TAPE/#

Speaker

Comments

TAPE 23, A

005

Chair Dallum

Calls the meeting to order at 1:00 p.m. and opens the informational meeting on proposed Oregon Liquor Control Commission information technology upgrades.

PROPOSED OREGON LIQUOR CONTROL COMMISSION INFORMATION TECHOLOGY UPGRADES – INFORMATIONAL MEETING

012

Rep. Burley

Announces that the U.S. House of Representatives Committee on Energy and Commerce “passed out” House Resolution 29, which fights the invasive practice of software that monitors the activity of computer users without his/her consent.  Explains that this is the spyware software that this committee discussed. 

019

Chair Dallum

Responds that is good news and comments that this committee delayed state action awaiting federal legislation.

025

Teresa Kaiser

Executive Director, Oregon Liquor Control Commission (OLCC).  Distributes printed OLCC Technology Modernization Package (EXHIBIT A).  Explains plan to develop information technology (IT) in three areas simultaneously during the next biennium:  merchandising, licensing and compliance.   

051

Kaiser

Continues with a description of the agency’s organization, responsibilities, revenue and relationship with sales outlets.    

068

Kaiser

Presents a six-minute videotape that portrays the activities of OLCC to underscore the agency’s IT needs.  (Note:  The voices/narratives on the audio tape are recorded from the videotape.)    

151

Kaiser

Continues following videotape presentation.  Expands on the IT needs in merchandising, licensing and compliance.  Reports on the increase in liquor licenses issued and the liquor store sales growth as shown in the Appendix in EXHIBIT A.  Advises that liquor sale profits are distributed to the general fund and local governments.

187

Kaiser

Continues that Oregon mirrors the nationally growing distilled spirits market.  Advises that the agency is not getting additional staff to keep up with demand for licenses or product.

199

Rep. Wirth

Asks about the decrease in full time equivalencies (fte) between 1993 and 1994 (EXHIBIT A).

208

Kaiser

Replies that was due to cutbacks in staffing.  Explains that the warehouse was partially automated to compensate for the reductions. 

215

Rep. Wirth

Inquires about the staffing level prior to 1993.

221

Steve Pharo

Acting Director, OLCC Merchandising Program.  Responds that there was a large restructuring required in the state to decrease the number of ftes, plus personnel for local deliveries were reduced. 

233

Kaiser

Advises that OLCC’s business partners agree that technological improvements are necessary as they need current product sales information to properly manage their businesses.  Cites sales growth projections.

253

Kaiser

Refers to Pages 35, 36, 38 and 41 of the agency’s budget narrative (EXHIBIT A) which describes one-time and ongoing needs.

259

Kaiser

Explains that she is personally handling the agency’s IT project.  Describes experience with similar projects in other states. 

274

Kaiser

States that Department of Administrative Services (DAS) has provided project management services in developing the charter and business analysis.

290

Kaiser

Comments that IT advances will allow the agency to handle workload increases without additional staff.   

308

Kaiser

Emphasizes that the agency needs to position itself to provide citizens with online licensing. 

318

Chair Dallum

Asks how long it takes to obtain a new license.

322

Kaiser

Responds, 90-120 days.

325

Chair Dallum

Inquires about the turn around time after implementation of IT.

326

Kaiser

Wants 90 percent within 30 days or less.

330

Rep. Wirth

Asks how much of the growth since 2002 is attributed to Sunday sales, which went into effect in 2002. 

340

Kaiser

Answers that they are able to obtain that information on the “store within a store” project as grocery chains capture sales by the hour, and there are significant sales Sunday afternoons in those three stores.  Advises they are unable to collect that data with the other liquor outlets.

355

Rep. Wirth

Inquires if the new technology will enable OLCC to collect and analyze that data.

360

Kaiser

Responds, that is correct.

363

Rep. Burley

Seeks clarification that the only information available is from liquor stores within grocery stores.

366

Kaiser

Answers, that is correct.

368

Rep. Burley

Asks why that is possible.

369

Kaiser

Replies that the stores have significant IT infrastructure in place and, by agreement, make that information available to OLCC.

373

Rep. Burley

Inquires if the agency has performance measures to keep track of that kind of information.

383

Kaiser

Responds that they do not have that kind of sophisticated performance measures.  Explains how they track information now.

TAPE 24, A

007

Rep. Burley

Comments that some businesses have the capability of capturing “real time” information into a data bank.  Asks if that is where they want to be for merchandising and retail.

013

Kaiser

Replies, absolutely; we need the right product in the right place at the right time.

017

Rep. Wirth

Asks for the locations of the three stores in stores.

019

Kaiser

Responds there are two in the Portland suburban area and one in Bend.

022

Rep. Krummel

Points out that the time frame for the agency to issue a license may be impacted by a delay of a local government in rendering a decision on the application.  

037

Chair Dallum

Assumes the agency is ordering just what is needed now.  

039

Kaiser

Answers, absolutely.

041

Bill Linden

Represents three of OLCC’s business partners, 7-Eleven, Oregon Restaurant Association and Anheuser-Busch Company.  States that OLCC needs significant enhancements to their IT capabilities and believes they have prepared a realistic plan. 

064

Linda Agnowski

Director, Regulatory Field Operations.  Gives overview of the agency’s regulatory program. 

084

Agnowski

Describes duties of the field operations unit, which includes licensing and complaint investigations and liquor law violations. 

093

Agnowski

Refers to the increase in number of licenses making it necessary for field operations to become more efficient.  Cites the lack of an integrated IT system inhibits efficiency. 

121

Agnowski

Explains the manual process for recording the compliance history of a business, which cannot be accessed electronically. 

148

Agnowski

Cites the need for an integrated enforcement activity system that would include remote access devices for inspectors.   

162

Agnowski

Explains how the enforcement activity system operates and the types of information captured.   

193

Agnowski

Describes the benefits of IT improvements.   

208

Rep. Wirth

States that there are legislators who believe the state should get out of the liquor business so wonders if it is wise to make a large investment at this time.

219

Kaiser

Responds that OLCC returns substantial revenues to the state.  Explains that their request is for less than ½ of 1 percent to invest in technology to operate more efficiently for as long as it is the will of the legislature.

230

Rep. Krummel

Responds to Rep. Wirth’s question about privatizing.  States there must be an incentive for a private business to bid; and if a large investment is needed, that is not likely to happen.

247

Rep. Krummel

Asks if the alcohol manufacturers listed in the budget narrative are in Oregon or nationwide.

257

Agnowski

Replies, it is a combination.  Advises that anyone who manufactures alcohol in Oregon has to have a license, even if their parent company is in another state.

266

Rep. Krummel

Seeks clarification if that includes small wineries as well as large distilleries.

273

Agnowski

Responds, that is correct.  States that most of the growth is in wineries.

280

Chair Dallum

Asks if DAS has reviewed OLCC’s security.

289

Roger Deming

IT Director, OLCC.  States that there have been discussions with DAS.  Explains that not all of the security requirements have been identified.

299

Kaiser

Points out that she has worked closely with a DAS project manager to ensure an integrated development that meets Oregon’s technology “big picture.”

309

Chair Dallum

Cites the committee’s concern for security and compatibility.

312

Rep. Wirth

Expresses concern with the threat of privatization of OLCC and asks how vulnerable the agency is by not having an IT upgrade.  Inquires how much of the $2.2 million for one-time professional services is for a private contractor and how much is for DAS. 

343

Kaiser

Replies that there has been no decision on how that will be broken down.   Wants to get the most value for the cost.  

354

Kaiser

Responds to the earlier question about privatization.  Believes those pressures came from unhappy business partners.  Explains that the gap between the agency’s performance and the industry’s needs has been closed by using work groups to resolve problems. 

384

Kaiser

Advises that privatization pressures also came from citizens with concerns with the retail outlets.   

403

Rep. Wirth

Expresses concern about the media.

418

Kaiser

Responds that OLCC needs to illustrate to citizens that they are getting the value from what is spent on the agency. 

TAPE 23, B

001

Rep. Burley

Asks if OLCC has made these requests before.

005

Kaiser

Understands that her predecessors regularly requested funding for projects to move the agency forward.   

012

Rep. Burley

Inquires about Web-based inquiry systems referred to in the budget narrative (EXHIBIT A). 

019

Deming

Answers that this is in response to a need that was identified to provide information easily to the public and to businesses.

029

Rep. Burley

Asks if custom-built packages or off-the-shelf solutions will be used. 

036

Deming

Replies that they are working with DAS and may have to develop some solutions but prefer to use off-the-shelf packages that can be modified whenever possible.   

046

Chair Dallum

Comments that DAS prefers use of off-the-shelf software.

053

Rep. Krummel

Reiterates that whatever is used, DAS will be sure it fits within the overall enterprise structure so there are no conflicts.

058

Kaiser

Emphasizes that there will be no conflict with the state’s decision regarding IT.

061

Rep. Krummel

Inquires about the need for Geographic Information System data mapping and what that adds to the overall picture.

080

Kaiser

Responds that OLCC interfaces with law enforcement.  Discusses areas with high incidents of alcohol-related problems and how this information would be helpful in electronic license processing. 

099

Rep. Krummel

Asks if the wireless connection ongoing expense is anticipated to be for a satellite connection (EXHIBIT A).

113

Deming

Explains that the initial estimate was based on a cellular network. 

117

Rep. Krummel

Inquires about the types of servers and licensing fees.

143

Deming

Describes the servers and license fees, and explains that a more fault tolerant system is needed as the agency moves into more Web-based functions.

154

Rep. Krummel

Assumes that the secondary servers will be housed elsewhere.

158

Deming

Replies that they have not selected a secondary site.

162

Rep. Krummel

Asks that even though OLCC is not part of the initial consolidation, could not the servers be put into the new data center.

165

Deming

Responds that he sees no reason why that wouldn’t work.

169

Rep. Krummel

Inquires if it would be more cost effective to look at servers that give a wide array of possibilities, especially the add-on capabilities.

174

Deming

Answers that they will look at all options available. 

184

Rep. Krummel

Asks who will use the developer work stations shown under capital outlay (EXHIBIT A).   

196

Deming

Explains that staff and contractors will use this equipment.

203

Rep. Wirth

Inquires if the request for funding is for Phase 2.   

208

Deming

Responds that Phase 2 is the current biennium and the funding request is for Phase 3. 

213

Rep. Wirth

Asks if Phase 3 could be broken down if not fully funded.

219

Kaiser

Answers that they need to accomplish Phase 3 next biennium so they can get to online licensing. 

236

Rep. Wirth

Refers to total budget package (EXHIBIT A).  Comments that a large portion appears to be for staff.  Seeks clarification.

260

Kaiser

Explains that some will be used for new staff and some for contracts.  

267

Rep. Wirth

Asks if DAS staff can provide some of the services planned for contracting.

279

Deming

Responds that they will be consulting with DAS, and if DAS does not have the needed services available, they want the flexibility to obtain from the private sector.

292

Michael Zanon

Information Resource Management Division, DAS.  Advises that over the past year OLCC in cooperation with DAS has focused on the business plan and business needs.  Confirms their continued support. 

327

Rep. Wirth

Asks if some of the money could be spent on training of current staff to provide necessary services.

339

Zanon

Replies that they are telling agencies that if DAS can provide a service at a cost competitive to the private sector, they want to be considered.     

353

Chair Dallum

Asks Rep. Wirth if her concern is that when it comes time to hire fte, that current IT people will have an opportunity to apply.

363

Rep. Wirth

Answers, no.  Suggests using some of the money to train current staff so in the long run they can provide needed services. 

377

Zanon

Replies that is part of the ongoing discussion with OLCC.  Explains that there is a need to balance their existing resources with all of the state agency projects. 

TAPE 24, B

003

Rep. Burley

Asks if the OLCC business plan is part of EXHIBIT A. 

006

Deming

Responds, yes; it is in the Appendix. 

011

Rep. Krummel

Points out that the amount for professional services is a one-time expense for such items as system architects and developers, skill sets that may or may not be available on staff. 

033

Michael Miliccui

Director, OLCC Licensing, Policy and Process.  Comments on business needs and how they can be addressed by IT solutions.  Explains responsibilities of the section.  Quotes number of new licenses, license renewals, service permit applications and server education tests processed annually. 

055

Miliccui

Covers how they plan to automate licensing and service permit processes into an integrated system so data can be shared by a variety of users. 

095

Pharo

Cites statistics on product sales and projected future growth. 

123

Pharo

Explains that currently they don’t get information on when a product sells for up to six weeks. 

133

Rep. Burley

Stresses that this is where the payoff is.  Asks about the carrying cost of inventory in the warehouse waiting to be shipped.

142

Pharo

Responds that of the approximate $30 million in product, all but about $300,000-500,000 worth is still owned by the companies, as it is not paid for until shipped.

150

Rep. Burley

Seeks clarification that the people in stores are not state employees.

152

Pharo

Replies, that is correct; they are contractor employees.

154

Rep. Burley

Asks if the 49 fte in merchandising work in the warehouse.

161

Pharo

Explains where the staff all work.

164

Rep. Burley

Asks how many are actually in the warehouse.

167

Pharo

Responds, about 30.

168

Rep. Burley

Inquires about possibility of automating the warehouse operation.

170

Pharo

Explains current automation in the distribution center and future improvements contemplated. 

189

Pharo

Continues that they need a system to work with contractors to obtain daily sales information and to be able to adjust inventory and forecast needs. 

225

Rep. Burley

Asks about sales in Bend.

227

Pharo

Answers, the store within a store is doing very well.

229

Kaiser

Interjects that sales projections for the stores within a store have been exceeded.  Reports that they want to open a few stores each year. 

252

Pharo

Advises that with up-to-date sales information, they will be able to more accurately predict patterns to meet customers’ needs.

267

Rep. Burley

Wants to review EXHIBIT A in more detail.

271

Chair Dallum

Asks if OLCC has been through Ways and Means,

273

Kaiser

Answers, no, but are scheduled before the subcommittee early in April.

276

Chair Dallum

Seeks committee consensus to support OLCC with Ways and Means, providing security, compatibility and coherence have been taken care of and this committee gets an IT update.   

282

Rep. Krummel

Asks Rep. Burley if the additional time he requests is needed before giving the Chair consent on support.

293

Rep. Burley

Responds that the areas he wants to review are the ones in the caveat presented by the Chair.

297

Chair Dallum

Announces that barring any dissent, the committee will support.

299

Rep. Wirth

Has serious reservations about all the projects statewide making IT investments with vast outlay for contracted services.  Needs reassurances that there will be training of our own people.

330

Chair Dallum

States that he will wait a week or two, and if the concerns raised by Rep. Wirth and Rep. Burley are addressed, he will prepare a letter of support to Ways and Means.

336

Rep. Krummel

Suggests Rep. Burley talk further with Ms. Kaiser and Mr. Pharo and take a tour of OLCC’s facility.

364

Chair Dallum

Announces that after the last meeting on computer security, it was the consensus of this committee to submit a bill, so he did a “gut and stuff” on a bill to meet the filing deadline.     

385

Weyand

Comments that the suggested language for an amendment to the “security bill” has been discussed with DAS (EXHIBIT B). 

406

Chair Dallum

Closes the informational meeting on proposed Oregon Liquor Control Commission information technology upgrades and adjourns the meeting at 2:50 p.m.