In Hawaii, government workers are tired of literally being paper-pushers. The Aloha State is trying to make up for years of underinvestment in information technology and has embarked on an ambitious plan to become one of the most advanced digital states in the country over the next 10 years. That’s a tall order. Up until three years ago, the state did not even have a chief information officer, let alone enough digital processing capabilities to efficiently serve its constituents by today’s standards.

Tax refunds, for example, historically took weeks to process even when filed electronically. The tax department, which is responsible for bringing in Hawaii’s roughly $6 billion in annual revenue, is now asking for proposals that will overhaul its entire system so it can do things like better manage and analyze data, process returns, and track and manage taxpayer data. “The current system requires a good deal of manual work -- both in terms of manual processing and customization,” says Frederick Pablo, the state director of taxation.

And, as Pablo notes, the new system will create more work for employees in the short term. But once the modernization is complete, he says it will save significant amounts of labor hours. That will save money in the long run, as will the department’s ability to use analytics to better identify tax fraud.

The tax department is the latest beneficiary of the effort that started when Gov. Neil Abercrombie wooed tech whiz Sanjeev “Sonny” Bhagowalia from Washington, D.C., to become the state’s first-ever CIO in 2011. He was tasked with transforming Hawaii from a state that still relied on paper forms to an innovative government that lives and operates digitally. That meant streamlining business practices across 18 departments, 108 agencies, and 168 boards and commissions, all in a state that had been spending about 1.4 percent of its budget -- half the national average -- on its IT.

The lack of investment has cost the state real money. In 2011, Hawaii filed its 2010 comprehensive annual financial report roughly 10 months late due to an antiquated accounting system that required employees to convert and enter information manually. The delayed report forced the state to push back a planned bond issue in 2011.

Step one in the improvement process, says Bhagowalia, was to upgrade Hawaii’s networking infrastructure, which was notable only for its frequent crashes and suspected security holes. Once 80 percent reliable, it is now operating at 99.9 percent. That improvement was followed by upgrades to the government’s computing power and the creation of a private cloud so that Hawaii could store and analyze more information faster. In addition to the tax department, the state is targeting its financial management, human services and health departments for major improvements. Already, the CIO’s office has redesigned all state agency websites, launched 60 new mobile apps, doubled the number of online services to more than 100 and has launched state open-data websites.

Bhagowalia has held a number of powerful IT positions for the federal government, including spearheading the open government site But “of all the work that I’ve done in 29 years, [Hawaii] was the hardest because they had the worst set-up,” says Bhagowalia, who recently handed the CIO reins to his deputy and is now Abercrombie’s adviser on technology and cybersecurity. “But the turnaround has been the most satisfying and the people’s attitudes here have really made that possible.”