THE CMX GROUP, INC 65 BROADWAY SUITE 1806 NEW YORK CITY NY (212) Consolidated Chargeback for a Consolidated World Sidney Finehirsh Demand Technology

This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group. The 90’s: Motivation to Decentralize Application development logjam in IT Application development logjam in IT Unreliable response Unreliable response Control of critical business systems Control of critical business systems High cost of central IT High cost of central IT

This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group. The 90’s: Economies of Scale Duplication of effort Duplication of effort Low utilization Low utilization Hidden costs Hidden costs systems support systems support outside services outside services Absence of standards and procedures Absence of standards and procedures Inability to negotiate volume discounts Inability to negotiate volume discounts Administrative chaos Administrative chaos

This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group. The 00’s: Cost Does Matter Downsizing organizations Downsizing organizations Driving to efficiency Driving to efficiency Lowering growth of IT budgets Lowering growth of IT budgets Moving to centralization Moving to centralization

This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group. The Shift to Centralization

This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group. Consolidation: As New Technology Better, faster, cheaper networks Better, faster, cheaper networks Central support Central support Rapid application development Rapid application development

This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group. Consolidation: “The Utility” Model Plug on the wall Plug on the wall Always available Always available Always responsive Always responsive Commoditization of IT Services Commoditization of IT Services Demand management Demand management Measure of success Measure of success “The Venture Partner” Model “The Venture Partner” Model

This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group. Consolidation: Opportunities Physical co-location Physical co-location Server sharing Server sharing Centrally managed networks Centrally managed networks Storage networking Storage networking

This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group. Consolidation: Systems Management down on the Server Farm Quality assurance Quality assurance Change control Change control Security and fraud detection Security and fraud detection Backup and disaster recovery Backup and disaster recovery Chargeback Chargeback

This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group. Consolidation: Why do Chargeback ? An expensive shared resource An expensive shared resource It’s unavoidable It’s unavoidable Provide management information Provide management information cost of production cost of production cost of doing business cost of doing business Control the demand for services Control the demand for services IT financials for scorecards IT financials for scorecards

This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group. Consolidation: The Cost Accounting Challenge Asset cost transfer Asset cost transfer Need for a standard costing model Need for a standard costing model Usage Based Billing (UBB) Usage Based Billing (UBB) Activity Based Costing (ABC) Activity Based Costing (ABC)

This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group. Consolidation: The Technical Challenge Spanning the number of server and and network technologies Spanning the number of server and and network technologies Identifying business owners Identifying business owners Standardizing units of measures in a diverse world Standardizing units of measures in a diverse world Mixing dedicated and shared servers Mixing dedicated and shared servers

This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group. Consolidation: Costing Shared n-way P1P1P1P1 P2P2P2P2 P 3… PnPnPnPn Dedicated n-way P1P1P1P1 P2P2P2P2 P 3… PnPnPnPn Billable Units = C x n x N C = Effective Capacity % n = Number of Processors N = Normalization Factor U n = Measured Usage Per User N = Normalization Factor Billable Units = Σ (U n x N) User 1 Effective Capacity Limit U1U1 U2U2 U3U3 U4U4 U5U5 U6U6 UnUn

This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group. Yankee Group Report – Oct The most important chargeback qualification for a vendor solution is that it conforms and adapts to the IT cost structure to properly distribute the financial aspect of service usage. Without an appropriate understanding of the cost structure, the ultimate goals of chargeback (allocating costs to users) will be lost.

This document contains unpublished confidential and proprietary information of The CMX Group. No disclosure or use of any portion of these materials may be made without the express written consent of The CMX Group. © 2001 The CMX Group.