BURLINGAME, CALIF. — It should come as no surprise that the large Bay Area cities are facing many of the same pressures as their peers and the state, namely budgetary constraints and the increased scrutiny that comes with them. Paired with rising service demands from departments and constituents, the situation has led IT leaders to take a more pragmatic approach to their IT spending.
During a members-only briefing at Tuesday’s Bay Area Digital Government Summit*, CIOs from four jurisdictions painted a clear picture of their strategies, but also of their expectations for vendors.
San Francisco CIO Michael Makstman painted perhaps the starkest picture for industry members in attendance, saying that the days of emailed pitches with no context are over, especially as it relates to AI. If you want his attention, put some skin in the game.
The city has created a pool of pre-vetted AI vendors that Makstman says is helping weed out less serious proposals from the ones with real-world potential.
“We need certain financial stability and certain other things in place, but when you do that, you're in the pool with an idea that our departments and agencies … can come in and have a conversation and potentially run a pilot,” he said.
The CIO noted that 100 or more vendors have already joined the pool. If the process is successful long-term, Makstman said he would like to extend it to other IT procurements.
The city’s largest legacy vendors should reconsider their pricing models. The CIO said the city’s top 10 vendors are under review with the end goal of ending any engagement that isn’t providing the best value, regardless of how long they’ve been a partner.
“I don't think it would be a surprise for anybody; we also have a budget deficit,” Makstman said. “For us, it is a lot about cost savings and finding money, so I pulled down the top 10 vendors we spend money with and I'm looking at alternatives. No sacred cows.”
Like San Francisco, San Jose CIO Khaled Tawfik said his city’s budget is tight and solutions need to come with a clear return on investment. This budget cycle, the city is facing a $27 million deficit with an additional $12 million gap expected in the next budget cycle.
“As I'm developing my strategy and my budget, I'm looking for investments that can yield results for me,” Tawfik said.
“So as much as possible, at least for me, I'm looking for solutions that can have higher ROI. A lot of my partners sell it at their cost or lower because they want the engagement and the experience to take the product from good to great,” he added.
Oakland CIO Tony Batalla said his city is on a similar journey to simplify procurement, though not to the extent of its neighbor across the bay. In his case, the approach is working to reduce the procurement barriers and documentation burden.
“We want to procure services. You know, it's a barrier for us too,” Batalla said, adding that some of the “Byzantine” governmental processes and need for protections will never go away.
Where Oakland can’t cut back its procurement process, there are simple steps vendors can take to smooth the existing process. He pointed to familiarity with the solicitation material — specifically legal requirements — as one area vendors need to pay attention or risk adding months to the contracting timetable.
“The contract piece has been challenging. In zero cases will I overrule my city attorney. I mean, there's no upside there,” he said.
Where upcoming projects are concerned, the group had a range of priorities.
For Newark CIO Ed Miranda, many of the large, complex projects are out of the way and he’s focused on less flashy projects, like connectivity work, public records management and website redesign.
San Jose, meanwhile, is working to develop a “house-grown” AI assistant that he hopes to see movement on within the year.
Makstman said San Francisco is trying to make any of its software buys before the state's new software tax takes effect. He estimates that the tax will add 2.25 percent that wasn’t budgeted for.
“I hope all of you are coming up with a strategy,” he said.
More broadly, the group agreed that cost models were an ongoing concern with regard to technology and AI purchases.
”My main question right now is: How are you going to help us govern the cost?” Makstman said. “Because that's becoming a big issue.”
*The Bay Area Digital Government Summit is hosted by Government Technology, Industry Insider — California's sister publication.
Bay Area CIOs Add Context to Strategy, Procurement Changes
The CIOs from San Francisco, Oakland, San Jose and Newark recently briefed industry partners on the foundational shifts their organizations are making in how they buy tech and the projects the coming years could bring.
