State CIOs continue to preside over an increasingly diverse set of service delivery models and sourcing options. Since 2010 we have asked CIOs to tell us what business models they are using to deliver IT services. Over that time period there has been a steady progression towards data center consolidation and increased use of outsourcing, particularly for IT applications and services.

We asked CIOs about their business model and sourcing plans for the future. As their responses showed, the dominant future business model for the state CIO organization will be a shared services organization leveraging managed services and application outsourcing to deliver a significant proportion of the service portfolio. We also asked CIOs to what extent they saw their state CIO organization migrating from a direct provider of services to a ‘broker’ of services. Every respondent stated that they expected in the future to be functioning as a broker of services for at least some of their services. This is clearly the state CIO business model of the future – the differences will be in the mix of services provided and in the proportion of assets that are owned and operated by the state.

Not surprisingly, a significant majority of CIOs believed that this transition will have an impact on the funding of the state CIO organization. Almost one third of CIOs feel that the overall revenue to the CIO organization will decrease as a result of the change. When asked for advice for CIO organizations transitioning into a broker role, the same two recommendations occurred again and again: consolidate first; and exit strategies must be written in contracts up front