Technology Budget Issuesfor ETAC

Willie Pritchard

Vice-Chancellor &

Chief Technology Officer

October 23, 2003 and November 19, 2003

Today’s Presentation

• Total Cost of Ownership (TCO)

• Desktop hardware and software

• Networks and Telephones

• Measure E

• Information System (ERP)

Total Cost of Ownership (TCO)

• What is TCO?– Recognition that the cost of technology is more than

just the initial purchase price– Accounts for all costs of technology

• Acquisition• Maintenance• Software• Training/Support• Overhead

– A budget plan for technology acquisition and maintenance that levels costs over time

Current Inventory

Desktop Computers

Network

Telephone System

Desktop Computers

• District has over 4,000 desktop computers– These computers are purchased by the colleges or CS,

not by ETS

• Range in age from new to five years old or older• Critical that we maintain relatively current

systems, especially in our instructional labs and classes

• TCO plan had been for a three-year replacement cycle; now being pushed out to four or more years

Desktop Computers

• Challenges– Ideal plan would be to spread acquisition costs

evenly over time (TCO)– Aging of our desktop inventory– Nearly half of our inventory is over 3 years old

• Moving toward older and older computers

• Next year nearly 2/3 will be over 3 years old

Computer Inventory

0

100

200

300

400

500

600

700

800

<1 1-2 2-3 3-4 >4

AGE IN YEARS

NUMBER

Foothill / District De Anza

Implications

• More repairs; will take longer to repair

• Increased costs for maintenance

• Less efficient work force

• At some point forced to upgrade (driven by software requirements)

• Less competitive

• Possible negative enrollment impact

Network, Systems & Telphones

• Network maintenance costs ~ $230,000 per year

• Information system hardware and software annual maintenance costs of ~ $291,000

• Telephone system costs ~ $808,000/year

• Total cost – ~ $1,300,000/year

Measure E

Equipment Needs

Staffing

Measure E Equipment

• Three technology components:– New desktop computers– Network and phone equipment– Classroom/lab technology

Measure E Equipment Costs(By Type)

ComputersNetwork & Phone

EquipmentClassroom

Technology*

$1,959,032 $1,874,192 $2,065,065

TOTAL $5,898,289

* Includes only computer and peripheral equipment, not furniture and traditional lab equipment (microscopes, scales, glassware, etc.)

Measure E Equipment Costs(By Year)

Fiscal Year Amount

2003-04 $390,797

2004-05 $2,496,256

2005-06 $1,522,093

2006-07 $1,424,143

2007-08 $65,000

TOTAL $5,898,289

Measure E Equipment Costs Over Time

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

03-04 04-05 05-06 06-07 07-08

YEAR

AMOUNT

Measure E Equipment (By Type & Year)

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

02-03 03-04 04-05 05-06 06-07

YEAR

AMOUNT

Computers Network/Phones Multimedia

Measure E Staffing Needs

• Technical support staffing is needed as new buildings come on online

02-03 03-04 04-05 06-07

New computers

219 458 450 279

Desktop techs

1 3 3 2

Network techs

0.5 1 1 1

Instructional Associates

3 6 6 4

State of Information System(ERP)

The Obvious Need

Options

Replacement

Current Information System (ERP)

• Doesn’t support our users’ current needs– Poor functionality / “User unfriendly”– Flat file data base technology– Antiquated screen interface or home-grown query tool

(MAUI) that is staff-intensive to support– FR, HR, and SIS data are not integrated– Can’t use it to do direct analysis of student learning– Opportunity cost– Some points of vulnerability, but NOT in immediate

danger of catastrophic crash

What are our options?

1. Bring additional functionality to current system

a) Without overtaxing system

b) While keeping options open for new ERP

2. Completely replace current system

Add Functionality• Use industry-accepted open (non-proprietary) standards that

will work with any new ERP system– Relational database (SQL, Oracle)– HTML, Java, XML, LDAP

• Investment for today & future, with lower costs• Examples of added functionality

– New registration system (TouchNet) – DONE– CATS/IEP/eTAG/FIPSE (Grant) – In process– Portal environment (Grant) – Just awarded ($1,087,450 over five

years)– Data Warehouse and Query Tool– Office Automation/Forms Processing

Replacement

• Multiple Year Project (3-5 years)

• Involves many district resources– Personnel– Budget

• Cost ~ $10,000,000

ERP Cost Itemization (Estimate)

Year 1 Year 2 Year 3 Year 4 TOTAL

Capital

Hardware $300,000 $1,000,000 $1,300,00

Software $732,333 $732,333 $732,333 $2.197,000

Database $500,000 $500,000

Misc.equipment $100,000 $150,000 $100,000 $350,000

Total Capital 0 $1,632,333 $882,333 $1,832,333 $4,347,000

Implementation

Backfill $325,000 $648,000 $648,000 $1,621,000

Consulting $155,000 $1,000,000 $1,250,000 $1,250,000 $3,655,000

Data migration $25,000 $75,000 $50,000 $150,000

Transition $25,000 $25,000 $50,000

Training; Technical $125,0000 $375,000 $500,000

Training: Users $100,000 $100,000

Total Implementation

$155,000 $1,350,000 $2,123,000 $2,448,000 $6,076,000

TOTAL COST $10,423,000

ERP Cost Itemization (2nd Estimate)

Year 1 Year 2 Year 3 Year 4 Year 5 TOTAL

Capital

Hardware $440,000 $370,000 $70,000 $290,000 $90,000 $1,260,000

Software $2.100,000 $378,000 $396,900 $416,675 $437,559 $3,729,227

Database $366,000 $310,000 $115,500 $121,275 $127,339 $1,040,114

Total Capital $2,906,000 $1,058,000 $582,400 $827,950 $654,898 $6,029,341

Implementation

Backfill $500,000 $1,000,000 $500,000 $2,000,000

Services $600,000 $500,000 $500,000 $200,000 $1,800,000

New DBA Position $50,000 $100,000 $100,000 $100,000 $100,000 $450,000

Transition $25,000 $25,000 $50,000

Contingency $1,000,000 $1,000,000

Total Implementation

$2,150,000 $1,600,000 $1,125,000 $325,000 $100,000 $5,300,000

SUBTOTAL COST $11,329,341

Savings (equipment & software maintenance, SCT LEAP program, etc.) (2.682.000)

TOTAL COST $8,597,341

Notes

• Any industry open standard application we add now to our system will result in an almost 1 to 1 reduction in cost of new ERP

• Migration to new ERP is very staff-intensive (line staff & tech staff)

• Benefits of migration won’t be realized for some time after initial implementation

Summary of Anticipated Costs(over next 4-5 years)

• Desktop technology – $1.9M - $2.9M• Measure E technology - ~$5.9M

– Desktop computers – ~$2M– Network and telephone system – ~$1.9M– Classroom technology – ~$2.1M

• New information system (ERP) – ≤$10M• Total ~$18M - $19M

ETS A & B Budget(over the years)

FY00-01 FY01-02 FY02-03 FY03-04

“A” Budget

$7.1 million $7.1 million $7.8 million $7.2 million

Starting “B”

Budget$1.5 million $1.5 million $1.2 million $501 thousand

Float $1.1 million$490

thousandZERO ZERO

Carryover from prior

yearZERO

$414 thousand

$517 thousand ZERO

Actual

“B” Budget

$2.6 million $2.4 million $1.7 million $501 thousand

TOTAL $9.7 million $9.5 million $9.5 million $7.7 million

Declining ETS Budget

$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

$9,000,000

$10,000,000

'00-01 '01-02 '02-03 '03-04

CarryoverFloatStarting BStarting A

Budget Changes due to…

• Layoffs (21 positions lost to cuts, contracts & grants ending, or to reorganization)

• Cuts to B budget• Savings by renegotiating some contracts• Moved some expenses from B to A budget

– Contracts for Alcatel, SCT, Data Center operations

– Software site licenses

Questions?