With a projected $144 billion budgeted for IT by states and local governments in 2024, the push for modernization in the public sector has reached critical mass. Yet healthy budgets alone can’t guarantee high-value, sustainable investment outcomes, particularly in the public sector where a legacy of siloed stakeholders and decision-making haunts leaders and IT professionals alike.
As we detailed in the first part of this series— which you can read here—agencies must start with a comprehensive and dynamic understanding of their operations. Moreover, they must do so with an eye for the future, establishing parallel strategies that support the agency as it is today and the agency it aspires to be in the future. This blend of current- and future-state goal-setting, people, and business must serve as the foundation for smart procurement, optimized operations, and ultimately, higher value systems modernization.
If a comprehensive assessment discussed in Part One is the “what,” governance represents the “how.” In today's rapidly evolving technological landscape, high-value, continuously evolving modernization outcomes require more than just advanced technology—they demand robust governance structures to ensure efficient management, clear direction, and accountability, which are crucial for navigating the complexities of modern operations.
How North Highland defines governance in the context of data and systems modernization: The cultural and procedural framework within which modernization decisions are made and delivered in the highly complex public sector landscape.
Effective governance frameworks provide the backbone for collaborative service delivery, encompassing critical functions such as:
- Decision-making
- Oversight
- Compliance evaluation
- Prioritization
Why is governance so critical to the success of complex initiatives, like systems modernization?
According to Gartner®, "Many organizations fail to achieve their digital transformation goals largely due to weak governance and leadership. Executive leaders can address these weaknesses by identifying a transformation sponsor, establishing decision rights, and focusing governance on decision making, not status reporting." Gartner® found that, "High-profile transformation failures cite weak governance and leadership as key contributing factors to the failure despite heroic efforts to recover. Successful transformations are associated with visionary leaders actively engaged in the transformation. IT governance practices for transformation initiatives often struggle to scale to support and manage the amount of change delivered within transformation programs."*
Effective governance is not just about control—it's about creating an ecosystem where strategic goals can be efficiently translated into actionable plans and measurable outcomes. It ensures that every decision, from resource allocation to technology adoption, aligns with your organization's overarching objectives. Governance offers a structured approach to resolving issues and managing scope changes by fostering consistent decision-making and strategic alignment. It is essential for any agency to thrive in a dynamic environment.
In the following blog, we’ll explore how you can leverage best practices in governance frameworks to meet your agency's unique needs. The outcome? Enabling your leaders to navigate the complexities of systems modernization while maintaining focus on your agency’s core mission and values.
State-led success: The Illinois Framework governance model
In 2012, the U.S. Department of Health & Human Services (HHS) awarded Illinois a grant to design and develop a governance model to guide the modernization and interoperability of the state’s HHS delivery system, also known as the Illinois Framework. While there was no shortage of governance best practices in similarly complex, high-stakes endeavors, none had been tested and proven in the public sector.
Illinois spent months researching and testing governance best practices, prioritizing and fine-tuning those that most effectively catalyzed cross-functional and cross-agency stakeholders in pursuit of optimized HHS operations.
The resulting Handbook for States distilled Illinois’ learnings and experiences, and more than a decade later, continues to serve as the gold standard. Whether the work is orchestrated from the top-down or at the staff level from the Project Management Office (PMO), Illinois found that the best governance models are centered on people. They are designed to garner buy-in, build momentum, and move high-priority work forward through the following functions:
Even today, as agencies procure technology that would have felt like science fiction in 2012, Illinois’ governance structures continue to ensure stakeholder representation and clear decision-making in complex systems modernization projects.
Seven outputs of effective governance systems
Let's talk about the seven key outputs of effective governance systems. These are essential for achieving sustainable results in complex systems modernization projects.
To create a successful governance framework, the first step is to identify your desired outputs. Then, work backward to design systems that work well with your agency's people, culture, and day-to-day operations. Here's what that looks like in practice:
- Strategic alignment. Be sure your governance framework aligns with your organization’s objectives, drawing from the strategic insights gathered in the planning phase to stay in line with industry best practices.
- Interagency collaboration. Make it easy for information to seamlessly flow and services to coordinate across organizational boundaries. Invite sister agencies to join in and improve interoperability and efficiency.
- Operational optimization. Streamline processes, cut out redundancies, and optimize your resources.
- Compliance and integrity. Ensure compliance with regulations and standards to build program integrity and foster public trust.
- Data-driven decision-making. Bring in experts to implement sophisticated data analysis techniques. Build a culture that trusts data-driven decisions to effectively inform your agency-wide policies and strategies.
- Adaptability and sustainability. Continuously evolve your governance structures to meet changing needs; this ensures long-term sustainability and value.
- Transparent communication. Cultivate a culture of transparency and collaboration through open communication channels.
By focusing on these seven elements, you’ll be well on your way to creating an effective governance system that drives real results in your modernization initiative.
Governance outputs in action
For nearly a decade, states have endeavored to modernize their mission-critical and antiquated Medicaid Enterprise System (MES) infrastructures. Since 2015, the Centers for Medicare & Medicaid Services (CMS) have spent an average of six billion dollars annually to upgrade the systems critical to enabling higher value and improved outcomes.
These highly complex modernization projects offer you a real-life glimpse into the “how” of governance, not just for those in the Health and Human Services (HHS) space, but to any public sector leader embarking on high-profile systems modernization efforts.
Governance Output #2: Interagency Collaboration
An east-coast state supporting more than one million Medicaid consumers recognized the critical need to navigate risks in complex transformations within its MES program. As this is a new program, the state engaged North Highland to design the governance structure, paving the way for collaborative design, development, and deployment of a comprehensive governance model.
The implemented model boasted three layers of authority—operational, tactical, and strategic—streamlining decision-making and escalation workflows. By extending membership to various state HHS agencies, the model extended collaboration and insight-sharing nationwide.
Governance Output #6: Adaptability and Sustainability
Over several decades, a state agency in the southeast saw its MES service levels decline while costs escalated. To improve operations and reduce costs, the agency partnered with North Highland to initiate a strategic approach to a multi-year, multi-agency transformation from its single-vendor system into a modular structure where vendors competed to provide modular components. North Highland developed a governance structure that evolved through continuous improvement efforts to streamline operations and enhance program performance.
Governance Output #3: Operational Optimization
Another east-coast state agency with the capacity to serve 2.7 million Medicaid customers partnered with North Highland for its multi-year, multi-vendor MES modernization efforts. North Highland designed and a strategic governance structure, associated roles and responsibilities, and charters for each governing body (including key activities, decision rights, priorities, key members, and meeting frequency). As the PMO services contractor, North Highland operationalized the program governance to ensure that decisions, change requests, risks, and issues were escalated to the right governing bodies and stakeholders in a timely, structured manner—all while aligning the full MES program portfolio of projects with the agency's overall enterprise business strategy.
Transforming governance with AI
In all initiatives, we must look to the future, and the future of governance is powered in part by Artificial Intelligence (AI). AI is already playing a pivotal role in supporting and improving governance frameworks across various domains. Here’s how we’re seeing AI enhance governance in complex, public sector initiatives today:
- AI-powered risk assessment tools analyze project data to identify potential risks and suggest mitigation strategies.
- Natural language processing (NLP) techniques extract relevant information from documents, reports, and meeting minutes, streamlining access to critical information.
- Machine learning (ML) models identify and flag potential compliance issues, enabling proactive remediation and adherence to standards.
Although AI and its NLP and ML subsets have the potential to significantly enhance governance frameworks, you should remember to only use them as tools to support and augment human decision-making rather than replace it entirely.
"Gartner® predicts more than 70% of government agencies will use AI to enhance human administrative decision making by 2026. Machine learning, analytics and generative AI will mature over the next two years and combine into a suite of tools that will support improved government service delivery."*
Embracing adaptive governance: Navigating complexity with courage and flexibility
Effective governance is vital for the success of large-scale initiatives in state agencies. Well-designed governance frameworks ensure strategic alignment, facilitate decision-making, and promote collaboration among stakeholders.
As technology advances, the potential for data-driven insights and AI-powered tools to enhance decision-making grows. However, so do fear and risk. A robust governance framework, one that optimizes the human elements of communication, collaboration, and strategic planning alongside advanced technology, can boost courage—and improve outcomes—for public leaders on a complex systems modernization journey.
“In 2024, we are going to see a major shift in the technology landscape in government towards modernization. In order to do so, government and public agencies must evolve culturally and procedurally with flexibility and the courage to modernize by reimagining for the future.” – Leigh Palmer, VP, Technology, Strategy, and Delivery for Google Public Sector in FEDSCOOP, Dec. 19, 2023
Read Part One of this series to discover how planning rooted in goals, people, and business needs sets the foundation for effective governance—and optimized systems modernization outcomes.
Want to learn more about North Highland’s in-depth experience and evidence-based outcomes in Health and Human Services? Start here.
*Gartner, Boost Digital Transformation Success With Effective Governance, Joanne Kopcho, Sarah Davies, 11 March 2024 (For Gartner Subscribers only)
GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.
*Gartner Press Release, Gartner Announces the Top Government Technology Trends for 2024, 16 April 2024
GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.
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