Internal Service Fund Overview

April 23, 2008CGAIT Spring Conference

10:45am – 11:45am

Agenda

ISF Overview ISF Examples

Arvada Ft Collins Jefferson County

Question & Answer Session

WHAT is an Internal Service Fund?

Method of accurately associating the total cost of a service across the proper mix

of consumers

WHERE are ISF’s Used?

Common in most public sector environments to better manage and track cross-departmental operational costs, as well as control and pay for major capital-related expenditures

WHY are we using the ISF model?

Increase Fiscal Accountability

Accurately assess the Total Cost of Ownership (TCO)

Ensure Value / Competitiveness with the Services provided

Allow Customer influence over their own budget (CHOICE)

Internal Service Fund Process

Charge for Services

-Base Services-Discretionary Services

Review Usage / Need

Refine RatesNext Fiscal Year

Process Changes, Efficiencies andService Delivery

Improvements

ISF Road Map

76% 85%98%IT Staff

Centralization

ISF All IT

Services in ISF

Hybrid - General Fund and

ISF

Type of Fund - General, CIP, ISF, Other

$11.2M $7.5M$5.8M Budget for 2008

2,606 1600600 -# of PCs

81 4524 (28) -IT Employees

2,840 2,200700 -Employees

Demographics

JeffcoFort CollinsArvada

ISF Roadmap

JeffcoFort CollinsArvada

Unintended behaviors, “less calls to help desk”

Spotlights cost and service allocation inequities; forces debate.

General Fund scrutiny could cause staff reductions

Cons

ISF, increase overall financial awareness of IT budget throughout county, less reductions in tight budgetary times, customers appreciate value of IT

Better transparency, protected reserves and working capital through fund balance,

Don't compete for CIP Funding for existing infrastructure. Staff costs in GF. Operating Costs in ISF, $ rolls, $5m balance

Pros

ISF Roadmap

JeffcoFort CollinsArvada

DecentralizedHybridHybridSoftware

DecentralizedCentralized in ITCentralized in ITServers

DecentralizedCentralized in ITCentralized in ITPCs

Procurement

Practices

YesIn process In process Service Catalog

YesA mix Yes Charge Backs

NoSort of Yes General Fund

Sweep

No YesNo General Fund

Revenue / Cost

Allocation

Arvada ISF

Expenditures by Division

2006 Actual 2007 Revised 2008 Revised

Print Shop 346,611$ 339,377$ 357,211$

General Services 151,999 208,489 216,796 Information Systems 2,371,989 2,784,437 2,834,365

Computer Replacement 1,462,363 2,017,110 2,465,390 4,332,962$ 5,349,413$ 5,873,762$

Central Services

General Fund

Replacement

Total Information Technology Department

Operating Expenditures by Division

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

2006 2007 2008 2009 2010 2011

General Services Information Systems

Computer Replacement Print Shop

Arvada Charge Backs Unit Cost of Laptops per year – 4 Year LC $650.25 Unit Cost of desktop ,Monitor, UPS – 4 Year LC $300.00 Unit Cost of MDC for PD – 4 Year LC $1,800 Unit Cost of Laser Printers - Failure $525.00 Desktop PC Software, Office other software $156.50 Cost per PC for Network Hardware $527.96 Cost per PC for Network software $23.84 Network Fileservers "Per PC in replacement fund“ $39.27 Price per users for SPAM/Zen $18.92 Price per GroupWise Users $20.00 Price per Netware Users $24.00 Price per FTE Finance system (Oracle Financials) $520.78 Price per FTE Phone System $178.09DIVISIONAL COSTS: Arts Ticketing System $32,362.67 GIS System $53,475.85 Document Imaging System $36,766.67 Courts System $34,750.00 Police Intergraph System $378,756.23 ETC

Arvada Network Charge Backs

Network Hardware/Maintenance charged per PC

ITEM Description Notes Locations Quantity Acquire Year Life SpanAcquire Cost

Cost per PC per year if in Fund

In Fund Y/N

yearly contribution to replacement fund

2008 Budget Expenses

2009 Budget Expenses

Foundry Network Equipment

This is all switches, rotuers, spares,RAD All over 1 2006 7 $300,776.80 $69.53 Y $42,968.11 $0.00 $0.00

Foundry Network Maintenance

Maintenance for all switches, rotuers, All over 1 2006 1 $23,267.00 $37.65 Y $23,267.00 $23,267.00 $23,267.00

StorServe Backup Appliance

Enterprise backup hardware and software All over 1 2006 5 $125,000.00 $202.27 Y $125,000.00 $0.00 $0.00

StorServe Backup Appliance Maintenance

Maintenance for Enterprise backup hardware and software All over 1 2006 1 $25,641.00 $44.71 Y $27,629.00 $28,269.20 $29,682.66

IT SANUpgraded to the compellent SAN CityHall 1 2007 8 $350,000.00 $70.79 Y $43,750.00 $0.00 $0.00

SAN disk drives Cityhall 1 $17,000.00 $27.51 Y $17,000.00 $17,000.00 $17,000.00SAN Maintenance 1 2007 1 $35,000.00 $56.63 Y $35,000.00 $43,750.00 $43,750.00Network Management All over 1 1 $10,000.00 $16.18 Y $10,000.00 $10,000.00 $10,000.00CD Jukebox CityHall 1 2002 3 $5,000.00 $2.70 Y $1,666.67 $0.00 $0.00Cisco Routers CityHall 2 2001 3 $10,000.00 $0.00 N $3,333.33 $0.00 $0.00Packeteer CityHall 1 2002 5 $8,000.00 $0.00 y $1,600.00 $0.00 $0.00Packeteer Maintenance CityHall 1 2002 1 $1,500.00 $0.00 y $1,500.00 $1,500.00 $1,500.00Wireless Devices New for 2007 3 $10,000.00 $5.39 Y $3,333.33IronPort Maintenance Email Encryption CityHall 1 2007 3 $15,000 $8.09 Y $5,000.00Iprism Maintenance Web Filtering CityHall 1 2005 3 $14,500.00 $7.82 y $4,833.33 $0.00 $0.00

$113,850.00 $123,786.20 $125,199.66Total cost per PC per year $527.96

COURTS

ITEM LocationsAcquire Year Life Span

Acquire Cost

Replacement Cost

Yearly contribution to replacement fund

2008 Budget Expenses

2009 Budget Expenses

2010 Budget Expenses

2011 Budget Expenses

2012 Budget Expenses

Server City Hall 2002 5 $15,000.00 $15,000.00 $3,000.00 $0.00 $0.00 $0.00 $0.00 $0.00Full Court Software City Hall 2000 6 $75,000.00 $75,000.00 $12,500.00 $75,000.00 $0.00 $0.00 $0.00 $0.00Full Court Maintenance City Hall 2000 1 $15,110.00 $15,110.00 $15,110.00 $15,110.00 $15,110.00 $15,110.00 $15,110.00 $15,110.00

LaserJet 4200 courts 2004 5 $2,000.00 $2,000.00 $400.00 $0.00 $2,000.00 $0.00 $0.00 $0.00

LaserJet 4050 courts 2003 5 $2,000.00 $2,000.00 $400.00 $2,000.00 $0.00 $0.00 $0.00 $0.00

LaserJet 4050 courts 2003 5 $2,000.00 $2,000.00 $400.00 $2,000.00 $0.00 $0.00 $0.00 $0.00

Epson LQ570 courts 2000 5 $500.00 $500.00 $100.00 $0.00 $500.00 $0.00 $0.00 $0.00

Epson LQ570 courts 2000 5 $500.00 $500.00 $100.00 $0.00 $500.00 $0.00 $0.00 $0.00Receipt Printer Ithica series 150 quanity 4 courts 2006 5 $1,200.00 $1,200.00 $240.00 $0.00 $0.00 $0.00 $1,200.00 $0.00Video arraignment equipment courts 2005 10 $25,000.00 $25,000.00 $2,500.00 $0.00 $0.00 $0.00 $0.00 $0.00

Total per year $34,750.00 $94,110.00 $18,110.00 $15,110.00 $16,310.00 $15,110.00

Divisional Example

REPLACEMENT FUND REVENUE

ID used by IT

Fund-DivAccount #54008 Division

Unit Cost of Laptops per year

Unit Cost of desktop ,Monitor, UPS,

Unit Cost of MDC for PD

Unit Cost of Laser Printers

Desktop PC Software, Office other software

Cost per PC for Network Hardware

Cost per PC for Network software

$650.25 $300.00 $525.00 $156.50 $527.96 $23.84

CMCMLT 01-0191 City Council $4,551.75 $0.00 $1,095.50 $3,695.74 $166.90

JDMC 01-0271 Judicial $0.00 $3,600.00 $0.00 $1,878.00 $6,335.55 $286.12

CMCM 01-0392 CMO $1,950.75 $4,200.00 $1,050.00 $2,660.50 $8,975.36 $405.34

CMCC 01-0393 City Clerk $1,300.50 $3,300.00 $1,050.00 $2,034.50 $6,863.51 $309.96

CMTV 01-0395 KATV $1,950.75 $0.00 $469.50 $1,583.89 $71.53

LDCA 01-0472 City Attorney $1,300.50 $3,900.00 $525.00 $2,347.50 $7,919.44 $357.65

FDTR 01-0551 Treasury $650.25 $5,400.00 $1,050.00 $2,973.50 $10,031.29 $453.02

FDTA 01-0552 Sales Tax $1,950.75 $1,800.00 $525.00 $1,408.50 $4,751.66 $214.59

FDPU 01-0553 Purchasing $650.25 $1,200.00 $525.00 $782.50 $2,639.81 $119.22

HRHR 01-0654Human Resources $650.25 $3,000.00 $0.00 $1,721.50 $5,807.59 $262.28

PSOC 01-0701Office of the Chief $1,950.75 $900.00 $525.00 $939.00 $3,167.77 $143.06

PSCS 01-0702Community Services $0.00 $3,600.00 $525.00 $1,878.00 $6,335.55 $286.12

PSCM 01-0703Communications $0.00 $1,500.00 $525.00 $782.50 $2,639.81 $119.22

$431.93 $189.20 $200.00 $240.00 $4,687.05 $1,692.79 $1,200.00 Caterease $20,257.33

$0.00 $0.00 $0.00 $3,645.48 $1,316.61 $4,962.09

$196.33 $189.20 $200.00 $240.00 $2,083.13 $752.35 $10,628.54

$314.13 $264.88 $280.00 $336.00 $6,770.18 $2,445.14 $19,352.03

$196.33 $75.68 $80.00 $96.00 $2,083.13 $752.35 $8,850.02

$196.33 $113.52 $120.00 $144.00 $2,083.13 $752.35 $9,326.11$117.80 $0.00 $0.00 $0.00 $0.00 $0.00 $3,142.72

$196.33 $0.00 $0.00 $0.00 $0.00 $0.00 $5,237.86$6,458.00 For new officers $6,458.00

$23,481.34 $13,887.28 $14,680.00 $17,616.00 $332,259.49 $120,000.00 $555,369.54 $1,951,467.53

Annual ISF Revenue

BUDGET NUMBERS FOR THE REPLACEMENT FUND

Category2008 Budgeted

Expense2009 Budgeted

Expense2010 Budgeted

Expense2011 Budgeted

Expense2012 Budgeted

Expense

Computer Replacement NO PD Laptops $695,600.00 $0.00 $0.00 $0.00 $695,600.00Monitor Replacement $0.00 $0.00 $0.00 $0.00 $0.00Network Software $10,700.00 $10,700.00 $10,700.00 $10,700.00 $10,700.00Network Hardware $123,786.20 $125,199.66 $126,683.80 $253,242.14 $129,878.39IT Servers $34,500.00 $0.00 $0.00 $21,000.00 $0.00Printers $25,200.00 $25,200.00 $25,200.00 $25,200.00 $25,200.00PD Hardware/Software $766,959.64 $2,766,004.12 $290,782.98 $318,018.64 $347,955.74Phone $35,000.00 $35,000.00 $35,000.00 $35,000.00 $885,000.00Document Imaging $25,500.00 $43,500.00 $25,500.00 $25,500.00 $25,500.00GIS $50,320.79 $55,736.74 $67,699.56 $75,179.46 $83,977.70Finance $260,913.56 $186,459.58 $194,000.53 $923,534.68 $205,996.40Groupwise/Netware $46,183.28 $46,183.28 $46,183.28 $46,183.28 $46,183.28Desktop Software $253,456.26 $42,837.79 $43,943.52 $45,082.43 $0.00Arvada Center $16,800.00 $5,800.00 $5,800.00 $14,800.00 $150,800.00Courts $94,110.00 $18,110.00 $15,110.00 $16,310.00 $15,110.00BANQUETS $5,490.76 $5,490.76 $45,490.76 $5,490.76 $5,490.76Building Inspectors $0.00 $0.00 $0.00 $0.00 $0.00

Total $2,444,520.48 $3,366,221.92 $932,094.42 $1,815,241.38 $2,627,392.27

Estimated Balance of the replacement fund

2008 2009 2010 2011 20012

Replacement Fund Balance $4,663,187.53 $4,351,088.31 $3,181,260.29 $4,511,451.58 $5,024,387.73Revenue $2,132,421.26 $2,196,393.90 $2,262,285.72 $2,328,177.53 $2,350,141.47Expenditures ($2,444,520.48) ($3,366,221.92) ($932,094.42) ($1,815,241.38) ($2,627,392.27)

Balance $4,351,088.31 $3,181,260.29 $4,511,451.58 $5,024,387.73 $4,747,136.93

Jefferson County ISF

Chargebacks

Customer: I complain about IT because that is all that I can do!!! I have no direct influence over the level of ITspending or the IT charges I receive.

Chargebacks provide checks and balances

Chargebacks drive behavior

For IT, the behavior is to be competitive

For business, the behavior is to obtain value

Develop chargeback process with right objective in mind.

Finance & AdministrationFinance & AdministrationISF Chargeback MethodsISF Chargeback Methods

SBP Service Based Pricing Per measured unitSBP Service Based Pricing Per measured unit

Lowest complexity,

cost

Highest complexity,

cost

HLA High Level Allocation Revenue, # of FTE’sHLA High Level Allocation Revenue, # of FTE’s

LLA Low Level Allocation Accts, Logins, UsersLLA Low Level Allocation Accts, Logins, Users

DC Direct CostDC Direct Cost Time & Materials Time & Materials

MRU Resource UsageMRU Resource Usage Actual Consumption Actual Consumption

TFR Tiered Flat Rate Service Used or NotTFR Tiered Flat Rate Service Used or Not

NFR Negotiate Flat RateNFR Negotiate Flat Rate Projected Usage Projected Usage

Information Technology Services

IT Services Catalog

2008

Development and Consulting Services

Provides full life-cycle software development services where commercial products are unavailable, insufficient or cost-prohibitive.

A wide variety of computing environments are supported which include Internet, Intranet and Legacy (IBM mid-range computer) software applications.

Also provides a wide range of technical consulting services including assistance in the evaluation, selection and implementation of commercial software packages

Development and Consulting Services

Services provided include but are not limited to:

Business Analysis & Requirements Definition: Assist customers in matching business needs with technical solutions.

Project Estimation: Determine estimates for custom software development or commercial software package implementation. Estimates include project costs, duration, staff requirements, functionality and quality.

Project Management: Provide full project management services for custom software development or commercial software implementation.

Support & Maintenance: Provide on-going support for custom software modifications and enhancements. Where feasible, provide support for commercial software packages.

Integration Services: Provide custom integration applications enabling technically diverse software systems to share processes and data.

ISF Rates and Billing ProcessRates Preparation

Begin, circa firstquarter

Budget: S&B,Infrastructure

from F&A

Collectand

Collate

Account metricsfrom Service

Managers

Revenue (fromJDE)

Service ActivityProjection (by

Customer)

DetemineDistribution

Rules

CalculateServiceBurdens

ProduceReports

Budget Advicefor each

Customer

Service Rates

Verifyand

Validate

Gain Approvalfrom IT Services,

Budget, andCustomers

To ISFBilling

Process

$ 32,667.12 2,124.00 $

1,107.36 $

15.38 72.00A&RM Retrievals - Count

$ 258,559.31 12,686.91 $

5,322.85 $

20.38 261.18A&RM Storage - Cubic Foot

$ 291,226.43 $

6,430.21 Cubic Foot/Count

$ 84,290.40 1,665.16 $ 429.26

$ 50.62 8.48EDMS (Livelink)

$ 6,919.87 110.40 $

- $

62.68 0Records Management

$ 33,921.47 421.28 $

- $

80.52 0IVR

$ 193,218.50 2,680.24 $

- $

72.09 0Amanda

$ 288,398.54 3,659.88 $

1,074.83 $

78.80 13.64ERP/JDE

$ 153,252.84 2,228.16 $ 137.56

$ 68.78 2.00GIS

$ 1,480,823.96 18,706.72 $

116,571.02 $

79.16 1,472.60Development & Consulting

$ 9,786.84 91.68 $

- $ 106.75 0Enterprise Services

$ 206,271.38 4,086.20 $

3,390.24 $

50.48 67.16Customer Services/Help Desk

$ 190,119.26 2,911.92 $ 817.43

$ 65.29 12.52Telecommunication

$ 172,163.48 2,647.04 $

1,251.37 $

65.04 19.24System Admin

$ 2,819,166.54 $

123,671.70 Hours

CUSTOMER SPECIFIC

Total ITSCounty-wideInvestment

ITS ProjectedService

County-wide

2008 CustomerExpense

2008ITS Rate Per

Metric

2008 Custome

rMetricService Metric

$ 11,209,924.51 $ 206,193.52 TOTALS (Customer Specfic & Enterprise)

$ 185,260.85 37.00 $ 5,007.05 $ 5,007.05 1.00IVR Applications

$ 185,260.85 $ 5,007.05 IVR Applications

$ 376,986.96 24,933.00 $ - $ 15.12 0Amanda Folders

$ 376,986.96 $ - Amanda Folders

$ 137,965.98 2,610.52 $ 1,152.13 $ 52.85 21.80Records Management (Enterprise)

$ 811,454.04 2,610.52 $ 6,776.31 $ 310.84 21.80ERP/JDE

$ 949,420.02 $ 7,928.44 FTE

$ 1,076,199.78 3,299.00 $ 12,396.36 $ 326.22 38.00Telecommunication

$ 1,076,199.78 $ 12,396.36 Phone Lines

$ 347,692.52 2,606.00 $ 3,202.08 $ 133.42 24.00EDMS (Livelink)

$ 723,946.80 2,606.00 $ 6,667.20 $ 277.80 24.00GIS

$ 762,124.70 2,606.00 $ 7,018.80 $ 292.45 24.00Development & Consulting

$ 477,810.10 2,606.00 $ 4,400.40 $ 183.35 24.00Enterprise Services

$ 555,833.74 2,606.00 $ 5,118.96 $ 213.29 24.00Customer Services/Help Desk

$ 236,103.60 2,606.00 $ 2,174.40 $ 90.60 24.00Data Carrier Fees (Sys Admin)

$ 2,408,152.48 2,606.00 $ 22,177.92 $ 924.08 24.00System Admin

$ 5,511,663.94 $ 50,759.76 Network Accounts

ENTERPRISE

New Solutions are new implementations or products.

Upgrades are major product releases that often contain significant changes and feature enhancements to the product.

Enhancements are new functionality, services or customizations.

ISF Vision

Maintenance, Support &

Updates

New Solutions, Upgrades &

Enhancements

Discretionary

Base Maintenance is the modification of a product after delivery to correct faults.

Support is user assistance with specific product problems, but not training and customization.

Updates, often referred to as service packs, are occasionally required to bring you necessary fixes or minor modifications to your software.

Maintenance, Support & Updates

New Solutions, Upgrades &

Enhancements

Discretionary

Base

ISF Goal

Maintenance, Support & Updates

New Solutions, Upgrades &

Enhancements

Discretionary

Base

↓ Maintenance & Support Costs

↑ Service Levels

↑ Allocation to High Value Discretionary Services

↑ Business Alignment

Question & Answer Session