acuta 2013 04 funding it economic perspective
TRANSCRIPT
FY12/13 OPERATING BUDGET
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• General Funds: $1.95B
• Hospital/Clinic: $1.27B
• Restricted Funds: $0.66B
• Aux. Enterprise: $0.36B
• Ag Federal: $0.02B
IT SPEND AT PENN STATE
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• IT Assessment – 2010 ~$250 million associated with IT Spend or ~6% of
the Operating Budget
ITS 33%
Budget Admin
67%
FUNDING IT – CONCEPTS
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• Funding IT services is NOT about identifying new funds
Tuition Student IT Fee Technology Access Fee Other
• ONE UNIVERSITY! Working towards a common mission
o Education oResearch oOutreach
FUNDING IT – CONCEPTS
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• Funding IT services is about efficiently allocating a limited resource
• Influencing behaviors Informed Decisions
IT Service Consumer
IT Service Provider
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+ Economies of Scale + Research/Resources
– Slow to respond to changes in demand
– Requires strong governance to be effective and efficient
ECONOMICS - MONOPOLIES
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+ Drives Innovation + Responsive to changes in demand – Duplication of effort/resources – Needs to be truly “open” to be efficient
ECONOMICS - COMPETITION
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Funding IT is about influencing the behaviors of the service consumer and service providers which best serves the institution.
• Efficient resource allocation and use
• Maximize benefits and impact to meeting business requirements of institution
RELEVANT TO IT FUNDING – HOW?
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FUNDING APPROACH
Behavior Funding Characteristic Efficiency
Driver
No Consumer Choice
• IT services that everyone is
required to use
Service Provider Monopoly Governance
Consumer Choice
• IT services that units choose
to use must be paid for or
cost shared with the units
Service Consumer Competitive Market
Place
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APPROACH TO HOW TO FUND IT
Compliance/ Life Safety/ Risk
No Consumer Choice
Centrally Fund Service Provider
Core/Enterprise Service
Potential Consumer
Choice
Shared Funding – Central & Unit
Competitive/ Differentiated
Service
Consumer Choice
Consumer/ Unit Funded
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PROPOSED @ PENN STATE Type of Service Target Behavior Optimal Funding Examples
•Compliance
•Life Safety
•Risk Mitigation
•Near Complete
Adoption
•No variability due to
differential priorities
•Centrally Funded •Payroll/Financial
•Video Surveillance
•Student Systems
•Core-Service
•Substantial Adoption
•Disincentive to
duplicate service
•Leverage Economies
of Scale
•Centrally Funded
•Technology Fees
•All units participate
regardless of
usage
•Wireless Networks
•Voice
•Storage
•Server Hosting
•Data Center
•Differentiated
Service
•Meet specific and
unique business needs
•Options spur
innovation
•Funding provided
to unit for
discretionary
decisions
•Department
specific software
•Edge networking &
computing
OTHER CONSIDERATIONS
• Optimize the effective and appropriate use of IT funding sources
Develop a common set of principles for all budget executives to use for IT funding and costing decisions
• Effective IT Governance is critical
A governance board without budgetary authority is just an advisor board.
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SERVICE PROPOSAL Project Name:
Person Submitting
Proposal:
Sponsors:
Stakeholders
Project Category ( ) Enterprise System
( ) Instructional Technology
( ) IT Service
( ) Research
Technology
( ) University
Services
Mission Critical ( ) Provides Competitive
Advantage
( ) Prevents Competitive
Disadvantage
( ) Address compromised operational
efficiency or customer dissatisfaction
( ) Provides significant incremental
revenue or cost savings to the
University
Nature of Project ( ) Renovation
/Enhancement of existing
system/process/asset
( ) Replacement of existing
system/process/asset
( ) Initiation of new system/process/asset
Core Mission ( ) Academic/Student ( ) Research
( ) Other
( ) Service
( ) None
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SERVICE PROPOSAL University Strategic
Goals
( ) Enhance Student
Success
( ) Advance Academic
Excellence
( ) Global University
( ) Access/Affordability &
Diversity
( ) Serve Commonwealth
and Beyond
( ) Control Costs
& Generate
Efficiencies
Compliance ( ) Internal Mandate ( ) External Mandate ( ) No Mandate
Business Need &
Project Goals
Consequences if
Not Funded
Sectors of University
Impacted
Benefits
Risks
Budget
Requirements
Personnel
Requirements
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Year 1 Year 2 Year 3 Year 4 Year 5
1.0 Research, Development, Test and Evaluation
1.01 Development Engineering
1.01.1 In-House Labor
1.01.2 Vendor/Contract Labor
1.02 Development Equipment
1.02.1 Hardware
1.02.2 Software/Application
1.02.2.1 COTS/Vendor
1.02.2.2 In-House Labor (Mod/Change)
1.03 System Engineering/Program Management
1.03.1 Labor
1.03.2 Systems
1.04 System Test and Evaluation
1.04.1 Labor
1.04.2 Systems
1.05 Development Facilities & Infrastructure
1.06 Training
1.07 Other RDT&E
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Year 1 Year 2 Year 3 Year 4 Year 5
2.0 Production Procurement & Implementation
2.01 System Engineering/Program Management
2.01.1 In-House Labor
2.01.2 Systems
2.02 System Changes/Modifications
2.02.1 In-House Labor
2.02.2 Vendor/Contract Labor
2.03 Production Equipment
2.03.1 Hardware
2.03.2 Software/Application
2.03.2.1 COTS/Vendor
2.03.2.2 In-House Labor
(Mod/Change)
2.04 System Test and Evaluation (Production)
2.04.1 Labor
2.04.2 Systems
2.05 Facilities & Infrastructure
2.06 Training
2.07 Activation/Implementation
2.08 Other Procurement & Implementation
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Year 1 Year 2 Year 3 Year 4 Year 5
3.0 Operations, Maintenance & Support (OMS)
3.01 System Engineering/Program Management
3.01.1 In-House Labor
3.01.2 Systems
3.02 System Maintenance & Operations
3.02.1 In-House Labor
3.02.2 Vendor/Contract Labor
3.03 Production Equipment
3.03.1 Hardware Maintenance
3.03.1.1 Spare
3.03.1.2 Maintenace Spt/Contracts
3.03.2 Software/Application Maintenance
3.03.2.1 COTS/Vendor
3.03.2.2 In-House Labor (Mod/Change)
3.04 Facilities & Infrastructure
3.05 Training
3.06 Other OMS