With widespread budget cuts, many local governments feel increased pressure to cut costs and improve efficiencies. In the current economic climate, IT departments in cities and counties nationwide have come under scrutiny from both an efficiency and cost-savings standpoint.

So how does a local government manager, typically with little or no IT experience, make an informed decision about saving money in an information technology department? In a June 7 ICMA webconference, Adam Rujan, partner at Plante and Moran and Leonard Martin, city manager of Carrollton, Tx., tackled this issue.

In this webconference, Rujan and Martin emphasized that there are complex issues at play when looking at any cost-saving initiatives involving IT. Rujan explained that beyond simply saving money, local governments often outsource IT functions to upgrade the level of service they provide the community. By contracting with companies that specialize in information technology, local governments can tap into industry best practices and gain access to talent with the most current skill sets.

Outsourcing IT, however, is not for every local government. Local government managers must navigate a significant cultural change when choosing to outsource IT. Managers looking to outsource must also be willing to relinquish control over the IT initiatives, particularly with the loss of in-house expertise. There can be significant financial risk with any vendor relationship and the risk can be compounded once under contract and the local government has eliminated internal IT positions.

Rujan cautioned that hasty or uninformed outsourcing decisions can leave local governments vulnerable and perhaps spending more money in the long term. Martin echoed this concern:  "IT is the nervous system of the organization," he explained, demonstrating how the entire workings of the government ­- from computer systems in every department down to billing and collections - depend on IT.

Rujan explained that IT outsourcing is not an "all or nothing" proposition and that there is a broad spectrum of options ranging from selective sourcing of one or more department functions to full outsourcing.

As a case study, Martin outlined the approach taken in Carrollton, that began in 1998 when the city leaders recognized that their IT department was inadequate and that they lacked the capacity to grow it. The city's initial outsourcing efforts brought about rapid IT improvements, but left a weak governance system. By 2007, the city divided IT services into nine  "towers" that allowed for greater transparency in services and costs. In doing so, Carrollton was able to put the contract out to bid and negotiate a comprehensive statement of work and contract with the vendor they selected. Carrollton currently has one in-house IT employee and outsources the balance of IT functions.

Read more about the webconference.