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Financing IT Services Recharging & Core Funding Strategies Common Solutions Group J.W. McCredie

Financing IT Services Recharging & Core Funding Strategies Common Solutions Group J.W. McCredie February 3, 2000. CSG Agenda. Overview of CSG mini-survey Update on implementation of UC Berkeley network funding model Discussion Next steps for CSG. UC Berkeley Carnegie Mellon Chicago

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Financing IT Services Recharging & Core Funding Strategies Common Solutions Group J.W. McCredie

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  1. Financing IT Services Recharging & Core Funding Strategies Common Solutions Group J.W. McCredie February 3, 2000

  2. CSG Agenda • Overview of CSG mini-survey • Update on implementation of UC Berkeley network funding model • Discussion • Next steps for CSG

  3. UC Berkeley Carnegie Mellon Chicago Columbia Duke Georgetown Harvard Maryland Michigan Penn State Stanford Virginia Yale CSG Mini-survey -- Universities

  4. Most cited Telephone services Data networking Cable TV Administrative apps. Consulting Programming Licensed software Also mentioned PC support Repair ADSL & ISDN Volume printing Teleconferencing Facilities mgt. Video production Important Services -- Recharged

  5. Most cited Help desk Email General inst. support Dial-in modems Student clusters Administrative apps Crucial software Net file storage Also mentioned PC support Repair ADSL & ISDN Volume printing Teleconferencing Facilities mgt. Video production Training Important Services -- No charge

  6. Important Services -- Heavy Subsidy • Data network • Administrative applications • Excess capacity • Software licenses • Printing • Disk space • Student labs • Site licensed software

  7. Network Charging • Yes - 11 • No - 2 • Full cost ~ 50% • Subsidized ~50% • Many responses indicated unhappiness with current model and indicated university was searching for a better way.

  8. Percent of operations recharged • Low 10 - 15% • High 80 - 97% • Question was ambiguous because of varied roles of voice services and technology stores.

  9. Suggested topics for discussion • Network funding models -- several • Distributed applications • Role (and problems) of cross subsidies • Comparisons with commercial rates • Models that demonstrate value of services rather than make IT organiza- tions look like money grubbing vendors.

  10. Update on UC Berkeley Network Funding Model Implementation

  11. Methodology • 1st -- Determine true costs of operating the network (replacement cost ~$200M -- without user computers) • 2nd -- Develop the internal gap between cost and recovery • 3rd -- Examine ways to close the gap • 4th -- Estimate impacts of funding mechanisms

  12. Terminology • Utility: • Infrastructure & Services for the common good (a.k.a. -- centrally funded) • Market: • Recoverable services where costs may move with the market -- visible to depts. • Lines Of Business (LOB): • Identifiable service centers

  13. Station Horizontal Wire Electronics Face Plate Network Closet Device Electronics Riser Core MDF BDF Terminology Key Data Network Components Building B Building A ~ 9 ~240

  14. Terminology • Direct Costs • Directly Related to providing a LOB • Charges from telcos for long distance • Maintenance on backbone system

  15. Terminology • Indirect Costs • Not directly related to providing a LOB but required for the LOB • Training of staff who perform the LOB • Office supplies

  16. Terminology • Overhead • Ongoing administrative expense of the enterprise • Rent • Insurance • General and Administrative

  17. Policy Driven Model • Created Four Levels of Choice • Expenditure Classification • Utility vs. Market Proportion • Allocation by LOB • LOB Grouping

  18. VCAC Next Steps • Reaffirm decision about whether to charge for data network charges • Should charges be on a per node, or more aggregate level (subnet, depart-ment, college, control level, etc.) • How much should be charged?

  19. Implementation Task Force Results • Charter to decide on implementation details surrounding recharging proposal developed by previous committee, adopted by Chancellor’s Cabinet, and approved by faculty commission • After one year of deliberation, the task force did not support partial recharge of approximately $7-10 per month per node (8-4)

  20. Implementation Task Force Results - continued • Voted to support recharging if departments “made whole” at transition. • Unanimously voted to move forward with recharging plan if departments “made whole” at transition.

  21. Computing and Communications Policy Board • Reviewed VCAC presentation • Reviewed Implementation task force recommendations • Reviewed action at UCSF • Discussed policy of “making departments whole” • Chancellor’s new idea

  22. Computing and Communications Policy Board • Chancellor’s new idea • “Often the best ideas appears after you think you’ve run out of them.” • Node bank

  23. What to do?

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