Desktop Computer Total Cost of Ownership (TCO) Planning Model revised 11/7/97 JXR
Introduction:
Desktop computers have become the foundation for virtually all university business services and for the university's rapidly expanding academic learning and support efforts. Successful use of computers and technology requires current, reliable equipment; adequate memory and network resources; trained, knowledgeable users; and adequate, responsive support staff and services. The model outlined builds on data from analysis of businesses by the Gartner Group, recapitalization models proposed by Arizona's Government Information Technology Agency (GITA), and actual data from operating computing sites at ASU. This document focuses on the issue of adequately maintaining desktop computing resources to support educational and administrative operations at Arizona State University. The figures identified project the minimum level of funding required to maintain service levels using current operating policies and procedures. Planning to increase capacity, acquire additional equipment, or expand capabilties must include operational, support, and recapitalization funding to insure consistent, reliable service.
Background:
ASU has traditionally used an infusion model to provide computers to the university community. The infusion model has used varying criteria to identify needs and allocated funds annually. Support costs were rarely addressed, and long term operational support for the computers obtained in each annual infusion became the responsibility of the college or department.
Most businesses and increasing numbers of state agencies and universities have begun to develop computing management models based on total cost of ownership (TCO). These models attempt to identify all costs to the organization for owning and operating a given resource. Costs of operating and maintaining desktop computers include acquisition of hardware and software, training, operational support, network and communications, maintenance, repair, and recapitalization.
The scope and quality of support services for desktop computing is directly related to the success in integrating technology into business practices and instruction. Typically technology initiatives in organizations without regular recapitalization programs continue to function, but both formal and informal support costs rise dramatically. The loss of productivity is believed to be significant, and the actual costs are diffused and difficult to quantify.
The need for additional resources and improved support services at ASU had been raised in fora across the institution. Last year the importance of the support issue was acknowledged when, for the first time, infusion funds were given to provide support staff to some colleges.
Ideally, planning builds on historical data. Unfortunately, the distributed, decentralized nature of desktop computing purchases and support at ASU makes determining accurate total cost of ownership extremely difficult. In addition, significant university resources are expended through 'grass roots' support. Typically faculty, staff or students who are perceived as having skill or knowledge are drafted into roles of support providers, as formal support fails to keep pace with institutional needs this informal support network attempts to fill the void. The significant cost to the institution of lost productivity and inefficient use of resources is difficult to calculate.
Components:
Currently state agencies under the Government Information Technology Agency (GITA) are developing a model for capital replacement of desktop computers. The model uses a 3 year replacement cycle which is consistent with many businesses. The draft proposal notes that:
78% of (state owned) PCs are over 3 years old - 'Any PC more than 3 years old is considered to be obsolete for the purposes of this analysis.'
This proposal outlines an initial effort to plan for a TCO model to support desktop computers. When possible, this model is based on actual cost of operating computer sites. Where actual data was not available, overall university costs were estimated from sources such as the Data Warehouse, and divided by the number of computer workstations. The initial draft figures were reviewed, and additional input was sought from IT directors in Engineering and Business, colleges with significant computer resources. If this model is accepted, actual cost data will be captured and incorporated into subsequent TCO projections.
Goals:
-To develop a standard set of principles for projecting computer operating costs over time and coordinate data and its presentation in planning efforts and budget requests.
-Improve access/service reliability and productivity of computing resources
-Maintain current levels of service.
-Increase efficiency.
-Lower long term cost of ownership.
-Create a foundation for future selective investment.
Assumptions: 3% annual inflation rate
Capital Replacement-
- Data obtained from State and business projections, and actual operating costs over 2 year period from IT open computer labs.
- 3 year capital replacement cycle for hardware.
Total Cost of Operation -
- 1 year amortization for software.
- Current individual network costs per connection (backbone upgrades to be separately funded)
Components included:
- Capital equipment (cost of purchase and/or replacement).
- Upgrades of memory and drive capacity required during life of equipment.
- Support costs for staff, training, etc required to remain operating.
- Software (cost of purchase and/or licenses and upgrades).
- Maintenance and repair costs.
- Local area network connection costs.
Implementation/evaluation issues to be addressed: how do we:
- Develop and maintain accurate inventory, purchase, support costs, and other relevant data.
- Accurately identify training and support costs? (Both IT and college data)
- Determine planning thresholds and targets - moving from minimum, to aspirational levels of service, support, etc.
- Prioritize allocation of funds (initial and ongoing).
- Evaluate feasibility of other models (outsourcing, lease, etc.).
- Identify, offer and fund appropriate support staff and services.
- Identify service measures and evaluation criteria.
- Identify and recommend an implementation strategy
- Plan for improvements such as increased operating hours, hardware and software improvements, better training and operating support, etc.
- Obtain ongoing funding to support workstations added by rennovation, new facilities, etc.
Recommended actions:
- Distribute recapitalization model.
- Prepare and submit internal and external budget requests based on model.
- Identify target units to fund as selective investments to evaluate if university-wide funding is not available.
- Monitor performance measures and evaluate model.
- Develop similar models for other types of technology resources such as:
- peripherals such as printers, scanners, and other output devices
- Other computing resources such as servers, workstations, etc.
- presentation equipment and mediated classrooms.
Consequences of no action:
- Reduced productivity due to unreliability and inefficiency.
- Lower utilization rates resulting from lost service
- Increasing unit costs from load on the'informal' support structure.
Draft ASU Total Cost of Ownership Planning Model
Estimated Minimal Cost of Maintaining a Desktop Personal Computer at Arizona State University
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
Year 6 |
Year 7 |
|
Hardware |
2500 |
2652 |
2898 |
||||
Software |
600 |
247 |
255 |
656 |
270 |
278 |
716 |
Maintenance |
300 |
309 |
318 |
328 |
338 |
348 |
358 |
Memory upgrade |
150 |
164 |
|||||
Disk drive upgrade |
400 |
400 |
|||||
Support |
876 |
902 |
929 |
957 |
986 |
1016 |
1046 |
Local Area Network |
200 |
206 |
212 |
219 |
225 |
232 |
239 |
Residual value (trade-in) |
437 |
478 |
|||||
Total cost per year |
4476 |
2064 |
1427 |
4374 |
2256 |
2037 |
4780 |
Average annual cost (3 year rolling) |
2656 |
2622 |
2686 |
2889 |
3024 |
3150 |
3281 |
NOTES: Costs are NOT included in this model for administration, network upgrades, "informal" user support at the college or department level, security, or other supplimental services.
The Support costs identified include operations staff, formal training, and help desk.