IT Sourcing Assessment Steering 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

Georgia Technology Authority 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

Georgia Technology Authority All Agencies Face Similar Challenges Aging infrastructure Meeting minimum standards Security and disaster recovery Systems development 4

Georgia Technology Authority 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.

Georgia Technology Authority 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

Georgia Technology Authority GTA’s Strategy

Georgia Technology Authority GTA’s Two-Prong Strategy Create an investment-driven IT enterprise Fix the infrastructure ▪Sourcing assessment ▪Operational improvements 7

Georgia Technology Authority 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

Georgia Technology Authority Why focus on Infrastructure Easiest component of IT to leverage Simplest to centralize Presents the best economic opportunities for Shared Services delivery

Georgia Technology Authority 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

Georgia Technology Authority 10 Assessment and Transition Timeline

Georgia Technology Authority GTA’s Approach

Georgia Technology Authority 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

Georgia Technology Authority 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

Georgia Technology Authority IT Sourcing Assessment Participating Agencies Community Health Corrections DOAS Driver Services GBI GTA Human Resources Juvenile Justice Natural Resources OPB Revenue SAO DTAE 14

Georgia Technology Authority 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

Georgia Technology Authority 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

Georgia Technology Authority Steering Committee Roles and Expectations

Georgia Technology Authority 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

Georgia Technology Authority 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

Georgia Technology Authority 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

Special Briefing Session #1

Georgia Technology Authority Briefing Session #1 - September ▪Assessment scope and range of options –IT Services included –Assessment Categories –Primary and Secondary Options to address –Sourcing Assessment Roadmap ▪Methodology (incl. M2M) and form of reports –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 ▪Elements 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 ▪Governance and Inter-Agency Agreements –Assessment of Service Management & Governance capabilities –Developing a Service Management Operating Model –The role of Inter-Agency Agreements Agenda 22

Georgia Technology Authority 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

Georgia Technology Authority Briefing Session #3 – November ▪Inter Agency Agreements – possible structure –Services and Service Levels –Treatment of Hardware, Software, Contracts and Leases –Use of Agency facilities –Policies and Procedures –Payment & Chargeback –Agency Participation Model ▪Approach to Federal Funding –Lessons learned from other States –Issues to address in structuring pricing and charge-back –Advance Planning Documents (APDs) ▪Retaining Accountability and Control Rights –A review of key provisions and rights to preserve –A description of how accountability is preserved in practice ▪Progress Report on Agency engagement in the Assessment Process –A review of Agency issues identified in the Assessment and how they are being addressed Agenda 24

Assessment Scope and Range of Options

Georgia Technology Authority 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

Georgia Technology Authority 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

Georgia Technology Authority 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

Georgia Technology Authority 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

Georgia Technology Authority 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

Georgia Technology Authority Sourcing Alternatives Assessment Tool An operational assessment will identify how the current operation is functioning and key gaps that need to be addressed. __________________________________________________ 28

Georgia Technology Authority Sourcing Readiness Filter An experience-based assessment of readiness for change. __________________________________________________ 28

Georgia Technology Authority 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

Georgia Technology Authority Example Output – Recommending Sourcing Alternatives __________________________________________________ 28

Georgia Technology Authority 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

Georgia Technology Authority 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. __________________________________________________________________

Georgia Technology Authority Total IT Expense In-scope Activities Out of Scope Activities In-Scope Assumed Expense Retained & Pass Thru Expense Base Case 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

Georgia Technology Authority 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. Salary Expenses Etc. 2 nd D: Tower Mainframe Servers End User Computing 3 rd D: Expense Categories Software Maintenance 1 st D: Agency Network DCH Financial data will be organized based on three dimensions: 40

Georgia Technology Authority Total Base Case Retained and Pass-thru Costs Net New Costs ++ = GeorgiaTotal Cost of Sourcing 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 Filters M2M, Asset Currency Analysis, SLA, etc Recommended Scenario Sourcing Costs 41

Georgia Technology Authority Infrastructure Scenario Comparison–Impact Summary Spend + Risk + Change = Recommendation GTA/Agencies Risk & Accountability Shared or Supplier Risk & Accountability Amount of Change Transition Risk LowHigh 153 Financial Impact LowHigh $0M $10M Scenario #1 Amount of Change Transition Risk Low High 153 Financial Impact LowHigh $0M $10M Scenario #2 Amount of Change Transition Risk LowHigh 153 Financial Impact LowHigh $0M $10M Scenario #3 Amount of Change Transition Risk LowHigh 153 Financial Impact LowHigh $0M $10M Scenario #8 42

Governance and Inter-Agency Agreements

Georgia Technology Authority 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

Georgia Technology Authority Governance is the Cornerstone of any Solution 45 Sourcing Management best-practice addresses the interfaces between GTA, Agency and 3 rd 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 and Direction Setting Right Work, Done Right Relationship Management Performance Management ► 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 and Manage Costs Ensure Compliance Financial Management Contract Administration

Georgia Technology Authority 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

Georgia Technology Authority 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

Georgia Technology Authority