IT Sourcing Assessment Steering Committee September 12, 2007.

IT Sourcing AssessmentSteering Committee

September 12, 2007

Georgia Technology Authority

Agenda

• What Problems Are We Trying to Solve?

• GTA’s Strategy

• GTA’s Approach

• Steering Committee Role and Expectations

• Special Briefing #1 (of 3)

2


What Problems Are We Trying To Solve?

• GTA needs a new business model

• GTA’s IT operations do not meet industry standards

• GTA lacks processes and automation to operate effectively

• State’s IT enterprise has not been managed well

3


All Agencies Face Similar Challenges

• Aging infrastructure

• Meeting minimum standards

• Security and disaster recovery

• Systems development

4


Enterprise Spend

• 2.42% of state budget spent on IT in FY 06▪ $522.6 million out of $21.6 billion*▪ Range of 1.43% to 4% in 12-state NASCIO survey▪ Compares to 5.3% in Gartner survey of state and local

governments

• $4,301 spent per end user annually (Hackett)▪ Compares to $5,070 in Gartner survey▪ $8,734 spent by private-sector peer group (Hackett)▪ $9,024 spent by world-class peer group (Hackett)

Note: FY 06 IT expenditures do not include Board of Regents. The total is an estimate that uses FY 05 expenditures for agencies that did not submit FY 07 reports.


Governor’s IT Vision and Mission

Vision• To lead the nation’s state governments in IT

enterprise management and the innovative use of technology

Mission• To create value for Georgia’s governments

through superb management of the state’s enterprise technology solutions

5


GTA’s Strategy


GTA’s Two-Prong Strategy

• Create an investment-driven IT enterprise

• Fix the infrastructure▪ Sourcing assessment▪ Operational improvements

7


Fix the Infrastructure

• Creates opportunities for the enterprise

• Sourcing assessment will set criteria for minimum infrastructure standards

• Everyone will be graded against the same criteria

8


Why focus on Infrastructure

• Easiest component of IT to leverage

• Simplest to centralize

• Presents the best economic opportunities for Shared Services delivery


What Change Will Enable Us to Do

• Reach a minimum level of operational performance

• Focus on the state’s business needs

• Manage the state’s investment in IT

9


4/1/2007 12/31/20097/1/2007 10/1/2007 1/1/2008 4/1/2008 7/1/2008 10/1/2008 1/1/2009 4/1/2009 7/1/2009 10/1/2009

Georgia Technology Authority Assessment and Transition Plan

April 2007

Governor’s Briefing

Q2 FY2010

New GTA in Place

April 2007

GTA Briefings

May / June 2007

Agency Briefings

Stakeholder Briefings

Strategic Sourcing Assessment

May 07

Issue RFP for Sourcing Consultant

June 07

Sign Contract with Sourcing

Consultant

Q3 FY2008

Complete Sourcing Assessment

Q2 FY2008

Draft RFP for Sourcing

Provider

Q4 FY2008

Issue RFP for Sourcing

Provider

Q1 FY2009

Evaluate and

Negotiate

Q2 FY2009

Sign Deal

Q1 FY2009

Transition Planning

Q2 FY2009

Transition Begins

Q4 FY2009

Transition Complete

Strategic Sourcing Solicitation

Transition to New Vendor

Wrap-up Phase

Go / No GoDecision Points

Fiscal Year 2007 Fiscal Year 2008 Fiscal Year 2009 Fiscal Year 2010

Pending Outcome of Sourcing Assessment and Permission

to Proceed

10

Assessment and Transition Timeline


GTA’s Approach


IT Services Assessment Consultant

• TPI of Woodlands, Texas

• Niche experience in IT services assessments and implementations

• TPI project director has performed 31 engagements with 22 clients over 8 years▪ TPI led the State of Texas consolidation project

• Would work with GTA through implementation of recommendations

12


Our Approach to the Assessment

• This is a GTA-led initiative

• TPI is a resource to assist

• TPI will▪ provide an objective view ― “solution agnostic”▪ draw on its experience to recommend

executable strategies▪ Work with agencies in a “sleeves rolled up,”

collaborative way

• Information collected can be used in subsequent phases

13


IT Sourcing AssessmentParticipating Agencies

• Community Health

• Corrections

• DOAS

• Driver Services

• GBI

• GTA

• Human Resources

• Juvenile Justice

• Natural Resources

• OPB

• Revenue

• SAO

• DTAE

14


Sourcing Assessment Objectives

• Create a plan for GTA and the state to manage IT infrastructure services investments

• Develop a stable, predictive financial model for IT services

• Identify options for who should provide IT infrastructure services

15


Scope of Sourcing Assessment

• Covers IT processes, assets, facilities for 13 agencies▪ Data center services▪ Desktop services▪ Telecommunications▪ Support functions

• Determines how services compare to minimum standards▪ Service delivery and service level targets▪ Business continuity and disaster recovery▪ Condition, life cycle, cost to refresh and maintain IT assets

• Best practices provide comparison of operational IT functions and processes

16


Steering CommitteeRoles and Expectations


Role of the Steering Committee

• Provide oversight, counsel and guidance

• Review direction, progress, milestones and end products

• Examine key decisions

• Ensure:▪ risks are identified and addressed▪ organizational support is in place▪ transition and transformation plans are

comprehensive

18


Assessment Team Next Steps

• Lead the sourcing assessment and coordinate with agency partners

• Continue our communications across all stakeholder groups

• Reach out to legislature

19


Assessment Timeline

• Gather data: Aug 23 – Oct 26• First round of agency interviews: Aug 28 – Oct 3• Second round of agency interviews: Oct 10 – Nov 6• Agencies confirm data collected: Oct 8 – 30• Agencies comment on observations: Oct 9 – 30• GTA validates assessment data: Nov 5 – 12• Complete business case: Dec. 21

20

Special Briefing Session #1


• Briefing Session #1 - September▪ A ssessm ent scope and r ange of options

– IT Services included– Assessment Categories – Primary and Secondary Options to address– Sourcing Assessment Roadmap

▪ Methodology (incl. M2M) and for m of r epor ts

– Quantitative Data Points / Qualitative Review– Sourcing Assessment Tools– Mark to Market – database profiling– Outcomes - Segments of final report – level of detail/summarization– Deliverables to Agencies

▪ E lem ents of the Business Case

– Structure– Source data – the Base year and adjustments– A different view – Towers of Service– Constructing a multi-year view– Scenario Analysis

▪ G over nance and Inter -A gency A gr eem ents

– Assessment of Service Management & Governance capabilities– Developing a Service Management Operating Model– The role of Inter-Agency Agreements

Agenda

22


• Briefing Session #2 – October

▪ Assessment Options/Sourcing Alternatives – a look at the Shared Services Model

– A review of the objectives of a Shared Services Model– How Assessment Options are impacted by the delivery model– Potential and issues to address in a Shared Services Model

▪ Governance – a deeper dive on best practices

– An overview of the three primary approaches– An overview of the impacted processes– Reconciling overlap and interfaces with Agencies

▪ Sourcing Assets – best practices (intro only)

– Overview of best practices by category of Asset– Risks and issues to address

▪ Resource Units – best practices (intro only)

– Usage based charging structures– Efficient pricing – Risk transfer

Agenda

23


• Briefing Session #3 – November

▪ Inter Agency Agreements – possible structure

– Serv ices and Serv ice Levels– Treatment of Hardware, Software, Contracts and Leases– Use of Agency fac ilities– Polic ies and Procedures– Payment & Chargeback– Agency Participation Model

▪ Approach to Federal Funding

– Lessons learned from other States – Issues to address in s truc turing pricing and charge-back– Advance Planning Documents (APDs)

▪ Retaining Accountability and Control Rights

– A rev iew of key prov is ions and rights to preserve– A description of how accountability is preserved in practice

▪ Progress Report on Agency engagement in the Assessment Process

– A rev iew of Agency issues identified in the Assessment and how they are being addressed

Agenda

24

Assessment Scope and Range of Options


IT Services included

• Mainframe

• Servers

• End User Computing

• Help Desk

• Managed Network Services – Data & Voice

• Cross Functional

We are looking at how the IT infrastructure serves and supports the business functions of each agency.

_______________________________________________

26


Assessment Categories

• Operational Assessment

▪ Process Assessment (Info Technology Infrastructure Library, ITIL)

▪ Disaster Recovery and Business Continuity Assessment

▪ Data Center Facility Assessment

▪ Sourcing Management, Governance & Change Management Assessment

• Sourcing Analysis

▪ Mark to Market

▪ Scenarios

• Business Case

The assessment methodology is comprehensive – the outcome will be the first complete picture of Georgia’s investment in IT infrastructure

with an executable roadmap to make best use of that investment._________________________________________________________

27


Possible Outcomes

▪ Retain state service delivery but make improvements

▪ Outsource services: GTA manages vendor and state owns IT assets

▪ Outsource services: GTA manages vendor and vendor owns IT assets

Only options that meet Georgia’s criteria for a best-managed State will be included in the final Business Case.

__________________________________________________

28


Sourcing Assessment Roadmap: We employ a structured, outcome-oriented approach towards uncovering the spectrum of

transformational opportunities and their related virtues/risks._______________________________________________________________________

29

Methodology and Form of Reports


Quantitative Data Points/Qualitative Review

• Fact-based Decision Making▪ Getting the complete picture▪ A basis for making “apple for apple” comparisons▪ Filtering out the IT myths and folklore

• Mapping the Operating Model to the Business Model

▪ Taking account of the unique issues in each Agency

▪ Testing for “Do no harm”

• Recognizing the Opportunities and the Risks

▪ Market testing with relevant data

▪ Mature and proven approach to manage complexity

31


Sourcing Alternatives Assessment Tool

An operational assessment will identify how the current operation is functioning and key gaps that need to be addressed.

__________________________________________________

28


Sourcing Readiness Filter

An experience-based assessment of readiness for change.__________________________________________________

28


Current State Analysis & Opportunity Report

The Mark to Market (M2M) analysis delivers comparative financial and operational metrics – compared to relevant and current market data.

__________________________________________________

28


Example Output – Recommending Sourcing Alternatives

__________________________________________________

28


Assessment Deliverables to Agencies

• Operations Assessment Report

▪ Information Technology Infrastructure Library (ITIL) process implementation assessment

▪ IT Business Continuity / Disaster Recovery process assessment

▪ IT assets and data center facility assessment

• Agency Baseline Report

▪ Scope of work and associated service levels – volumes and utilization

▪ Performance quality – performance metrics

• Mark to Market Analysis

▪ GTA Shared Services

▪ The Enterprise

▪ Select agency managed towers, where applicable

36

Elements of the Business Case


What is a Base Case?

• Multi-year financial model representing State of Georgia’s full operational scope (services and volumes) of assessment

• The Base Case measures the internal cost of performing the services for business-as-usual projected over the multi-year term

38

A Base Case is the ‘Business-as-Usual’ hypothesis. __________________________________________________________________


Total IT

Expense

In-scope Activities

Out of Scope Activities

In-Scope AssumedExpense

Retained &Pass Thru Expense

BaseCase

• Provides multi-year projected internal costs to provide in-scope services in a business-as-usual scenario

• Provides the financial information needed for M2M/RFP purposes

• Delineates State-retained expense, pass-through expense, and in-scope assumed expense

Base Case Composition

39


• Dimension 1 – Agency• Dimension 2 – Tower• Dimension 3 – Expense Categories

▪ Salary

▪ Benefits

▪ Other Employee Related expenses (Training, Travel, Subscriptions, etc)

▪ H/W Lease

▪ H/W Maintenance

▪ H/W Purchase

▪ S/W Lease / Maintenance

▪ Computer Supplies

▪ Telecom Carrier Expenses

▪ Facilities and Occupancy

▪ FTE Employees

▪ Contractors

Base Case Design

DHR

GTA

DOAS

DNR

DOR

Etc.

Sal

ary

Exp

ense

s

Etc

.

2nd D

: Tow

erM

ainf

ram

e

Serve

rsEnd U

ser C

omputin

g

3rd D

: E

xpen

se C

ate

gor

ies

Sof

twa

re M

ain

ten

ance

1st D: Agency

Networ

k

DCH

Financial data will be organized based on three dimensions:

40


Total Base Case

Category Base Year Year 1 Year 2 Year 10

Direct Staff - Overhead 0 0 0 0Direct Staff - Countable 0 0 0 0Consultants - Countable 0 0 0 0 Total 0 0 0 0

Salary 0 0 0 0Fringe Benefits 0 0 0 0Other (salary related) 0 0 0 0Contractors 0 0 0 0Facilities / Premises 0 0 0 0Training 0 0 0 0Telecommunications 0 0 0 0Furniture 0 0 0 0Equipment 0 0 0 0Travel and expenses 0 0 0 0Data Center 0 0 0 0Other ______________ 0 0 0 0Other ______________ 0 0 0 0

0 0 0 0

Grand Total 0 0 0 0




0 0 0 0

Grand Total 0 0 0 0

Retained andPass-thru Costs Net New Costs

+ + =

GeorgiaGeorgiaTotal Total

Cost of Cost of SourcingSourcing




0 0 0 0

Grand Total 0 0 0 0




0 0 0 0

Grand Total 0 0 0 0




0 0 0 0

Grand Total 0 0 0 0




0 0 0 0

Grand Total 0 0 0 0

Delta = Investment Opportunity

Business Case Analysis – Interpreting the Results

The Investment Opportunity is derived from comparing the Base Case to the Total Cost of Sourcing (TCOS).

______________________________________________________________________

Total Cost of Sourcing includes:• Delivery of Services Costs• Transformation Investments• Governance Costs• State Retained and Pass-Through Costs

Alternative Scenario

FiltersM2M, Asset Currency

Analysis, SLA, etc

Recommended Scenario

Sourcing Costs

41


Infrastructure Scenario Comparison–Impact SummarySpend + Risk + Change = Recommendation

GTA/Agencies Risk & Accountability

Shared or Supplier Risk & Accountability

Amount of Change

Transition Risk

Low High1 53

Financial ImpactLow High1 53

-$0M $10M

Scenario #1

Amount of Change

Transition Risk

Low High1 53


-$0M $10M

Scenario #2

Amount of Change

Transition Risk

Low High1 53


-$0M $10M

Scenario #3

Amount of Change

Transition Risk

Low High1 53


-$0M $10M

Scenario #8

42

Governance and Inter-Agency Agreements


Assessing Service Management & Governance Capabilities

• Understanding the “As Is” and the “To Be”▪ Service Management & Governance Gap Analysis

• Making a Strategy Executable▪ Designing the Model▪ Skills Set▪ Managing Change

• Implementing the Model▪ Measuring for Success▪ Mitigating Value Leakage

44


Governance is the Cornerstone of any Solution

45

Sourcing Management best-practice addresses the interfaces between GTA, Agency and 3rd Party Service Providers.

______________________________________________________________________

► Governance

► Forecasting and Demand Management

► Regulatory

► Workplace Services

► Customer Satisfaction Survey Management

► Communications Management

► Project Spend Pool Management

► Performance Analysis & Service Delivery Management

► Service Requests & Authorization

► Security, Architecture & Standards Management

► Risk Management

► Asset Management

► Incident, Problem, Escalation, Change Management

Satisfaction andDirection Setting

Right Work,Done Right

RelationshipManagement

PerformanceManagement

► Invoice Management.

► Performance Credits, Earnbacks, and Critical Milestones

► Financial Analysis & Planning

► Procurement

► Contract Pricing Adjustments

► Value Leakage Mitigation

► Chargeback

► Contract Administration

► Contract Change Management

► Contract Issue Management

► Dispute Resolution

► Service Provider Audit

► Governance Library

Validate andManage Costs

EnsureCompliance

FinancialManagement

ContractAdministration


The Role of Inter-Agency Agreements

A collaborative approach for a complex journey▪ Planning for change▪ Mapping the journey ▪ Confirming what needs to change and what should

remain the same▪ Building a model for participation

IAAs will provide a detailed model for interaction between agencies and GTA, needed for all potential outcomes.

__________________________________________________

47


• Briefing Session #2 - October

▪ Assessment Options/Sourcing Alternatives – a look at the Shared Services Model

– A review of the objectives of a Shared Services Model– How Assessment Options are impacted by the delivery model– Potential and issues to address in a Shared Services Model

▪ Governance – a deeper dive on best practices

– An overview of the three primary approaches– An overview of the impacted processes– Reconciling overlap and interfaces with Agencies

▪ Sourcing Assets – best practices (intro only)

– Overview of best practices by category of Asset– Risks and issues to address

▪ Resource Units – best practices (intro only)

– Usage based charging structures– Efficient pricing – Risk transfer

Next Session - Agenda

48


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