1. 1 Financing IT Services Recharging & Core Funding Strategies Common Solutions Group J.W. McCredie February 3, 2000

2. 2 CSG Agenda Overview of CSG mini-survey Update on implementation of UC Berkeley network funding model Discussion Next steps for CSG

3. 3 CSG Mini-survey -- Universities UC Berkeley Carnegie Mellon Chicago Columbia Duke Georgetown Harvard Maryland Michigan Penn State Stanford Virginia Yale

4. 4 Important Services -- Recharged Most cited Telephone services Data networking Cable TV Administrative apps. Consulting Programming Licensed software Also mentioned PC support Repair ADSL & ISDN Volume printing Teleconferencing Facilities mgt. Video production

5. 5 Important Services -- No charge Most cited Help desk Email General inst. support Dial-in modems Student clusters Administrative apps Crucial software Net file storage Also mentioned PC support Repair ADSL & ISDN Volume printing Teleconferencing Facilities mgt. Video production Training

6. 6 Important Services -- Heavy Subsidy Data network Administrative applications Excess capacity Software licenses Printing Disk space Student labs Site licensed software

7. 7 Network Charging Yes - 11 No - 2 Full cost ~ 50% Subsidized ~50% Many responses indicated unhappiness with current model and indicated university was searching for a better way.

8. 8 Percent of operations recharged Low 10 - 15% High 80 - 97% Question was ambiguous because of varied roles of voice services and technology stores.

9. 9 Suggested topics for discussion Network funding models -- several Distributed applications Role (and problems) of cross subsidies Comparisons with commercial rates Models that demonstrate value of services rather than make IT organiza- tions look like money grubbing vendors.

10. Update on UC Berkeley Network Funding Model Implementation

11. 11 Methodology 1st -- Determine true costs of operating the network (replacement cost ~$200M -- without user computers) 2nd -- Develop the internal gap between cost and recovery 3rd -- Examine ways to close the gap 4th -- Estimate impacts of funding mechanisms

12. 12 Terminology Utility: –Infrastructure & Services for the common good (a.k.a. -- centrally funded) Market: –Recoverable services where costs may move with the market -- visible to depts. Lines Of Business (LOB): –Identifiable service centers

13. 13 Building BBuilding A Face Plate Station Device Horizontal Wire Core MDF Electronics Key Data Network Components Terminology BDF Riser Network Closet Electronics ~ 9 ~240

14. 14 Terminology Direct Costs –Directly Related to providing a LOB Charges from telcos for long distance Maintenance on backbone system

15. 15 Terminology Indirect Costs –Not directly related to providing a LOB but required for the LOB Training of staff who perform the LOB Office supplies

16. 16 Terminology Overhead –Ongoing administrative expense of the enterprise Rent Insurance General and Administrative

17. 17 Policy Driven Model Created Four Levels of Choice –Expenditure Classification –Utility vs. Market Proportion –Allocation by LOB –LOB Grouping

18. 18 VCAC Next Steps Reaffirm decision about whether to charge for data network charges Should charges be on a per node, or more aggregate level (subnet, depart- ment, college, control level, etc.) How much should be charged?

19. 19 Implementation Task Force Results Charter to decide on implementation details surrounding recharging proposal developed by previous committee, adopted by Chancellor’s Cabinet, and approved by faculty commission After one year of deliberation, the task force did not support partial recharge of approximately $7-10 per month per node (8-4)

20. 20 Implementation Task Force Results - continued Voted to support recharging if departments “made whole” at transition. Unanimously voted to move forward with recharging plan if departments “made whole” at transition.

21. 21 Computing and Communications Policy Board Reviewed VCAC presentation Reviewed Implementation task force recommendations Reviewed action at UCSF Discussed policy of “making departments whole” Chancellor’s new idea

22. 22 Computing and Communications Policy Board Chancellor’s new idea “Often the best ideas appears after you think you’ve run out of them.” Node bank

23. 23 What to do?