1. IT Funding/Business Model Discussion
December 18, 2017

2. IT Spend IT Spend: FY15 Summary IT Salary & Fringe Expense
$119.4 million
IT Non-Salary Expense
$69.8 million
Total IT Expense
$174.0 million
Total DoIT Expenses
$47.4 million *
Total All Other IT Expenses
$126.6 million
* Represents de-duplicated count.
Actual DoIT expenses were $98.7 million when considering serving both UW-Madison and UW System, of which $27.6 million is spent serving UW System.

3. IT Funding/Business Model
DoIT Cost Recovery Policy
Divisional IT Spending

4. 4. Current State: IT Funding/Business Model
DoIT cost recovery policy:
Mandated by campus policy. It includes:
1. Fees for IT services provided by DoIT to campus units, based on hourly rates (example: $67, $78, $87, $94, $97).
2. Chargeback assessments to campus units:
For campus IT licenses and shared campus IT systems.
For Common System Operations such as Service Center, Shared Financial Systems (SFS), etc.
For Network Services.
There are also chargebacks/fees for IT services that DoIT provides to UW System/other UW Schools.

5. Current State: IT Funding/Business Model
Divisional IT funding:
Multiple IT funding sources: Fund 101, other sources/funds.
101 allocations to divisions: Not ear-marked for IT.
Campus assessments:
FY15 Campus Assessments
Common System Assessments
$13.9 million
Campus Network Fees
$5.3 million
Telephone Systems
$5.55 million

6. IT Funding/Business Model: Questions
Critical examination of the current IT funding model.
Is the current IT funding model an effective mechanism for:
A. Strategic prioritization of IT services across campus?
B. Creating:
A rational/optimal campus IT service portfolio?
A service-centric culture?
Alignment with the mission and objectives of the university as a whole?
Providing IT services on an equitable basis across all campus units?
Providing the right incentives for promoting decisions that are effective and optimal from the point of view of the campus as a whole?
Promoting transparency? Collaboration? Partnerships? Innovation?

7. Consequences of Cost Recovery Policy
1. Prioritization of DoIT IT services is based primarily on affordability :
Impediment for effective campus-wide strategy. Services are not necessarily based on a clearly defined strategy where priorities are aligned with the mission and objectives of the university as a whole.
Impediment for a service-oriented culture. The conversation between units and DoIT is based primarily on costs.
Impediment for cross-functional services. The focus on very specific local needs in responding to department-funded requests often comes at the expense of developing cross-functional services.

8. Consequences of Cost Recovery Policy
2. Inefficiencies. Full cost recovery creates several types of inefficiencies in allocating scarce IT resources across campus:
Duplicated, redundant services; little incentive for service consolidation.
Fewer services: Fewer services are delivered due to high fees/costs.
Complex internal economy.

9. Consequences of Cost Recovery Policy
Inequities:
High fees create inequities in the consumption of IT services across campus (the “haves” and “have nots” problem). This is likely to have an adverse impact on the ability of some units to meet their pedagogical, research and administrative objectives.
4. Less transparency, trust, collaboration and partnership.