ICT Asset Management Plan 2019/2020
** This document is a modified version of the Nams Plus template. The information contained in this document is obtained
from Nams Plus 3 web based program using data from Cassowary Coast Regional Council.
ICT Asset Management Plan 2019/20
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Table of Contents
1. Asset Management Plan Context .................................................................................................... 3
2. Asset Class ....................................................................................................................................... 4
3. Indicators ......................................................................................................................................... 5
3.1. General .................................................................................................................................... 5
3.2. Financial .................................................................................................................................. 6
3.3. Condition ................................................................................................................................. 8
4. Financial Expenditure .................................................................................................................... 11
4.1. Total Costs ............................................................................................................................. 11
4.2. Renewal Expenditure ............................................................................................................ 12
5. Basis of Plan .................................................................................................................................. 12
6. Demand Forecast .......................................................................................................................... 12
7. Future Projection .......................................................................................................................... 13
8. Risk ................................................................................................................................................ 15
9. Next Steps ..................................................................................................................................... 16
10. Plan maturity ................................................................................................................................. 16
11. Technology Changes ...................................................................................................................... 17
12. Conclusion ..................................................................................................................................... 18
Appendix A. Asset Data ..................................................................................................................... 20
A.1. Asset List ............................................................................................................................... 20
A.2. Data used .............................................................................................................................. 20
A.3. Basis of Valuation .................................................................................................................. 21
Appendix B. Financial Information .................................................................................................... 22
B.1. Financial Summary ................................................................................................................ 22
B.2. Financial Statements and Projections ................................................................................... 22
B.3. Funding Strategy ................................................................................................................... 24
Appendix C. Demand Factors ............................................................................................................ 25
C.1. Customer Levels of Service ................................................................................................... 25
C.2. Legislation ............................................................................................................................. 27
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1. Asset Management Plan Context
ICT assets function differently from other major asset categories such as water, buildings or vehicles.
It is customary practice to group ICT assets round user tasks such as desktop telephones or printers.
Another grouping is security and non-security assets. Security assets control access to confidential,
sensitive or personal information. They function like a pass card to a hotel room. Hackers continuously
find ways through security and manufacturers plug security holes as regularly. When a manufacturer
ends support they stop plugging the holes that hackers continue to find. The longer an asset is used
beyond support the greater the risk of a security breach.
We could define the usable life of an ICT asset against economic criteria. A printer might function as
it did when acquired. Manufacturers continually develop new technologies to reduce the running
costs of their printers. At a certain point, the cheaper cost per page will mean that Council can save
money by replacing the printer even though it has not failed.
Manufacturers will make 2 or more generational changes to physical assets during their lifecycle. Each
generational change brings new or improved functionality to processing speeds and memory
addressing. Software vendors revise their applications and operating systems to take advantage of the
new features. New monitors are generally landscape and high resolution. Application providers have
upgraded their software to match landscape monitors. Someone using a low resolution square screen
would see a much reduced picture which is less sharp and this can give rise to user fatigue.
Another factor is application vendors such as TechnologyOne(T1) changing their platform solely to a
cloud based subscription service and not providing patches for existing local installations.
The definition of an ICT asset being at its end of life needs to be considered against several factors
including:
Security
Interoperability
User fatigue
Economy
Obsolescence
Change of platform
The ICT Asset Management Plan provides the financial and asset information only. It should be read
in conjunction with:
CCRC Asset Management Policy
CCRC Asset Management Strategy
CCRC What is Asset Management
CCRC Asset Management Definitions
CCRC Asset Management Portfolio
CCRC Non-Current Assets Disposal Policy
The objective of this Asset Management Plan is to provide an abridged view of the ICT Asset Status.
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2. Asset Class
This plan covers the ICT asset class.
Table 1 below shows the value of the assets by sub-class in Information Services:
Table 1: ICT Asset Values in 000’s
Class Quantity
Current Rep
Cost WDV
Accumulated
Depreciation
Annual
Depreciation
($'000) ($'000) ($'000) ($'000)
Audio/Visual Systems 2 14$ 11$ 3$ 2$
Desktop computers 223 271$ 112$ 159$ 54$
Fibre network 6 62$ 41$ 21$ 2$
Laptop computers 106 164$ 65$ 99$ 41$
Mobiles 224 78$ 32$ 46$ 26$
Monitors 222 69$ 31$ 37$ 14$
Printers MDF and Scanners 45 82$ 29$ 53$ 16$
Servers 18 174$ 27$ 147$ 35$
Storage 16 263$ 101$ 162$ 53$
Switches 120 148$ 90$ 58$ 30$
Tablets 95 57$ 20$ 37$ 19$
UPS 14 33$ 10$ 23$ 7$
Web Development - - - - -
Wireless Access 41 88$ 3$ 84$ 13$
Workstations 14 50$ 21$ 29$ 12$
Enterprise Resource Planning (ERP) 1 2,140$ 708$ 1,432$ 214$
1,147 3,691$ 1,301$ 2,390$ 537$
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3. Indicators
3.1. General
There are two aspects that indicate how Council is performing in managing the ICT network. The first
is the financial aspect and the second is the condition aspect. The age profile in 3.3 Condition shows
that 33% of ICT assets, or 18% by value, are two to three times past their design life. If an asset design
life is five years, three times design life means the asset is up to 15 years old. The current 10-year
financial plan includes a phased renewal of these assets over four to five years.
It should also be noted that this plan is based on a physical inventory of assets in use and the physical
inventory differs significantly from the assets recorded in TechnologyOne. For example, the
TechnologyOne asset was recorded on 14/11/2013 and 4.4 years of depreciation was recorded at the
same effective date. There is no other depreciation until 28/02/2017 when system generated
depreciation commenced. If the current depreciation amounts continue to the end of the asset life,
the total depreciation would be $2,368k against an asset value of $2,140k. Therefore, depreciation
appears to be overstated by about 1 years' worth. The physical assets will need reconciling with the
financial records to get an accurate base for the Asset Management Plan.
Figure 1 Comparison of 10 year profiles below compares the current incumbent asset plan lodged in
the system with the proposed asset plan based on the physical asset inventory. The current incumbent
Asset Management Plan (2018-19) was significantly understated across all sub-classes. Furthermore,
the current incumbent plan did not reconcile to the physical assets as so the asset values and renewals
were understated.
Figure 1 Comparison of 10 year profiles
-
$200k
$400k
$600k
$800k
$1,000k
$1,200k
$1,400k
$1,600k
$1,800k
1 2 3 4 5 6 7 8 9 10
Plan Years
Comparison of 10 year profiles
Current incumbent Asset Management Plan (2018-19) Proposed plan 2019
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3.2. Financial
The financial indicators provide a view on how CCRC is performing in the financial management of the
assets. They show that the ICT Asset Management is sustainable at the proposed budget levels.
Note that the NAMS model uses a simple flat rate depreciation based on the current depreciation
recorded in the ledgers. The current depreciation reflects assets that are in life only. As this plan
proposes to replace obsolete assets, the depreciation over the first few years of the plan will increase.
With no other changes, the depreciation would then stabilise round the program of recurring renewal.
However this plan includes asset spend to extend the life of the largest asset, T1, by 7 years before it
moves to an on demand subscription service. These spends will result in revaluation of the T1 asset
with accompanying changes in depreciation to the new end of life. Thereafter T1 asset renewal spend
will be replaced by operational expense reflecting the on demand consumption. The ratios below are
based on the assumed future state model.
As the ICT asset base is further audited and updated this plan can be updated with more accurate
information particularly for the variations in depreciation over time.
Financial Sustainability Ratio
This ratio tells Council whether it can afford to own the assets they currently have over the long term.
The figures include renewals and operating costs. If the average annual budget is less than the
required annual average renewal expenditure then Council is not able to maintain all the assets.
Options would be:
1. To remove non-vital assets from the asset base.
2. Allocate more budget so Council can maintain vital assets.
Vital assets would include assets relating to security, safety, complying with legislation or critical to
delivering the strategic goals.
Values are average annual amounts for a 10-year planning
period.
𝑃𝑙𝑎𝑛𝑛𝑒𝑑 𝑇𝑜𝑡𝑎𝑙 𝐵𝑢𝑑𝑔𝑒𝑡
𝑅𝑒𝑞𝑢𝑖𝑟𝑒𝑑 𝑇𝑜𝑡𝑎𝑙 𝐸𝑥𝑝𝑒𝑛𝑑𝑖𝑡𝑢𝑟𝑒=
$1,832𝑘
$1,847𝑘= 99%
ICT Value = 100%
Good = 90%
Acceptable = 80% to 90%
These values include all expenditure
The ICT Financial Sustainability Ratio demonstrates Council’s commitment to fund renewal in the ICT
asset class. The small shortfall in required expenditure has potential to be alleviated as selected ICT
assets move to a subscription basis and is not considered a significant risk at the moment.
80%
90%
100%99
Financial Sustainability Ratio
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Renewal Sustainability Ratio
This ratio tells Council the extent to which it is renewing assets against the requirement over the long
term to maintain the assets base in the correct condition. A sustained renewal rate below 100% would
mean that assets are degrading and not being replaced. This can lead to:
A diminished asset base
An increase in unplanned maintenance costs to fix assets when they fail.
Increased risk for safety or security.
Inability to deliver the required service level.
The required expenditure is obtained from technical analysis and planned expenditure is the budget
from the Long Term Financial Plan.
Values are average annual amounts for a 10-year planning
period.
𝑃𝑙𝑎𝑛𝑛𝑒𝑑 𝑅𝑒𝑛𝑒𝑤𝑎𝑙 𝐸𝑥𝑝𝑒𝑛𝑑𝑖𝑡𝑢𝑟𝑒
𝑅𝑒𝑞𝑢𝑖𝑟𝑒𝑑 𝑅𝑒𝑛𝑒𝑤𝑎𝑙 𝐸𝑥𝑝𝑒𝑛𝑑𝑖𝑡𝑢𝑟𝑒=
$923𝑘
$938𝑘= 98%
ICT Value = 100%
Good = 90%
Acceptable = 80% to 90%
Asset Consumption Ratio
The Asset Consumption Ratio provides an indication whether renewals are keeping pace with
consumption. Consumption is assumed to equal the annual depreciation of the asset as this has been
calculated to bring the asset value to zero when it is no longer useful as an asset. There are many
factors affecting the required expenditure on asset renewal such as damage or a change in
requirement or a change in legislation. There is a significant number of ICT assets that are well over
their design life as shown in section 3.3 Condition 'Figure 2 ICT Asset Aged Profile' and this ratio reflects
bringing them back into alignment to make them fit for purpose. IS plan to phase the renewal over
three to four years.
Annual depreciation is estimated from the physical asset inventory and not taken from the T1 system.
Values are average annual amounts for a 10-year planning
period with depreciation based on the assumed future state.
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑅𝑒𝑛𝑒𝑤𝑎𝑙 𝐵𝑢𝑑𝑔𝑒𝑡
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐴𝑛𝑛𝑢𝑎𝑙 𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛=
$923𝑘
$860𝑘= 107%
Good = 90%
Acceptable = 80% to 90%
80%
90%
100%107
Asset Consumption Ratio
80%
90%
100%98
Renewal Sustainability Ratio
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Life Cycle Ratio
The life cycle indicator is a further view of Depreciation compared to Renewal expenditure. If assets
renewal is keeping pace with consumption the ratio would be 100%. A ratio of less than 100% shows
a degrading asset base which is the case in prior years for ICT assets. As Information Services is bringing
this asset base back into alignment, renewals are greater than consumption giving the ratio greater
than 100%.
($000s) Life Cycle Cost Life Cycle Expenditure
Operations 909 909
Maintenance
Renewal 923
Depreciation 860
Total 1,769 1,832 Table 2: Life Cycle Expenditure and Cost
Values are average annual amounts for a 10-year planning
period.
𝐿𝑖𝑓𝑒 𝐶𝑦𝑐𝑙𝑒 𝐸𝑥𝑝𝑒𝑛𝑑𝑖𝑡𝑢𝑟𝑒
𝐿𝑖𝑓𝑒 𝐶𝑦𝑐𝑙𝑒 𝐶𝑜𝑠𝑡𝑠=
$1,832𝑘
$1,769𝑘= 104%
Good = 90%
Acceptable = 80% to 90%
A life cycle ratio above 100% would imply a growth in asset base however, in this plan, it is a recovery
of the asset base to the level needed to service Council's needs.
𝐿𝑖𝑓𝑒 𝐶𝑦𝑐𝑙𝑒 𝐺𝑟𝑜𝑤𝑡ℎ = 𝐿𝑖𝑓𝑒 𝐶𝑦𝑐𝑙𝑒 𝐸𝑥𝑝𝑒𝑛𝑑𝑖𝑡𝑢𝑟𝑒 − 𝐿𝑖𝑓𝑒 𝐶𝑦𝑐𝑙𝑒 𝐶𝑜𝑠𝑡𝑠
$1,832𝑘 − $1,769𝑘 = $63𝑘
This represents the average annual cost of rebalancing ICT assets.
3.3. Condition
Council generally estimates how long an asset will be useful before having to replace it. Therefore,
age is the common way of expressing asset life across all the different factors discussed in section 1
Asset Management Plan Context. This in part because technology improves and develops continuously
and in part because the moveable assets have a limited life. Once they fail they are completely
unusable and generally need replacing.
Enterprise systems have regular patches and maintenance updates which maintains their
functionality. They will be replaced when the functionality prevents the organisation from achieving
strategic goals.
80%
90%
100%104
Life Cycle Ratio
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Other assets such as servers and storage arrays need to have their operating systems kept up to date
to reduce their vulnerability to security breaches. Assets with operating systems that suppliers no
longer support have an elevated vulnerability to security breaches. Council has a number of assets
that are well over their design life as shown in 'Figure 2 ICT Asset Aged Profile' and 'Figure 3 Percentage
number and value of assets past design life' below. Ages are categorised by multiple of design life
because the design lives vary across asset sub-class.
Figure 2 ICT Asset Aged Profile
Figure 3 Percentage number and value of assets past design life
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15% of ICT assets by value are beyond their design life. Some as much as 4 times. Old Servers, storage,
switches and wireless network have the highest risk for Council with a security breach as their
vulnerability increases with age.
One of the aims of this asset management plan is to ensure no assets beyond their design life present
an unacceptable risk to Council. IS will achieve this over the next three to four years by bringing all
operating systems to the current version, replacing operating systems that suppliers are no longer
support and replace assets for which there are no upgrade options.
Another disadvantage of using obsolete assets is that new assets which will interface to the old assets
have to be configured to be backward compatible. This usually results in the performance and
capability of the new asset being constrained meaning that Council does not get full value of the
renewal investment.
Whilst retaining assets as long as possible saves Council money in one spending class, there are hidden
costs such as productivity which are likely to wipe out any savings. There are also further health risks
related to fatigue for the users.
IS will also investigate options to use subscription or cloud services as part of the business assessment
when renewing assets.
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4. Financial Expenditure
4.1. Total Costs
The Figure 4 Total ICT Asset Costs below shows the total costs of owning and managing ICT assets. This plan involves a renewal profile to bring the asset base back within the design life age profile. Therefore, there is no new Capital / Upgrade plan. Also, the disposal value of ICT assets tends to be very low as much is sold for scrap value, therefore the Disposal is assumed at nil value.
This renewal plan includes annual costs to extend T1 Ci (Connected Intelligence) useful life by 7 years. The benefit will be to allow the existing asset to operate alongside the next generation of T1, Ci Anywhere. T1 will cease to provide patches and support for their onsite version so Council must plan for this transition. It will also avoid a repeat of the $2.1M, or current day equivalent, investment to upgrade the onsite version in 2023.
Figure 4 Total ICT Asset Costs
The table below shows the data used in Figure 4 Total ICT Asset Costs.
Table 3 Total asset costs
Year 2019 2020 2021 2022 2023 2024 2025 2026 2027 202810 Year
Total
Operations $ 909 $ 909 $ 909 $ 909 $ 909 $ 909 $ 909 $ 909 $ 909 $ 909 9,087$
Capital Renewal $ 865 $ 1,151 $ 915 $ 745 $ 764 $ 1,026 $ 1,357 $1,022 $ 764 $ 625 9,234$
Total Expenditure $ 1,774 $ 2,060 $1,823 $1,654 $1,673 $ 1,935 $ 2,266 $1,931 $1,673 $1,534 18,321$
Budget Expenditure $ 1,774 $ 2,060 $1,823 $1,654 $1,673 $ 1,935 $ 2,266 $1,931 $1,673 $1,534 $ 18,321
Variance $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
All dollar values in ($'000)'s
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Due to the relatively small asset base in the ICT class and the significant cost of the individual assets
within the class renewal expenditure has significant peaks and troughs over time.
4.2. Renewal Expenditure
Figure 5 Renewals Projected vs Planned Costs shows the renewal requirement compared to planned
renewals. Whilst the ratios are based on annual averages for the first 10 years the actual annual costs
vary considerably.
Figure 5 Renewals Projected vs Planned Costs
In the next 10-year period Council is fully funding its renewals for the ICT class. This aligns with the
financial stability ratio in section 3.2 Financial on page 6.
5. Basis of Plan
Certain factors combine to provide input to the standard of asset that Council provides. The way
Council manages its ICT assets is influenced by Customer Service Levels, Technical Service Levels,
Legislative Requirements and Other Factors. Details of these factors can be found in 'Appendix C
Demand Factors' on page 25 or in Council’s ‘What is Asset Management” document.
6. Demand Forecast
Cassowary Coast population and economy are quite static showing neither significant growth nor decline. Managers in Council are not planning for any increases that would materially affect the ICT asset base.
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An increase in facilities available for public use could place a further demand on ICT services, however, managers are not planning these at the moment and they are therefore not included in this plan.
Other factors that will influence the demand forecast are future work practices such as moving from paper based job management to electronic records delivered to mobile devices such as rugged tablets. There is not enough information to form an opinion for this plan.
ICT assets comprise 0.1% of Council's total asset value.
7. Future Projection
The future projection includes migrating candidate assets to subscription services as they reach the
end of their useful lives or when economically advantageous. IS will prepare options to replace
physical assets with subscription of cloud services. This will change the future renewal projections and
will take time and effort to assess and plan. The changes are likely to be implemented over the period
2020 to 2024.
Candidate assets include:
Servers
Storage
Citrix
Enterprise systems such as TechnologyOne
And associated services
Moving assets to a subscription service will require significant planning to select the most beneficial
options for Council. There is likely to be a large amount of effort in re-engineering the business to
make the most of a move to subscription services. The most significant transformation would to T1's
cloud service. IS would need to remediate data storage and cleanse data before any moves. Remaining
systems would need reconfiguring so that the new subscription services run seamlessly alongside
inhouse services.
As Council moves assets that support ICT services to commoditised cloud-based subscription services,
roles will transform to managing contracts and supplier relationships. Council will be operating in a
federation of cloud-based suppliers and will need to develop new skills to work in that environment.
Council will also have to ensure that the new activities do no replace the old activities but that effort
to manage the new activities is much reduced from the existing levels. IS can then direct that effort
towards delivering higher value services to internal and to external customers.
Benefits and cost savings include:
Reduced risk of vulnerability as suppliers will manage patches and updates.
IS people will have space to focus on higher value activities to improve service quality and
asset management
Variable demand response if Council needs to increase or reduce capacity in a service.
Reduced risk of downtime
Access to development and Test environments that are easily turned off when not in use.
Rapid prototyping to develop proofs of concept with little upfront commitment.
Supporting special events that require large ICT capabilities.
Supporting business change programs that require new systems to be rapidly deployed.
Disaster Recovery (DR) environments that are rarely activated.
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Figure 6 Migration to subscription services' shows an example of the shift from asset expenditure to
operational costs starting in 2020/21. The example assumes a smooth transition of the candidate
assets to subscription service and a 30% reduction in costs over the renewal life. The candidate assets
would all move to subscription service at the end of 2024 /25 financial year. The assumptions would
need further work and the costs of preparing to migrate are not included in this example.
Each proposition to migrate to a subscription would be subject to in-depth investigations to assess the
risks and benefits when seeking business approval.
Figure 6 Migration to subscription services
The above assumes a simple pay-as-you-go consumption model similar to buying a train ticket or
renting a hire car. The actual accounting treatment of the subscription service will need to be
determined based on the specific form of contract.
The general basis of a cloud supply is that the supplier does not confer any right of asset ownership
to the consumer for software licences or physical assets. Fundamentally, providers want the ability to
balance load across their assets by using the server that best meets their needs at a specific time. This
means that it would be almost impossible to identify a specific asset associated with service supply to
a nominated customer. Therefore, a cloud service would fail to meet one of the fundamental tests to
be capitalised on the balance sheet, namely acquiring legal title to hardware or software assets or
legal rights to a particular asset.
-
500
1,000
1,500
2,000
2,500
-
500
1,000
1,500
2,000
2,500
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038
$0
00
Year
ICT Profile after migrating to subscription services assuming 30% saving on candidate
renewalsOperations Renewals Previous Profile
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Given the above, IS do not consider that the changes to AASB 9 Financial Instruments or AASB 16
Leases would require the subscription services to be capitalised. AASB 116 Property, Plant and
Equipment and AASB 138 Intangible Assets are unlikely to apply either.
Whatever the accounting practice, the ultimate goal is for Council to pay less cash for their individual
ICT services.
8. Risk
Risks are identified in IS risk management plan. The significant risks regarding this Asset Management
Plan are:
1. Technology Investment
2. TechnologyOne
3. Underspecified core assets
4. System vulnerability
5. Resource Erosion
6. Acceptance of moving from CAPEX to OPEX
Technology Investment
Investment in technology is not usually directly linked to driving service delivery. As such it can be a
target for budget cuts. Council has not renewed assets in the past with the consequence that some
core systems are increasingly vulnerable. Some of this renewal catch-up could be perceived as
providing Council manages and officers with shiny new toys. Therefore, Council needs develop clear
criteria for replacing assets. The criteria will include security, user fatigue, functionality and
economics. Council will need to communications carefully to ensure people understand what is being
replaced and why. Bringing these systems back to an acceptable level of security places a demand on
the existing resource and will result in added cost to Council.
TechnologyOne version upgrades
Failure of TechnologyOne to deliver
TechnologyOne does not have a track record of delivery in full and on time. This plan needs to
recognise potential delays and changes to functionality by allowing time and money over and above
the schedule to remediate any issues with T1
Underspecified Core Assets
As assets are being assessed for renewal, there are instances of the original asset being significantly
under-specified. When the correct specification is costed this can increase renewal costs by a factor
of 2 to 3 times. Basing budget assumptions on a like for like replacement carries the risk that the actual
renewal, when correctly specified, will cost considerably more. This in turn impacts budget estimates
and cash flow forecasting.
System Vulnerability
As assets age enough beyond their design life, they will reach a point where suppliers will no longer
support them. They will also be further removed from being able to operate with newer technologies.
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Data#3 conducted a vulnerability assessment in 2018 and identified a range of vulnerabilities across
servers, storage and applications. The vulnerability assessment will be a significant factor in prioritising
candidates for subscription services.
Operating systems that cease to be supported have a heightened vulnerability to intrusion malicious
programs. Council must reduce this risk by making sure the existing systems are renewed before they
become vulnerable.
Resource Erosion
With the local economy and population being relatively flat Council is likely to suffer an erosion of
resources because payroll awards and suppliers price increases could outstrip income. This will result
in a shortage of funds for renewals.
This risk can be offset to some extend by shifting from a fixed ICT infrastructure to scalable
subscription-based ICT services. This will even out the peaks and troughs of different asset renewal
cycles particularly when their renewal dates coincide.
Acceptance of moving from CAPEX to OPEX
Culture and practice within Council has evolved round owning and managing assets. The move to
subscription-based ICT services will give the appearance that IS is increasing operating costs
disproportionately to other departments. There is a risk that Council decides to swap asset renewals
for increased but predictable operating costs and then constrains ICT operating costs. The outcome
would be that IS services would fall below the level expected by internal customers. If this happened
with services to external customers, Council could suffer reputational damage.
9. Next Steps
The next steps are summarised in Council’s Asset Management Definitions Documents where they are
common across all asset classes. The next steps specific to ICT are listed in 'Table 4 Improvement Plan'
below.
Task Responsibility Timeline
Fix security risks in priority as detailed in Data#3
Vulnerability Assessment Report
Administrator
Network
Systems
2019-2020
Undertake ICT Stock take 2018-19 Administrator
IT Support
2018-19
Adoption of Information Transformation 2019 -
2023 Positioning Paper
Manager
Information
Services
2018-19
Cleanse asset data and move to a coherent data
set correctly integrated to the financial ledgers
Administrator
IT Support
2018-19
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Task Responsibility Timeline
Audit specifications of all core assets and update
with current performance requirements
Administrator
IT Support
2019-2020
Update renewal costs against revised
specifications for core assets
Administrator
IT Support
2019-2020
Revise renewal cost budget for next 10 years Manager
Information
Services
2019-2020
Develop functional and non-functional
requirements for each type of subscription
services
Manager
Information
Services
2019-2020
Prioritise assets for migration to subscription
services
Manager
Information
Services
2019-2020
Identify vendors and arrange for demonstrations Manager
Information
Services
2019-2020
Table 4 Improvement Plan
Plan maturity
This Asset Management Plan is in its initial stages. The current incumbent Asset Management Plan
(2018-19) does not reconcile to the physical inventory check. Therefore, there are assets for which
the depreciation records would need to be checked to assure the probity. A sampling exercise to check
whether the assets were fit for purpose found a high proportion of the sample were below the
required specification even when they were installed. This means that Council will need to renew
those assets with the current specification which will increase the cost of renewals estimated in this
plan.
10. Technology Changes
Technology changes on a short time frame with generational change every five years at the moment.
The rate of change is likely to increase. Key disruptive technology influencers for Council include:
• Internet of Things
• Automation
• Artificial Intelligence
Internet of Things (IOT) brings ever increasing connectivity to everyday objects. Whilst this has many
benefits in speeding communications, it also brings challenges. Increased connectivity means
increased opportunities for security breaches. IOT create and share lots of data which users need to
move and store.
ICT Asset Management Plan 2019/20
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Artificial Intelligence is likely to play a part in deciding what to do with captured data.
IOT could reduce costs of tracking assets and monitoring their performance. Combined with Artificial
Intelligence (AI) this could reduce unplanned maintenance costs and lead to other savings in other
asset management areas.
Automation combined with IOT and AI could bring significant savings in operating expenditures across
Council. Machines can execute the many jobs that require humans to follow procedures. Once mature.
AI could provide the judgement and intuition that a supervisor applies today.
Technology change has potential to help Council deliver basic services and allow people to
concentrate on the more complex services. Whilst the technologies have yet to mature, the ever faster
rate of change may make some opportunities available over the 10 year life of this asset management
plan.
11. Conclusion
ICT Asset Management Planning is all about enabling people, from Council staff to the community we
serve. In common with other service organisations, almost every role in Council depends on the ICT
assets to perform their tasks. The ICT assets have evolved considerably from their first inceptions. For
example, the mobile phone has transformed from a peer-to-peer audio device to a powerful multi-
function mobile computer. It provides calendar functions, navigation, job tasking and timekeeping
amongst its many capabilities. These capabilities will continue to grow.
Reliance on ICT assets has grown exponentially over the past decade. Time between major changes
gets shorter. There are increasing numbers of ways that technologies interact. Many technologies
have comparatively short lives before being superseded by the next generation or new invention.
Most technologies will go through two to three generations within their lifecycles. Forecasters need
to account for demand growth as well as delivery models. Predicting when an investment will become
redundant becomes increasingly hard with rapidly emerging disruptive technologies. As technologies
become more interconnected Councils reliance on them to deliver services increases. Forecasting
asset renewals accurately against this background becomes a challenge.
These evolving technologies are also driving new service models. The choices for delivering ICT
services now include attractive subscription options. Large commercial service providers can hire
expensive specialists and defray their costs over many customers. Smaller ICT providers cannot afford
to employ many specialists. Subscription services are attractive because of their consistent quality and
on-demand supply. The service provider takes away the management effort of security, disaster
recover, business continuity and configuring development environments. This leaves the local ICT
organisation capacity to monitor and to improve services, so they match their internal and external
customers' needs. However, it adds the challenge of changing the service costs from capital to
operating and having to apply different accounting standards and planned cash requirements.
Planners need to address these issues urgently.
ICT Asset Management Plan 2019/20
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This asset management plan is designed to make the most efficient and effective use of the existing
assets whilst moving to the most economic and effective delivery model. In doing that it will:
Take advantage of disruptive technologies, balancing risk and benefit, when replace obsolete
assets
Consider seriously using subscription services to replace fixed assets whenever possible and
beneficial.
Reduce the percentage number of assets passed their useful life from 33% to zero.
This asset management plan will need regular reviews reflecting the rapidly changing nature of
technology solutions and the continued rise of disruptive technologies. Whilst responsibility for
delivering ICT solutions rests with IS, other departments in Council share the organisational
responsibility for prioritising investment and maintenance of the ICT assets that underpin and enable
almost every function within Council.
Anthony Wilson Manager Information Services
ICT Asset Management Plan 2019/20
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Appendix A. Asset Data
A.1. Asset List
See the category listing in 'Table 1: ICT Asset Values in 000’s in section 2 Asset Class above
A.2. Data used
Table 5 Data used in this Asset Management Plan
2019
ICTAsset values at start of planning period Calc CRC from Asset Register
$3,691 (000) $0 (000) % of asset value
$3,691 (000) This is a check for you. 24.62%
$2,390 (000) 0.00%
$537 (000) 14.55%
Planned renewal budget (information only)
Planned Expenditures from LTFP You may use these values
calculated from your data
2019 values or overwrite the links.
Financial year ending 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
Expenditure Outlays included in Long Term Financial Plan (in current $ values)
Operations budget $909 $909 $909 $909 $909 $909 $909 $909 $909 $909Management budget $0 $0 $0 $0 $0 $0 $0 $0 $0 $0AM systems budget $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total operations $909 $909 $909 $909 $909 $909 $909 $909 $909 $909
Reactive maintenance budget $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Planned maintenance budget $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Specific maintenance items budget $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total maintenance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Planned renewal budget $865 $1,151 $915 $745 $764 $1,026 $1,357 $1,022 $764 $625
Planned upgrade/new budget $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Non-growth contributed asset value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Asset DisposalsEst Cost to dispose of assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Carrying value (DRC) of disposed assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Additional Expenditure Outlays Requirements (e.g from Infrastructure Risk Management Plan)
Additional Expenditure Outlays required 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 and not included above $000 $000 $000 $000 $000 $000 $000 $000 $000 $000
Operations $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Maintenance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Capital Renewal to be incorporated into Forms 2 & 2.1 (where Method 1 is used) OR Form 2B Defect Repairs (where Method 2 or 3 is used)
Capital Upgrade $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
User Comments #2
Forecasts for Capital Renewal using Methods 2 & 3 (Form 2A & 2B) & Capital Upgrade (Form 2C)
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Forecast Capital Renewal $000 $000 $000 $000 $000 $000 $000 $000 $000 $000
from Forms 2A & 2B $865 $1,151 $915 $745 $764 $1,026 $1,357 $1,022 $764 $625
Forecast Capital Upgrade
from Form 2C $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Annual depreciation expense
Operations
Maintenance
Capital
20 Year Expenditure Projections Note: Enter all values in current
Depreciable amount
Depreciated replacement cost
Current replacement cost
ICT_S2_V3 Asset Management Plan
Cassowary Coast RCNAMS.PLUS3 Asset Management
Additional operations costs
Additional maintenance
Additional depreciation
First year of expenditure projections
© Copyright. All rights reserved. The Institute of Public Works Engineering Australasia
(financial yr ending)
for New AssetsOperations and Maintenance Costs
ICT Asset Management Plan 2019/20
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A.3. Basis of Valuation
Table 6 Standard Lives, Costs and Contribution to Total Depreciation
Class
Useful
Lfe
Number
of assets
Current Rep
Cost
Annual
Depreciation
% contribution
to depreciation
($'000) ($'000)
Audio/Visual Systems 5 2 14$ 2$ 0.4%
Desktop computers 5 223 271$ 54$ 10.1%
Fibre network 25 6 62$ 2$ 0.5%
Laptop computers 4 106 164$ 41$ 7.6%
Mobiles 3 224 78$ 26$ 4.9%
Monitors 5 222 69$ 14$ 2.6%
Printers MDF and Scanners 5 45 82$ 16$ 3.1%
Servers 5 18 174$ 35$ 6.5%
Storage 5 16 263$ 53$ 9.8%
Switches 5 120 148$ 30$ 5.5%
Tablets 3 95 57$ 19$ 3.5%
UPS 5 14 33$ 7$ 1.2%
Web Development 7 - - - -
Wireless Access 7 41 88$ 13$ 2.3%
Workstations 4 14 50$ 12$ 2.3%
Enterprise Resource Planning (ERP) 7 1 2,140$ 214$ 39.8%
1,147 3,691$ 537$
ICT Asset Management Plan 2019/20
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Appendix B. Financial Information
B.1. Financial Summary
This section contains the financial requirements resulting from all the information presented in the
previous sections of this asset management plan. The financial projections will be improved as further
information becomes available on desired levels of service and current and projected future asset
performance.
B.2. Financial Statements and Projections
The financial projections are shown in 'Figure 4 Total ICT Asset Costs' in section 4.1 Total Costs above
for projected operating (operations and maintenance) and capital expenditure (renewal and
upgrade/expansion/new assets). Note that all costs are shown in real values.
Providing services in a sustainable manner will require matching of projected asset renewal and replacement expenditure to meet agreed service levels with the corresponding capital renewal program accommodated in the long-term financial plan.
A gap between projected asset renewal/replacement expenditure and amounts accommodated in the LTFP indicates that further work is required on reviewing service levels in the Asset Management Plan (including possibly revising the LTFP) before finalising the asset management plan to manage required service levels and funding to eliminate any funding gap.
We will manage the ‘gap’ by developing this asset management plan to provide guidance on future service levels and resources required to provide these services, and review future services, service levels and costs with the community.
Projected expenditures for long term financial plan are shown in Table 7 Projected Expenditures for Long Term Financial Plan . This shows the budget renewals and the Long Term Financial Plan are balanced as there are no gaps or surpluses.
ICT Asset Management Plan 2019/20
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Table 7 Projected Expenditures for Long Term Financial Plan
Table 8 Projected Expenditure shows the projected expenditures for the 10-year long term financial plan. Expenditure projections are in 2019 real values.
Table 8 Projected Expenditure
Year End
Jun 30
Projected
RenewalsLTFP Renewal
Renewal
Financing
Shortfall
Cumulative
Shortfall($'000)
($'000) ($'000) ($'000) ($'000)
2019 $865 $944 - - 2020 $1,151 $1,236 - - 2021 $915 $881 $1 $12022 $745 $809 - $12023 $764 $715 - $12024 $1,026 $1,002 - $12025 $1,357 $1,375 - $12026 $1,022 $997 - $12027 $764 $810 - $12028 $625 $660 - $12029 $699 $814 - $12030 $685 $836 - $12031 $487 $546 - $12032 $430 $405 - $12033 $417 $344 - $12034 $557 $745 - $12035 $799 $924 - $12036 $582 $533 - $12037 $312 $416 - $12038 $260 $336 - $1
Year Operations MaintenanceProjected Capital
Renewal
Capital Upgrade /
NewDisposals
($'000) ($'000) ($'000) ($'000) ($'000)
2,019 $ 909 $ - $ 865 $ - $ - 2,020 $ 909 $ - $ 1,151 $ - $ - 2,021 $ 909 $ - $ 915 $ - $ - 2,022 $ 909 $ - $ 745 $ - $ - 2,023 $ 909 $ - $ 764 $ - $ - 2,024 $ 909 $ - $ 1,026 $ - $ - 2,025 $ 909 $ - $ 1,357 $ - $ - 2,026 $ 909 $ - $ 1,022 $ - $ - 2,027 $ 909 $ - $ 764 $ - $ - 2,028 $ 909 $ - $ 625 $ - $ - 2,029 $ 1,359 $ - $ 699 $ - $ - 2,030 $ 1,359 $ - $ 685 $ - $ - 2,031 $ 1,359 $ - $ 487 $ - $ - 2,032 $ 1,259 $ - $ 430 $ - $ - 2,033 $ 1,359 $ - $ 417 $ - $ - 2,034 $ 1,359 $ - $ 557 $ - $ - 2,035 $ 1,359 $ - $ 799 $ - $ - 2,036 $ 1,259 $ - $ 582 $ - $ - 2,037 $ 1,359 $ - $ 312 $ - $ - 2,038 $ 1,359 $ - $ 260 $ - $ -
ICT Asset Management Plan 2019/20
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This plan involves a renewal profile to bring the asset base back within the design life age profile. Therefore, there is no Capital / Upgrade budget. Also, the disposal value of ICT assets tends to be very low as much is sold for scrap value, therefore the Disposal is assumed at nil value.
B.3. Funding Strategy
After reviewing service levels, as appropriate to ensure ongoing financial sustainability projected expenditures previously identified will be accommodated in the Council’s 10-year long term financial plan.
The depreciated replacement cost or Net Book Value will vary over the forecast period depending on
the rates of addition of new assets, disposal of old assets and consumption and renewal of existing
assets. Forecast of the assets’ depreciated replacement cost is shown in Figure 7 Projected
Depreciated Replacement Cost. The depreciated replacement cost relates to renewing existing assets
only. The reduction in later years reflects T1 moving to Ci Anywhere where the renewals are likely to
be more of an operational expense.
Note that the NAMS model applies depreciation at the flat dollar rate for each year of the plan. This
approach does not accommodate two key aspects of this plan.
1. With a catch up scenario this understates depreciation and gives the impression that IS is
increasing the ICT asset base.
2. T1 depreciation accounts for about 40% of the depreciation charge and is due to end in 2023.
The depreciation associated with the annual spend included in renewals to extend the useful
life by 7 years will influence the Depreciated Replacement Cost and that effect is not catered
for in NAMS.
The graph below should be considered as indicative as it is based on an average percentage
depreciation per asset class rather than a detailed analysis by individual asset.
Figure 7 Projected Depreciated Replacement Cost
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
DR
C (
$000
s)
Year
Projected Depreciated Replacement Cost (ICT_S2_V3)
Existing Assets ($000)'s New Assets ($000)'s
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Appendix C. Demand Factors
C.1. Customer Levels of Service
All activities performed by Council are defined in accordance with the four Scope Levels and five risk consequences. IS response times are based on scope and consequence.
Scope levels are:
1. Enterprise 2. Business 3. Work Group, or 4. Individual.
This classification is used to assess the scope in terms of how many people will be affected if an IS
service is compromised or fails to deliver; and the flow-on effect in terms of Public or Organisational
impact of any service failure.
Scope Definition
Enterprise Any activity that supports Council-wide multi-division business functions and
processes and whose failure, corruption or degradation would cause large scale
interruption to business processes; negatively impacting multiple divisions, and
directly impeding Council’s ability to conduct business. Such activities will typically
involve real-time exchange of information between a range of council business
applications.
Business Activities that support divisional functions whose failure, corruption or degradation
would limit the ability to provide core divisional services, or whose interruption
would remove service availability from significant council locations. Such activities
may share information with other council activities (including Enterprise level) but
would typically to so on a deferred basis (e.g. batched on other defined interface).
Business activities will typically be those whose unavailability would be visible to the
public or are integral to meeting council’s statutory responsibilities.
Work Group Activities that support the functions of individual departments or workgroups (that
are not core business processes of a division) or provide infrastructure to specific
council locations. Delivery failure will cause isolated disruption which may be
addressed through local work-around or work rescheduling and involve processes
that are not time-critical to Enterprise level or Business level activities.
Individual Activities that support the work of individuals or groups of individuals on a stand-
alone basis. Delivery failure or interruption will be isolated.
Table 9 Customer Scope Levels
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Risk consequences are:
Consequence Public / Customer Impact Reputation Organisational Impact
Catastrophic Organisation wide inability
to operate one or multiple
sites of operation. Inability
to meet customer
expectations.
Delivery failure leads to
legislation breach exposing
council executive to legal
action. Fallout leads to high
levels of negative or
ongoing government and
media exposure.
Delivery failure could lead
to direct property or
environmental damage;
personal injury or fatality;
or significant financial loss.
Major Inability to operate at a
local level. Some areas
unable to meet customer
expectations.
Delivery failure risks
compliance or impacts high
profile Council initiatives;
results in major asset
embezzlement; or brings
damaging publicity or
government attention.
Delivery failure risks
property or environmental
damage; threatens Council
cash flow (including payroll)
or delays availability of
mission critical information.
Moderate Disruption of a number of
aspects of operations at a
local level. Some impact on
meeting customer
expectations.
Delivery failure will be
brought to the attention of
government. Some media
attention expected.
Customer complaints likely.
Delivery failure delays
availability of decision
support information or
impact departmental cash
flow.
Minor Some disruption to
operations at a local level.
Little impact on meeting
customer expectations.
Limited government and
media attention, some
complaints could be
expected.
No financial impact beyond
work group productivity.
Insignificant Little or no interruption to
operations at local level.
Nil impact on meeting
customer expectations.
Limited or no media
attention, limited or no
complaints.
No financial impact beyond
individual’s productivity.
Table 10 Failure Risk Consequences
Response times
IS would target response times are shown below. Resolution times would depend on the type of failure
and resources to fix.
Table 11 Target Response times
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C.2. Legislation
The following is the relevant legislation relation to the provision and ownership of ICT Assets.
Legislation Requirement
Local Government Act 2009 The purpose of this Act is to provide for the way in which a local government is constituted and the nature and extent of its responsibilities and powers and a system of local government in Queensland that is accountable, effective, efficient and sustainable.
Sets out role, purpose, responsibilities and powers of local governments including the preparation of a long term financial plan supported by asset management plans for sustainable service delivery.
Australian Accounting Standards
As the basis of providing moves from a local asset base to subscription services, applicability of AASB 9 Financial Instruments or AASB 16 Leases may need to be checked depending the contractual basis of the ICT consumption.
Table 12 Legislation