest itself in increased network system outages and poor response, increased deferment of project work, and insufficient program testing and debugging.  In reviewing the detailed resource data, investments in hardware and software appear to be on par, with labor costs accounting for much of the reduced cost profile. 

Summary of ITSD Resource Assessments for 2005-07
Clearly, significant capacity and performance issues are forecast for the network services area as a result of implementing any of the 12 ITSD impact initiatives.  The current network architecture is simply inadequate, based on moderate growth in current requirements and new traffic requirements associated with implementation of currently identified initiatives.  Fortunately, changes in network technology are one of the easier to accommodate.  Upgrades to the existing networks are more dependent on funding than on internal ITSD skills or applications compatibility and generally carry little risk.  Also, network upgrades can be accomplished in increments that closely track with requirements, thus minimizing issues pertaining to over-capacity.

Low comparative spending in IT is usually associated with inordinate labor costs in other business units.  In wholesale distribution, for example, the development and support costs associated with materials and warehouse management systems are generally more than offset by improvement in labor efficiency, reduced warehouse space, increased inventory turn rates and reduced spoilage.

Recommendations
ITSD is currently funded at less than 1% of WSLCB revenues, estimated at $600 million for FY 2004.  This funding level is very low compared to spending levels in  both retail and wholesale distribution, and state government.  Gartner believes that minimum ITSD funding levels should be in the 1.5% to 2.5% range in order to ensure sufficient capacity for growth and to preserve existing service levels.

In reviewing potential demands on IT capacities for FY 2005, estimated to support 12 initiatives, it is questionable whether any significant additional demands on ITSD services can be effectively delivered at current spending levels.

Many of the services that ITSD supports will require additional investment to meet the needs of the majority of the WSLCB initiatives.  How these investments in system upgrades, staffing and facilities are accomplished will determine whether ITSD remains an efficient and effective provider of IT services.  One key management component that is not available today is a comprehensive systems plan.  A systems plan is a strategic document that guides funding/budgeting, project scheduling and architectural choices.  A systems plan lays out a course for optimizing investments in IT service capability by viewing service delivery from a total architectural perspective, rather than a specific project need of "bottleneck" relief perspective.  Typically, the systems plan address issues such as scalability, technology life-cycles, technology compatibility, open systems alternatives, vendor product support, and standards compliance.

Investments in upgrading ITSD's service capabilities are likely to require a significant infusion of capital over the next five years.  Without a systems plan it will be difficult to optimize future investments if funding is most often linked to specific project needs.  The inability to view future requirements from a total services delivery  viewpoint usually results in poor investment choices and missed opportunities to leverage existing IT capabilities."

Budget:
Funded at $8,182,526 for IT Operations and $4,749,463 for Special Projects, the combined funding of $12,931,989 is 18% more than in 2003 - 2005.

  IT Budget Comparison 2001-2003 vs. 2003-2005 vs. 2005-2007            

The IT budget represents 6.5% of the Board's 2005 - 2007 biennial budget.  This is a .2% decrease in IT's share of the budget over last biennium.

                    IT Budget vs. Agency Budget 2003-2005                           

 

 

 

 

 

 

Staffing:
Funded FTEs for the ITS Division are up 14% from last biennium; from 36.67 FTEs to 41.95 FTEs this biennium.  IT FTEs account for 4.1% of the Board's workforce which is the same as last biennium.

Infrastructure:
As part of the 2005-07 budget development process, the ITS division prepared an infrastructure inventory of the current IT infrastructure and its capacity. 

A server consolidation project reduced the number of servers by 49% from 78 last fiscal year to 40 currently.   

The number of desktop computers, including 570 point of sale computers, is 1224.  The hardware and software are kept current through an ongoing Technology Refresh program. 

The inventory of business applications and inventory of databases shows that the number of applications and databases is growing.


F.  Challenges and Opportunities  [top of page]

The Liquor Control Board faces many of the same challenges as other state agencies -- security, disaster recovery, project management, workload, age and complexity of the infrastructure and maintaining a trained workforce.  Listed below are some of the more pressing challenges.  

There are opportunities to leverage our limited IT resources by sharing information, experiences and resources through state organizations such as WACIRC and implementing industry best practices such as the Information Technology Infrastructure Library (ITIL) framework.

Challenge Opportunity
Security -  Increasing threats and vulnerabilities require more effort and cost to maintain the security, reliability, availability and accessibility of the network.   Staff time to maintain basic network services detracts from other more strategic initiatives.
  • Participate in WACIRC and other state / industry security groups to share information and resources
  • Continue to develop and implement the LCB's Security Program
  • Follow-up on recommendations from security audit
Disaster Recovery - Increasing reliance on technology requires ongoing planning, testing, maintenance and funding of disaster recovery plans.
  • Continue to develop, implement and test the LCB's Disaster Recovery Plan
  • Look for opportunities to outsource aspects of disaster recovery / business resumption.
Trained Workforce - Maintaining an adequately trained workforce is difficult when training budgets are limited.  
  • Develop staff training plans that make best use of limited training dollars by focusing on training in the core technologies
  • Ensure that core technologies are in compliance with state policies, standards and guidelines. 
Workload - The demand for IT services is increasing and so is the backlog of service requests.  Many of the LCB's business strategies will be implemented, in part, with technology.  
  • Use the IT Steering Committee to prioritize service requests and maintain a connection between technology and the agency's strategic plan.
  • Continue using DIS Best Practices and evaluate the possibility of using more of them.
  • Implement ITIL Operations Management Model.
Legacy Systems - The 5-year old IBM AS400 that runs most of the LCB's business system needs a hardware, OS and client access upgrade.  
  • Develop strategies and a plan to maintain the current, supported levels of hardware, operating system and application code for all mission critical business systems.
Complexity of Technology - The size and complexity of the Board's IT infrastructure is increasing.  Maintaining current levels across a variety of platforms increases risk and cost.
  • Inventory the number and functionality of servers with the goal of reducing the number of servers, operating system versions, etc.
  • Develop an asset management plan for scheduled replacement of all IT assets. 
  • Develop policies and procedures for managing the infrastructure, ie change management, version control, inventory management, technology refresh, etc.  
  • Maintain consistency with ISB policies, standards and guidelines
Enterprise Data Management - Data and information that crosses divisional lines, ie liquor inventory, is managed differently by various divisions.  Impacts of decisions often have unanticipated effects on other divisions.
  • Develop strategies and a plan to manage data as an agency asset.
  • Educate executives in enterprise data management.
  • Develop a data/ data base administration function within the ITS division and assign as a primary responsibility.
  • Evaluate the use of data marts and a data warehouse.


G.  Solutions:  Current and Future IT Investments  [top of page]

The following projects were active during the 2005 - 2007 biennium.
 

  1. Increase the shipping capacity of the Distribution Center and upgrade the Warehouse Management System software.
  2. Install a wide-area data network to all state liquor stores to improve the speed of credit/debit card transactions.
  3. Improve the IT core technology infrastructure, including mission critical servers, operating and database management systems and network applications.
  4. Build internal capacity of ITS staff.

Increasing the shipping capacity of the Distribution Center and building staffing capacity are activities that will continue into FY2008.  All other projects were completed in the biennium.

The following investments are planned for the 2007 - 2009 biennium:

  • Improvements to retail business operations
  • Additional staffing to support Sunday liquor sales
  • Point-of-Sale system enhancements
  • Improve access to data
  • Improve core technology infrastructure
  • Increase ITS staffing
  • Compliance with Payment Card Industry Data Security Standards

For more information on these investments go to Section 5.


H.  Prioritization Process  [top of page]

In FY2007, the Information Technology Steering Committee (ITSC) was re-established to meet the Liquor Control Board's growing need for strategic vision and direction of information technology.  The ITSC serves as support to the Information Technology Services (ITS) Division in planning, setting priorities and strategic direction to meet agency needs.

The ITSC is a standing committee and meets as needed.  The Director selects the members of the committee.  A sub-committee of division representatives and ITS  staff provide support to the ITSC.

The role of the ITSC is to consider and advise the Director and ITS Division on strategic vision and direction for information services and technology in the agency.  It provides support, advice and recommendations, and may endorse or advocate information technology needs that are identified for the agency.

The ITSC considers the strategic vision and direction of the agency, and considers technology initiatives to achieve that direction.  It provides advice on the long-range planning; priorities and policies that are thought needed in order to achieve the strategic vision and direction of the agency as a whole.  The ITSC may also be asked to consider and advise on projects with agency-wide impact, including the goals, design, and implementation of those projects.