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Mr. LAULER. This is the cost of information handling in 1980. The potential savings from a statewide information system is $183 million a year.
The same is true even more dramatically when you examine the picture at the local government level. This is the same kind of analysis and includes not only the State but counties. Here you find the information handling bill is $4.1 billion with potential savings annually of $415 million versus operating costs of $13 million for the statewide information system.
These are large numbers even for an aerospace company.
Let me complete my presentation with even larger numbers, figure 19. This shows what happens if you took all of the pieces of paper from the filing cabinets and stretched them end to end. They will reach the moon and back.
There is no message here. Let's not do it that way. Let's leave that to NASA.
Senator NELSON. Thank you very much.
Senator NELSON. Thank you very much. At a later date we might have some questions but right now there are a number of witnesses, and I think we will go through the testimony and subsequently have more questions.
Mr. Nash. We will be happy to answer them.
Senator Nelson. Thank you very much for taking the time to come here today. We will place the attachment to your statement in the record at this point. SUMMARY OF THE CALIFORNIA STATEWIDE INFORMATION SYSTEM PROPOSED BY
LOCKHEED MISSILES & SPACE Co. In November 1964 the State of California embarked on a program which promises a revolutionary approach to the massive and complex problems faced by governments today. In essence, it was a decision by Gov. Edmund G. Brown to apply the techniques of systems engineering to four selected problem areas waste disposal management, prevention and control of crime, State transportation system integration, and a statewide information system. Governor Brown's decision was predicated on his belief that California's aerospace industry could apply its systems analysis skills to the State's problems with much the same success it had demonstrated in its space age achievements. Initial evaluation of the reports that resulted from these four studies has completely justified Governor Brown's unique approach.
Lockheed Missiles & Space Co., in competition with other members of the aerospace community, submitted the successful proposals for a California statewide information system study. The contract resulting from this proposal covered a 6-month period and was funded at $100,000.
Application of systems engineering techniques demands as the first step a thorough understanding of the existing operation. From such an understanding can be developed the overall system requirements. In turn, these requirements determine in large measure the recommended design for an improved system. This, in brief, was the path Lockheed followed in performing the study.
To get a clear understanding of the State's current operation in collecting, processing, and exchanging information, Lockheed sent a team of systems analysts to Sacramento, the State capital, and to various cities, counties, and other political units. From the more than 800 interviews conducted by these analysts, certain basic information concepts began to emerge-vertical and horizontal patterns of flow between agencies; duplications in data collection; methods of processing, from simple manual to complex computer; unsatisfied needs in the present system; information handling rate of growth; projected costs under current methods; and many other aspects of the present system.
Once the raw data obtained in these interviews had been reduced and analyzed, the basic problem came into focus—how best to satisfy the information needs of the entire State by applying modern electronic data processing methods on a statewide network basis, without dislocating operations of those agencies already using such modern methods. Additionally, efficient interchange of data between computerized and noncomputerized units had to be maintained.
Many concepts for the overall system were considered by Lockheed before evolving one that most nearly met the requirements of the basic problem. In its final form, the concept recommended incorporated a unique approach to an inte grated information system of such magnitude. Although neither completely centralized or decentralized, it preserved the best of both approaches. Termed a federated system, it consists of two essential components: (i) a statewide network which would allow eventual linkage of every governmental unit in the State, and (2) a central electronic index which would pinpoint the location of all accumulated data on file in government units.
The network would allow man-machine and machine-machine dialog throughout the system, and in addition, would provide a switching arrangement for linking all units in the network, much in the manner of a giant automatic switchboard. The central electronic index, with its knowledge of every file in the State, would make all data available to network units without physically centralizing the various files. Organizational files would remain in their original locations, but all data common to severl files could be updated simultaneously from a single input of new information.
Development of the concept would extend over a 10-year period, with partial activation scheduled at the end of the first 5 years. All State unit tie-ins will be completed in 6 to 8 years, and the complete information system will be fully activated in 10 years. Savings of more than $100 million annually in information handling costs are forecast when the system is fully activated. Annual operating costs are estimated at approximately $13 million, with overall capital costs placed at $100 million, accumulated over the 10-year activation period.
Specific benefits from the system fall roughly into two groups. In the first are found cost reduction or avoidance, and increased revenues. In the second are service benefits—better services provided and received by government units; and new services impossible to provide under traditional data handling methods.
The study recommendations have been endorsed by the Governor's Automatic Data Processing Advisory Committee (ADPAC), and steps have been taken toward a budget proposal for implementation of the statewide information system. California legislative approval will be sought to permit the beginning of design work during 1966.
Senator NELSON. I will call one other witness out of order. He has a commitment. It is Dr. Zuckerman, associate professor of management, University of Southern California.
We are pleased to have you take the time to appear today, Dr. Zuckerman. You may present your testimony in any fashion you wish.
STATEMENT OF DR. JOHN V. ZUCKERMAN, ASSOCIATE PROFESSOR
OF MANAGEMENT, UNIVERSITY OF SOUTHERN CALIFORNIA Dr. ZUCKERMAN. Thank you very much, Senator Nelson. My name is John V. Zuckerman, and I am associate professor of management and director of the research and development management program of the Graduate School of Business Administration of the University of Southern California.
We at USC are engaged in providing graduate education in the management of science and technology for academic students, for business executives, for members of Federal, State, and local governments, and for members of the Armed Forces.
We base our teaching on the premise that the future of our Nation will be largely determined by the skill with which we employ science and technology in the furtherance of all of our goals, both public goals and private goals.
We believe that our environment is going to continue to change very rapidly—we have already heard this morning some of the ways in which at least the information environment is going to change. We see, for example, that population growth is going to result in the geometric rather than arithmetic increase in urban problems.
While we do have the scientific knowledge and the technical skills to deal with these problems we feel that these have to be integrated with the conceptual and practical understanding of management processes, which underlie the scientific and technological changes that we want to bring about.
Systems analysis and systems engineering by themselves are not enough. We need to include explicit reference to the employment of systems management. . I would include in this, the methods for planning and implementation of large-scale technological change and also the knowledge of how most effectively to motivate the teams of scientists and engineers who make up the systems analysis and systems engineering disciplines.
We have available methods for managing large-scale technical change, and we think these methods can be taught. Therefore, I believe that there should be added in your proposed act explicit provisions for the employment of system management techniques to integrate the systems analysis and systems engineering activities so they can be employed effectively.
We call this kind of management “The Management of Change," and with this kind of inclusion I would heartily endorse your proposed act.
I would be glad to answer any questions you might have, Senator Nelson.
Senator NELSON. What do you mean by adding systems management techniques to system analysis?
Dr. ZUCKERMAN. In some of the earlier testimony we have noticed there are some people problems involved in the implementation of any of these programs.
For example, State Senator Rees pointed out there are some jurisdictional difficulties in the State.
Mr. Schrade pointed out that there were human beings involved in the technical enterprises themselves.
Dr. Nash and his associates pointed out that in order to get the information accepted some people are going to have to give up some jurisdictional boundaries and operate as it were—a railroad, with central controls.
We all know how difficult it is to get the railroads in the United States to change certain kinds of operating rules, because we have resistance to change.
Management technology includes principles which will help implement change, and it seems to me that proposals by systems engineers should include in the development plan the means by which resistance to change would be overcome.
Senator NELSON. I suppose you could submit to the committee at a subsequent date in writing some clarifications and examples !
Dr. ZUCKERMAN. Yes; I would be glad to amplify this for the committee.
Senator NELSON. We will be conducting further hearings in Washington next year, and we include the record along with the testimony, with this testimony, but it might be helpful if you have the time to submit to us a rather detailed clarification of what you are talking about.
Dr. ZUCKERMAN. I will be glad to do that, Senator.
(At the time this hearing went to press the material referred to had not been supplied.)
Senator NELSON. Thank you very much.
STATEMENT OF JOSEPH RYAN, REPRESENTATIVE, AMERICAN
INSTITUTE OF AERONAUTICS AND ASTRONAUTICS
Senator NELSON. I will now call on Mr. Joseph Ryan, representative of the American Institute of Aeronautics and Astronautics.
Mr. Ryan. Thank you very much for the time.
May I first apologize for Mr. Richard Horn, our president, who unfortunately had to be in Washington, D.C., because he was required to work on the scientific board.
Senator NELSON. Do you have a prepared statement ?
Mr. Ryan. No; I have been asked by the president to request you to permit us to submit some subsequent statement to the committee.
Senator Nelson. We would be pleased to accept a statement and include it as part of the record.
Do you know when you will have one ready?
Mr. Ryan. I would say—shall we say prior to Christmas? Prior to the 30th of December?
Mr. NELSON. That will be fine.
(At the time this hearing went to press the material referred to had not been supplied.)
Mr. Ryan. I represent the American Institute of Aeronautics and Astronautics, composed of all professions and engineering and scientists engaged in the aerospace field.
As such we therefore have quite an awareness of the workings of the aerospace industry and how it works.
We wish to go on record, and it will be substantiated by Mr. Horn's statement, to heartily endorse your proposed bill. And we would like to state also, if it is so desired, and I am sure it will be in his statement, that we would like to offer the assistance of the institute with technical advice for the committee, if you see the need of this. This is considered as an offer from our society to you.
Senator Nelson. I appreciate that very much.
Mr. Ryan. We do believe that the States' primary effort in trying to solve this problem of humanities and assigning pilot studies to the aerospace companies has been a wise one, because these aerospace companies in conjunction with some 65 technical sciences and arts, which go into the humanities, which go into other sciences and also the systems approach. It is not possible to create a vehicle, whether it is