Iowa’s new cloud-computing deal costs nearly $40M over 10 years – The Gazette

Iowa will pay multinational firm CGI Technologies and Solutions nearly $40 million over 10 years for a cloud-based financial management system after dumping previous vendor Workday.

Gov. Kim Reynoldss office says the state sunk nearly $16 million into the multiyear Workday implementation before pulling the plug last month because of implementation issues affecting many state business processes.

Since the review period of the (Workday) project went into effect last summer, there have not been any implementation costs to the state since the contract was paused last summer before the testing phase started, Kollin Crompton, a Governors Office spokesman, said in an email to The Gazette.

Had the state continued with testing, there would have been an additional cost of $3.5M for Workdays services. With the shift to CGI, the state estimates that even with the $15.7 million sunk cost, the total savings will be $8.6 million over 10 years.

The states contract with CGI, signed March 24 by Department of Management Director Kraig Paulsen, calls for the company to provide Iowa with cloud-based computer systems to handle financial management, inventory, procurement and budgeting, among other functions, for up to 1,500 state government users.

The state will pay CGI nearly $4.5 million per year in fiscal years 2025 through 2032, with lesser amounts for fiscal 2024 and fiscal 2033 because those will not be full service years. The total contracted amount of $38.82 million over 10 years includes cloud services and quarterly planning sessions.

Headquarters: Montreal, Quebec, Canada

Founded: 1976

Consultants and professionals: 90,250

Locations worldwide: 400

Fiscal 2022 revenue: $12.87 billion

End-to-end services clients: 5,500

Source: CGI

If the state wants to buy additional consulting, it will pay CGI escalating rates from up to $235.50 per hour in fiscal 2024 to $286.50 per hour through February 2033, according to the contract.

If the cloud-based system doesnt go live as scheduled, Iowa doesnt have to pay. But if the state breaks the deal after implementation, the contract calls for early termination fees of up to $650,000.

CGI had been the states longtime computer services provider before the Office of Chief Information Officer chose Workday in 2019. But CGI didnt have a software-as-a-service model in 2019, the Governors Office said last month.

Since then, multiple state and local governments have successfully implemented it and are now leveraging the benefits of a public sector solution, a March 24 news release said. A preliminary review suggests this option is more compatible with the states requirements and current business operations and will result in less disruption to internal functions and lower ongoing costs over 10 years.

Iowa chose Workday, a California-based company, in September 2019 to convert the states aging human resources and financial management systems to the cloud. That contract was worth $21 million. The state signed another deal with Workday in February 2020 for $28 million.

Instead of seeking proposals from multiple companies to see which best met Iowa's needs and was most affordable, state officials chose a generic contract Workday had signed in 2015 with a for-profit procurement organization in Texas, The Gazette reported in 2020.

The state still will use Workdays human resources system, which can exchange information seamlessly with CGIs platform, the state reported March 24.

By stopping implementation of the financial management system last year, Iowa avoided paying subscription costs and ongoing implementation costs, together totaling $6.4 million in savings, Crompton said. The original contract period for Workday ran through June 30, 2024.

Cloud computing sounds like programs and data are somewhere overhead in an invisible cloud. Actually, anything based in the cloud actually is on another computer located somewhere else. Instead of buying and maintaining computer programs and storing vast amounts of data on a home or work computer, we can hire companies with large data centers to provide the services to us through the internet.

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The Workday logo is seen at the Workday Championship golf tournament Sunday, Feb. 28, 2021, in Bradenton, Fla. (AP Photo/Phelan M. Ebenhack)

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Iowa's new cloud-computing deal costs nearly $40M over 10 years - The Gazette

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