1. www.umn.edu/oit A Saner IT Funding Model(?): System-Wide Technology “Cost-Driver Based” Allocation Common Solutions Group January 2006

2. www.umn.edu/oit Agenda Context for IT Change IT Funding –Today’s budgeting process –Current IT environment –Roles within the service continuum Allocation Options and Details –The new budgeting process Discussion

3. www.umn.edu/oit University of Minnesota’s Strategic Positioning Goal: To become within the next decade one of the top three public research universities in the world.

4. www.umn.edu/oit Administrative Aspiration: “…that the University be known as much for its service and business innovation as for its high quality research, education, and public service.” President Robert H. Bruininks

5. www.umn.edu/oit New Budget Model Committee Principles Mission and Goal Alignment Transparency Efficiency/Cost Control Revenue Enhancement Simplicity Predictability Adaptability Central Investment Information Rich Implementation Risk

6. www.umn.edu/oit Current IT Funding Environment Broad IT Governance - but not tied to funding allocation. Current funding mechanism requires excellent relationship with CFO and executive team. Actual costs of centrally provided services unclear to revenue generators / stakeholders / Deans.

7. www.umn.edu/oit Local Technology Principles Mission Specific or Strategic Importance to Local Unit Uniqueness High Touch, High Interaction Little Cross-Unit Use Emerging, Immature Technologies

8. www.umn.edu/oit Local Technology Service Examples: Computer Desktop Support Web Development & Content Management Academic Application Development & Support Research Application Development & Support

9. www.umn.edu/oit OIT / Institutional Technology Investment Goals Maintain a competitive, institutional leadership role that attracts the brightest students, faculty, staff and scarce research funding. Create savings, efficiencies and effectiveness. Optimize the University’s scarce resources. Achieve the greatest institutional return on investment. Improve services to students, faculty, staff, patients, and other stakeholders. Exploit untapped ERP functionality and extend the usefulness of ERP systems with new technologies such as portals, workflow and others. Demonstrate value by producing meaningful ROI and performance (system and business process) information.

10. www.umn.edu/oit OIT / Central Technology Investment Principles Institutional Vision & Mission Alignment Institutional Mission Criticality Strategic Leadership Opportunity Interoperability Common Need Institutional Economy-of-Scale Value Technology Maturity Institutional Risk

11. www.umn.edu/oit Budget Model Alignment Strategic Positioning alignment and promotion. Internal Budget Model Working Principles alignment. Embrace the Institution’s central technology goals and principles. ‘Cover’ the University’s core ‘in’ technologies.

12. www.umn.edu/oit Core Technologies - What’s In Student,Faculty, Staff Support Helpdesk (1-HELP) Training Digital Media Center. Computer Labs Security MS license Communications Data Network Productivity Applications Operating System MS Office File Systems Web Collaboration (Breeze) Email Portal Calendar (UMCal) File Storage (SAN) Personal space Enterprise storage Web Content Management (FileNet) Business Applications PeopleSoft WebCT Imaging Library Automation E-Research CUFS IMS Reporting EGMS FormsNirvana GradPlanner Portfolio GoldPass All currently Centrally Funded

13. www.umn.edu/oit Allocation Model Options Measured Usage (Consumption): Typical ISO model. Define measure to perceived value, real cost and strategic value. –Creates year-to-year volume fluctuations that cause budget instability. Unpredictable. –Is an imprecise way to measure outcomes. –Requires significant investment in measurement tools and corresponding administrative systems and processes. Significant implementation implications. –Can effectively control demand. –Inefficient method to measure the value of a strategic asset.

14. www.umn.edu/oit Current Technology Services Funding (Examples) Centrally Funded Unit-Based Chargeback Consumption- Based Chargeback Telephone XX VoiceMail XX E-Mail X Data Network X Calendar X WebCT X Security X Helpline X

15. www.umn.edu/oit Recommended Allocation Model Headcount-Based: Allocation based on an unit’s student, faculty and staff population. –Simple. Easy to understand and administer. –Optimizes the institution’s technology investment. –Sustainable. Is adaptable to internal and external environmental factors - including emerging technologies. –Predictable. Minimal year-to-year fluctuation. –However… Imprecise measurement for actual usage. Demand management more challenging.

16. www.umn.edu/oit Headcount Allocation Model… In Alignment with: –Budget Model Principles –Strategic Positioning Goals & Objectives –The Institution’s Technology Investment Goals By… –Optimizing the University’s technology investment –Positioning the University’s technology investment strategy –Encompassing and encouraging the use of a core set of student, faculty and staff technologies.

17. www.umn.edu/oit Headcount Allocation Methodology Annual snapshot-in-time: –Previous year’s headcount. OIT’s budget for ‘In’ Core Technologies –Proposed OIT budget for managing these technologies. Per Head Rate Allocate by Collegiate/Administrative Unit Single annual bill / statement to each Unit Two-Tiers - one for all campuses and one for Twin Cities (only).

18. www.umn.edu/oit Headcount Allocation Formula Core ‘In’ Technology Budget = System-wide ‘In’ Technology Budget + Twin Cities ‘In’ Technology budget

19. www.umn.edu/oit Headcount Allocation Formula System-wide ‘In’ Technology Budget System-wide Headcount ____________________________ =A Twin Cities Only ‘In’ Technology Budget Twin Cities Headcount ____________________________ =B A = Coordinate Campus Rate ($24/mo.) A + B = Twin Cities Rate ($48/mo.)

20. www.umn.edu/oit Employee Allocation Details Employees with an X.500 ID as of the 9 th pay period of the fiscal year Employees holding multiple appointments will be assigned to a college or administrative unit according to primary job code using the following logic: –Highest standard hours –Annual benefit base rate –Highest compensation rate –Lowest employee record Both part-time and full-time employees are counted equally. Both paid and unpaid employees are included. Temporary/casual employees are excluded. Student employees (graduate or undergraduate) are excluded and counted as students. Employees in ISO’s having a unique area number within Auxiliary Services only will be excluded from the budget model. Note: The model is built upon headcount, not FTE. Units will not split charges.

21. www.umn.edu/oit Student Allocation Details All students registered for fall semester as of the 10 th day of the fall term. Graduate School students are mapped to a college using a background table that maps the student’s major to a college. (All graduate students are required to register, therefore all are counted) Students pursuing a dual degree program are assigned to a college and counted only once according the the following logic: –Degree seeking gets priority over non-degree seeking –Priority is given to professional, then graduate-level, then undergraduate –FA primary number by career. Assigns priority by career (highest tuition) –Number of credits enrolled in each –Electronic random number (rare). Student is assigned to the college that gets the highest random number. Part-time and full-time students are counted equally Employees taking courses using the Regent’s scholarship or the academic or civil service tuition benefit are counted as employees not students.

22. www.umn.edu/oit Student,Faculty, Staff Support Premium ‘In’ Services (Where Applicable) Computer Desk-top Support Telephone and Network Installation Services Hardware Sales Software Sales Web Development Core Technologies: What’s Out Communications Premium ‘In’ Services (Where Applicable) Productivity Applications Premium ‘In’ Services (Where Applicable) Business Applications Premium ‘In’ Services (Where Applicable) Server Management & Support Back-Up Services and Data Restoration TelephonesVoice Mail All currently funded through charge-back

23. www.umn.edu/oit Core Technologies: What’s Out Student,Faculty, Staff Support Premium ‘In’ Services (Where Applicable) Computer Desk-top Support Telephone and Network Installation Services Hardware Sales Software Sales Web Development Communications Premium ‘In’ Services (Where Applicable) Productivity Applications Premium ‘In’ Services (Where Applicable) Business Applications Premium ‘In’ Services (Where Applicable) Server Management & Support Back-Up Services and Data Restoration TelephonesVoice Mail All currently funded through charge-back

24. www.umn.edu/oit Technology Allocation Assumptions… All heads treated equally All ‘In’ Core Technologies applied to all heads Base level of services with premium options at additional price. PeopleSoft as headcount source Coordinate campus distinction Housing & Residential Life student technologies not included.

25. www.umn.edu/oit New Cost Allocation Model Understanding / Assumptions The model itself is a set of stable revenue and cost attribution rules that assist in achieving (but don’t determine) the strategic goals of the institution A sound process for budget approval and rate development for “cost pool” units is key The process is dependent on strong leadership to approve cost pool budgets and to make strategic allocations of the state dollars The model will be implemented at a collegiate level – not a departmental level Good performance measures and good data are essential for analysis Existing consultative groups will be essential to promote transparency & understanding of decisions Process will evolve over time – year one will largely be a conversion to the basic structure, with refinements toward goals in the future

26. www.umn.edu/oit Key Changes Today’s model is opt-in. Tomorrow’s is a rigorous opt-out. Provides the key stakeholders / revenue generators / Deans a clear understanding of what they are actually funding. The new model’s open budgeting process will bring those stakeholders together in a form of IT governance not experienced before. Will need to appropriately link the new budget model to the current IT Governance structure.

27. www.umn.edu/oit Discussion…