November 24, 1999 Web posted at: 10:10 a.m. EST (1510 GMT) by Perry Glasser and Sandy Kendall

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(IDG) -- When you hear the letters ATF, do you think of...Waco? It's likely. Despite bad press and continuing attention from the incident in Texas, the U.S. Bureau of Alcohol, Tobacco and Firearms pursues its apparently odd combination of duties with generally little fanfare and less conflagration. Like all regulators of pleasure and vice, however, the ATF often comes under fire from the citizenry and sometimes its very existence is questioned.

The period following the events at Waco may have been the low point in the bureau's 27 years. Within six months the Secretary of the Treasury had appointed a new director, John Magaw, and he spearheaded the bureau's fight for its life.

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Magaw, former director of the U.S. Secret Service, started his tenure by defending the ATF. The bureau remained intact, and Magaw turned to internal matters to improve its operations and its reputation. He enjoined the bureau to run like a business, daring to innovate, striving for new efficiencies and getting wired.

One house

In the pre-Magaw ATF, three organizational directorates - regulatory, law enforcement and management - were so disparate that they shared no e-mail system, never mind enjoying such niceties as file sharing over a network, a common word processing system or access to databases of information about weapons, explosives and criminals.

Different arms of the ATF competed for resources. Deputy Director Bradley A. Buckles recalls, "Regulatory and criminal divisions never worked together very well. They were two very strong silos-even where they needed to complement each other, they didn't."

To tear down the silos within ATF, Magaw launched several intra-agency units that crossed former organizational boundaries, most important the Strategic Leadership Team, which Buckles chairs. Its members are the ATF's eight assistant directors, including Patrick Schambach, the CIO since 1997.

Another new stovepipe-busting unit is the Office of Science and Technology, which Schambach runs. Its responsibilities include the information technology needs across the organization and other sciences as well, such as forensics, explosives research and post-arson forensic accounting.

Just as in the private sector, Buckles notes, "IT will change the organization more than any other factor I look at." The ATF, however, faces a challenge that most private industry does not. Just about everything it does is controversial. As McNally puts it, "We deal with issues that are hot topics and get people angry."

Push to change

After 18 years of IT work at the Secret Service, Schambach left to join the ATF because, as he explains, "ATF's hunger to do things a different way attracted me. There was a reinvention-almost a rebirth-underway there, with new top leadership and an emphasis on things that appeared to have been neglected in the past, like technology."

In February 1997, Schambach handpicked a lieutenant, Larry Jurcich, to be the program manager for developing an enterprisewide systems architecture. (He was subsequently named director and chief of information services). Jurcich had also seen IT action for 24 years in the Secret Service and at the White House.

Arriving at the ATF three-and-a-half years after the Waco incident, Schambach found an agency still demoralized and in disarray. Before 1996, the agency had no CIO to give a single managerial perspective on IT.

Before Schambach took the IT reins, Buckles recalls, systems "had gone in wild directions." Headquarters featured an old mainframe with a variety of different green-screen terminals. Nationally, there were no enterprisewide IT standards; each directorate deployed its own choice of systems, amounting to a patchwork of technologies ranging from the merely obsolete to the nearly antique. "Everything that was out there, we owned it," Buckles says.

The ATF's new IT leadership had to develop a new tactic. Schambach and Jurcich arrived at one that would be a first among federal agencies: a completely outsourced and leased seat-management program.

The lease they could do

Schambach's aim was to outsource every IT purchase in every office: hardware, shrink-wrapped software, servers, printers, Ethernet switches for the local area network, cabling, installation and support. That would include the maintenance, installation and training for systems as well.

It took Schambach six months to convince the executive staff that his plan was viable. "It was hard because it was brand new [for a federal government organization]," he says. "There was no one else we could point to who had done it. And law enforcement organizations do not typically want to be on the bleeding edge."

Schambach saw the advantages of an IT leasing program arising from mandated budgeting processes, the typical snail's pace of federal bureaucracies and the short life spans of technology products. Government expenditures for capital investments must be spread out over three years. Since most mission critical IT projects are capital investments, and since you only get what you pay for, an agency IT shop would have to budget and roll out new equipment or systems in three annual stages. It would thus take at least three years to get everyone using the same stuff.

Outsourcing helps make an IT investment more like an operating expense than like a capital investment. Schambach says, "The key piece of this outsourcing is that it's on a lease basis. That way we have some built-in technology refresh capability-so we can add to it or replace it at any give time. If we purchased all of that, it would be a capital expense."

Although leasing does not entail the same budget restrictions because it is not a capital expense line-item, the question remained: Could the ATF afford it?

Schambach sent RFCs (request for comments) to eight vendors to find out whether they had cost and sales structures that would allow his outsourcing plan to work for a Federal agency, while Jurcich led an initiative to determine organizationwide standards. The vendor responses came in, and Jurcich recalls the happy moment the two realized, "We'd created an idea and learned it was not only feasible but affordable."

The same principle of simplicity ruled the winnowing of vendors. Schambach and Jurcich pared the initial vendor group to seven, then to three and finally to one. "If things go wrong," Schambach says, "we want one neck to grab." The handy neck in ATF's grasp now belongs to Unisys Corp. of Blue Bell, Pa. Unisys subcontracts to Tivoli Systems Inc., Dell Computer Corp., Hewlett-Packard Co., Micron Technology Inc., Microsoft Corp. and other companies.

Schambach has been pleased with Unisys's service, but he and Jurcich point out that the ATF has some leverage over its service supplier. "Since we are leading this strategy in the federal arena," says Schambach, "we know Unisys works hard to please us. They want us to be a 'referenceable' account."

The cost for the three-year contract is approximately $30 million. A daunting figure for a single outlay, but at $10 million a year for three years, pretty reasonable for equipping more than 4,000 employees. Schambach roughly estimates the cost per seat per year to be around $3,300, but the ATF has recently engaged GartnerGroup Inc. to arrive at a more exact total cost of ownership for its current system, which will help guide future IT decisions.

Once the new network-end-user equipment put together by Unisys to match ATF specs was rolled out in late 1997, the biggest problem was user griping. Jurcich counsels anyone who follows ATF's lead to prepare for "techno-shock" as offices are cabled and systems are installed, and to be aware "that there are good complaints and bad complaints." The former alert you to systemic problems, and the latter are just the inevitable bellyaching of human nature.

Today, cutting-edge telecommunications, databases and other computer technologies assist all 4,200 ATF workers in 223 locations in the performance of their jobs. A private, secure network reaches from Washington, D.C., to Agaca, Guam, with tendrils that grow out to Bogota, Colombia, and Mexico City.

According to McNally, the ATF has gained the respect of the wider law enforcement community. And it has certainly led the way for leased outsourcing of IT in the federal government; in fact, Schambach reports, "We're plagued with questions." He and Jurcich have been on speaking tours explaining how the system has helped their organization. Already the main Treasury Department (the ATF's parent organization) has awarded seat-management contracts, and others are in negotiations.

Being known as a leader in your field is nice, but the ATF's tradition-breaking approach was not spawned by the desire to be first. The ATF's disparate duties and far-flung workers make having uniform and high-performance IT systems indispensable to its work. And the sensitive and very public nature of that work makes IT systems success a matter of life and death for the agency.

Perry Glasser is a former senior writer at CIO.Sandy Kendall is a features editor for CIO.