Kelso said that the state has dozens of legacy IT systems that it can no longer maintain because the managers who designed or maintain the systems have either retired or will do so in the near future. "We've run out of time on legacy applications and we can't continue to maintain them," he said. "We've been reliant on small handful of individuals and they have retired or are planning to retire. Many of these systems are non-manageable, not because they are broken, but because we don't have any people around that know how to keep them running."

As a result, California has launched a broad initiative to update the state's IT systems. But Kelso acknowledged that the state is looking at a projected shortfall $5 billion to $6 billion for fiscal 2008, which may slow down some of these large IT projects such as the $1.5 billion Fi$Cal project to update the executive branch ERP systems.

But despite the shortfall, the broad IT mandate coupled with the fact that 50 percent of the state's IT workforce is eligible to retire over the next five years, creates a potential boon for VARs.