States are crushed with unemployment claims. This firm wants to help

The state websites set up to handle the roughly 10 million unemployment claims filed in recent weeks have been crushed with traffic they weren't ready for, making it extremely difficult for the newly out of work to access relief. States have long known that their systems are outmoded — and some even tried to fix it before it was too late.

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Ohio saw the need for improvements, and in early 2019, the state's Department of Job and Family Services contracted Sagitec Solutions to start the multiyear process of modernizing its unemployment system. But then the fallout of the coronavirus pandemic hit the economy: 468,414 people in the state have filed claims over the last two weeks — 364,603 were filed in all of 2019. The state's unemployment website has experienced intermittent outages, slow loading pages and, in some cases, an inability to file an unemployment claim.

David Minkkinen, a partner at Sagitec who leads the company's unemployment insurance practice, echoed what experts told Protocol last week: that many states' systems, including Ohio's, are struggling with outdated technology at a very difficult time. "You can't fix them overnight — they're very complex systems," he said. "Most of the state agencies have tremendous folks that really try their best to serve this population, but they're held back by 20- to 30-year-old antiquated systems in some cases that have very little flexibility to respond to change. They're very brittle architecture."

Sagitec is in the process of transitioning Ohio's unemployment system from mainframes and servers to the cloud. The company told Protocol that it's chosen Azure for its cloud, primarily because of the work Microsoft has done in hitting compliance standards across the world, and the fact that it separates out private and public data in its cloud.

When unprecedented numbers of people hit a server-based system, the only real solution an organization can take (beyond temporary solutions like load balancers) is to spin up more servers. But that takes time and manpower. With an operation that runs on the cloud, the system would be able to dynamically call upon more resources as it needed them, given that it's far less likely a Microsoft or Amazon would run out of server space before a local government would.

"If you don't have your solution in a cloud environment with that kind of circumstances, you really wouldn't have much of a chance to respond to this," Minkkinen said.

Sagitec has offered possible tech solutions that could help the state process more of the claims it's struggling to get through. Right now, claims are going directly to the mainframe system that's currently in place and overloaded, but the company has suggested building other applications to sit on the front end of the process. People could input data that could then be fed into Ohio's system at off-peak times, easing the burden on the mainframe. Some of the options offered included mobile apps, chatbots and self-service portals, where claimants could fill out their information in a Sagitec-designed system to take some of the burden off the states' servers.

"As you can imagine in a situation like this, we have been approached by dozens of vendors (including Sagitec) offering assistance," Bret Crow, a representative for Ohio's Department of Job and Family Services, told Protocol. "We are sifting through the proposals and have actively engaged vendor partners to see what offerings they have. We assign a research team to assess each proposal to gauge whether the product will be useful. Even in the midst of a time-sensitive situation like this, as good stewards of taxpayer money, we cannot make a snap decision without doing our due diligence."

Minkkinen said Sagitec is also working with Maryland, South Carolina and Washington, D.C., on a range of back-end modernization programs. Maryland's system is supposed to go live in May or June, he said. That will likely feel like an eternity away for the state's unemployment division, which, just like about every other state, is having to take claims online in batches to keep them from getting lost. Some are beginning to wonder if the U.S. unemployment rate is actually even higher than stated, given that so many people are struggling to file claims online or over the phone.

"Sometimes in our market, the timing just doesn't work out right," Minkkinen said.

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States have realized their setups were insufficient for dealing with regular traffic and needed to be modernized, but the pressure they're currently experiencing isn't doing them any favors. Whether there will be any solutions put in place before more modern systems can come online, wading through state bureaucracy and the sheer amount of time it takes to replace a mainframe with a cloud solution — Minkkinen pegged this at about a three-year process — remains to be seen.

"Ohio is probably the most progressive and forward-thinking state that's out there right now," Minkkinen said. "I give the agency credit for learning from their past and forging a plan that's better for their future."

Updated 4:55pm Apr. 2, 2020 to include a comment from the Ohio Department of Job and Family Services.