Governance of Information Technology

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					Information Technology BTA/Governance

Information Technology Governance
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                                                                    Information Technology Governance

I.        IT Governance Team Goals and Objectives
The IT Governance Team’s Goal, as stated 12/2/05: To develop an IT governance model for the State of
Minnesota that improves customer service management, supports efficient IT operations, and enables
effective IT service delivery to State constituencies. The team’s philosophy for recommending a new IT
governance model was to leverage the value that a proper Enterprise IT organization can provide to all

Team Objectives:
•     Develop an IT governance model that enables efficient IT service delivery and agency goals and
•     Determine appropriate mechanisms to support effective IT governance
•     Develop a high-level IT organizational model based on leading practices and constituent needs,
     backed by a solid business case

Our objectives for this phase of work did NOT include:
•     Developing a detailed IT organizational model with FTEs assigned
•     Developing an IT operating model (i.e., how IT services will be delivered under the new model)
•     Developing a business case that supports a large ROI simply by virtue of reorganizing IT

This document recommends an approach for developing a detailed organizational and operational          model
as well as further refining both hard and soft benefit objectives.

Definition of Terms
The terms used in this document to describe the governance model include:
•     Enterprise—The total of central, shared, agency-specific and programmatic IT issues, governance
    and spending according to the definitions below. Includes all IT-related spending at the Agency level.
    Encompasses executive agencies; while there may be collaborative opportunities among Legislative,
    Secretary of State, MNSCU, and the University of Minnesota entities, they are not included and were
    not addressed in this recommendation.
•     Shared—Those applications, infrastructure or operations that can be leveraged across more than
    one Agency.
•     Agency-Specific—That portion of the Enterprise as previously defined which is the line responsibility
    of the Agency organization. These are systems and technologies that are peculiar or particular to the
    services and operations of a given agency.
•      Central IT— That portion of the Enterprise as defined above which is the line responsibility of the
     organization reporting directly to the State CIO.

The Case for Change: The “As Is” IT Governance Model
The current information management environment—processes, relationships and technologies—was
created largely without strategic vision or agency coordination to align technology decisions to one
another and to common statewide business processes. As mission, resources and organization evolved,
so too did the systems that supported them. The result of this agency- or program-centered approach
was divergence in technologies, limited sharing of common information, and redundant development
projects. Opportunities for shared functionality were rarely realized because of lack of a shared business
vision, of resources or of motivation.
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There are success stories in the current environment: some agency applications work well, agency IT
dollars are spent on agency business needs; generally, agency IT service performance is good; and
Central IT has appropriate processes and tools/templates in place.

Issues with the current IT governance model at the State can be summarized as follows:
•     No Enterprise IT strategy exists
•     No effective mechanism exists to make IT decisions for the greater good of the State: the IT function
    is fragmented organizationally, operationally, and directionally
•     While the State has positions and organizations with responsibility to address IT from an Enterprise
    perspective, they have generally not executed against that responsibility. The State does not have a
    good, Enterprise-wide picture of its current IT environment, nor does the State have the mechanisms
    to move forward strategic statewide decisions.
•     Funding and chargeback mechanisms do not effectively allocate IT service costs based on value
    received, cost to provide, or other appropriate basis
•    Proper mechanisms are not consistently present across the Enterprise to manage IT HR (determining
    appropriate staffing models, getting appropriate skill sets in place, etc.)

II.       Future Vision

Effective IT Governance
IT Governance is most effective when:
•     Governing bodies focus on the right issues
•     Decision making responsibilities are clear
•     Performance of the results of the decisions are monitored

A framework that was used to create the Minnesota Vision and “To-Be” Governance model was based on
six key areas for IT decision making:
•     Leadership—Addresses overall State IT direction and representation of key IT stakeholders
•     Policy—Addresses fundamental IT operating philosophy and internal IT standards, rules and
•     Planning—Addresses IT strategy contents, goals and performance targets
•     Capital Allocation—Addresses resource allocation, capital investment decisions, and capital
    investment processes
•     Coordination and Compliance—Addresses standards enforcement policies and activity
    coordination between agencies
•     Monitoring and Control—Addresses benchmarking activities, progress reporting policies and
    processes, and corrective action policies, processes and enforcement.
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The Minnesota Vision and the “To Be” Governance Model
The proposed IT governance model is based on a “Federal” model of IT governance. The Federal model
balances central authority to provide adherence to strategy and standards, with agency control to be
agile in fulfilling agency objectives and opportunities for centrally-managed issues, services, and
infrastructure. The model is based on a strong definition of roles within the State and distinct IT
governing bodies.

The specifics of the IT Governance model include:
•     The model governs decision making on all IT spending across the State, including agency IT
    spending that is not explicitly included in the agency IT budget
•     Office of the State CIO leads a collaborative IT planning and strategy process with the
    Agencies/Agency CIOs
•     Enterprise IT strategy, plan, and related spending are presented to a governing council for review
    and approval
•     The approved Enterprise IT strategy, plan, and related spending drive IT budget priorities and
    agency business and IT budget planning
•     Agencies have budget execution authority for approved agency-specific IT initiatives
•     Agencies are accountable for execution of projects within the Enterprise IT strategy

Benefits of “To Be” IT Governance Model
The “To Be” governance model balances the business needs of agencies to fulfill their missions with the
value of enhanced Enterprise-wide perspectives where it makes business sense for the State to operate
from an Enterprise perspective. The To Be IT Governance Model enables IT decisions to be made for the
greater good of the State.
•     Critical IT decisions and policies are made at the Enterprise level
•     Lays a foundation for strong Enterprise and agency IT organizational role and mission clarity
•     Sets a framework to support service delivery at levels required by the State Enterprise
•     Allows IT spending decisions that are aligned with an overall Enterprise IT strategy by elevating
    Enterprise IT to report directly to the Governor
•     Strengthens the mechanism to develop a single Enterprise IT strategy and enable standardized
    technology adoption in accordance with Enterprise-wide technology strategy, direction, and
•     Provides visibility to and management of the financial, technical, and business requirements
    dimensions of IT spending plans across the State Enterprise
•     Allows agencies to be involved in IT decision making
•     Provides a conduit for standardized technology adoption in accordance with Enterprise-wide
    technology strategy and direction
•     Facilitates alignment of the IT component of agency strategy with the overall Enterprise IT strategy
    by establishing dual accountability from the agency CIOs to their respective agency Commissioner and
    the State CIO
•     Enables the implementation of IT BTA business cases and lays the foundation for further change
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Key Governance Components: Overview
The To Be IT Governance model is comprised of these key components:

•      Role of the State CIO and agency CIOs
•      State CIO-Agency CIO accountability
•      Governing bodies
•      Supporting mechanisms
•      Organizational elements

Key Governance Component: Role of the CIO’s
The new model, the State CIO and agency CIOs will serve distinct but complementary roles.

    Role of the State CIO                                   Role of the Agency CIO

    Provide oversight, leadership, and direction of the     Provide oversight, leadership, and direction of the
    delivery of IT services across the State to support     delivery of IT services to support agency business
    business needs.                                         requirements in accordance with agency and
    •     Lead Enterprise IT policy and strategic           statewide business strategies.
      planning                                              •     Lead the delivery of IT services as required to
    •     Lead the delivery of Shared IT operations and       serve the agency mission
      services                                              •     Lead and approve Agency IT spending plans
    •     Lead and approve Enterprise IT spending plans     •     Advocate and represent agency business needs
    •     Review all IT spending plans                        to State CIO
    •     Review Agency IT strategic plans for fit with     •     Direct planning and execution of agency IT
      Enterprise IT strategy                                  initiatives
    •     Direct planning and execution of Shared IT        •     Foster IT decision making for the greater good of
      initiatives                                             the Enterprise
    •     Identify, escalate and sponsor Enterprise IT      •     Collaborate, advise and participate with State
      and Shared IT opportunities                             CIO to establish statewide IT strategic plans,
    •     Enforce Enterprise IT standards and policies        standards, policies, and architecture
                                                            •     Deliver on Enterprise IT assignments as agreed
    •     Lead the development and deployment of
                                                              with the State CIO
      Enterprise IT architecture
    •     Manage Central IT resources and prioritize
      their deployment
    •     Maximize use of Central IT resources and
      facilitate inter-Agency resource sharing
    •     Assign Enterprise IT deliverables to agency
      CIOs as appropriate
    •     Direct the Shared IT service Level
      Management program
    •     Assume accountability for Enterprise IT service
      delivery to Agencies
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Key Governance Component: State CIO—Agency CIO Accountability
Agency CIOs will be accountable to both the State CIO and their respective agency commissioner.

 Agency CIO Accountability To State CIO                   Agency CIO Accountability to Agency Commissioner

 •    Collaborate with the State CIO in setting           •     Understand agency business needs
   Enterprise IT direction                                •     Support the agency mission with enabling IT
 •    Execute Enterprise IT strategy                      •     Use IT to support current agency business priorities and
 •    Enforce Enterprise IT standards                         advance the agency business strategy
 •    Align and follow Enterprise IT Governance
   processes and standards, including IT budgeting
   and funding approval

Inherent in this model is the expectation that agency CIOs will dedicate a meaningful proportion of their
energy and efforts toward Enterprise-level activities.

The accountabilities of both the State and agency CIOs must be tied to individual and organizational
performance measures. The evaluation of agency CIO performance will be led by the agency
Commissioner, with input from the State CIO.

Key Governance Component: Governing Bodies
The IT Governance model will be supported by these primary governing bodies:

 Governing Body     Role                                                                Participants

 Business           •      Review and approve statewide IT Strategy and direction       •    Chaired by State CIO
 Technology         •      Confirm business and IT strategy alignment across the        •    5-7 State agency business
 Council (BTC)          State                                                             leadership (Commissioner or
                    •      Review and approve Enterprise IT spending                      COO) appointed by Governor
                                                                                          serve as voting members
                    •      Approve thresholds, process, and decision criteria for IT
                        spending plan and IT project review based on State CIO          •    May also include ex-officio
                        recommendation                                                    members and external
                                                                                          stakeholders as appointed by
                    •      Provide forum for addressing synergies across statewide
                                                                                          the Governor
                    •      Develop strategic IT investment criteria
                    •      Review and recommend legislation
                    •      Recommend “people management” programs and
                        organizational effectiveness improvements

 Enterprise IT      •   Manage all Shared IT programs                                   •   PMO Director and Staff
 Program            •   Support agency IT initiatives as necessary to adhere to
 Management           Enterprise IT policies, standards, and architecture
 Office (PMO)       •   Guide initiatives through the governance process
                    •   Monitor progress and spending for all IT programs
                      (Shared and Agency) and report to the BTC
                    •   Manage service portfolio
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    Governing Body      Role                                                             Participants

    Agency IT/Central   •      Serve as primary conduit for collaboration between        Final structure TBD. May
    IT Coordination         agency IT and the Office of the State CIO:                   include:
    Mechanism           •      Promote standardized technology adoption in accordance    •    Agency CIOs
                            with statewide technology strategy and direction             •    Deputy State CIO
                        •      Establish a program to collaborate IT planning and IT     •    Agency IT Liaisons (from
                            resource allocation across the State                           Central IT)
                        •      Identify and propel Enterprise IT solutions               •    Other participants as
                        •      Evaluate and recommend technology leading practices         deemed appropriate
                            and adoption of mature technologies
                        •      Advise the Business Technology Council on Enterprise IT
                            standards, policies, and priorities
                        •      Provide advocacy of agency business needs to Central IT

    Governance          TBD. In some entities, these working committees provide          Final structure TBD. May
    Working             focused monitoring and management capability to support          include:
    Committees          the overall IT governance objectives of the Enterprise.          •    Agency CIOs
                        Governing bodies could include standing Sub Committees
                                                                                         •    Deputy State CIO
                        such as Security and Disaster Recovery, IT Architecture, etc;
                        and ad hoc Sub Committees as deemed appropriate by the           •    Other participants as
                        State CIO and/or Enterprise IT Board of Directors.                 deemed appropriate

Key Governance Component: Supporting Mechanisms
In addition to the governing bodies, there are several supporting mechanisms to support the governance
model. These supporting mechanisms enable:

•     Service levels required by State constituents
•     Customer service management
•     Cost efficient service delivery

Enterprise IT Strategy—Defines the current and planned use of funds for IT initiatives to meet State
business goals

Service Level Management Program—Defines the framework for specifying and agreeing upon IT
service levels necessary to meet business requirements, monitoring performance, and enforcing service
level accountability

Enterprise IT Architecture—Defines the technology platforms that effectively and efficiently implement
business goals as defined in the Enterprise IT strategy

Key Governance Component: Organizational Elements
Enterprise IT Planning
•     Develop IT Strategic plans and direction and IT tactical plans for State CIO and Business Technology
    Council review
•     Evaluate all State IT project proposals to identify and escalate Enterprise and shared service project
•     Develop and maintain IT governance processes
•     Establish performance metrics and targets and monitor performance
•     Set IT procurement policies and procedures; manage contracts and IT vendors
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•   Research needs, perform benchmarking, assess assets and capabilities
•   Perform IT business management: central IT finance, org model maintenance, compensation
•   Market and communicate IT to customers

Enterprise Architecture
•   Maintain current Enterprise technical, application, network, business architecture
•   Perform proactive long term architecture planning
•   Develop Enterprise architecture standards

Enterprise Infrastructure—Develops, maintains, and supports Enterprise IT infrastructure services.
The IT Governance Team recommended infrastructure services that present good opportunities for
delivery through this centralized infrastructure function. An implementation plan will be developed by the
State CIO in consultation with the Agencies to confirm and validate the prioritization and return on
investment for each infrastructure service opportunity.

The specific infrastructure services identified as candidates for centralization include:
•   Voice Networks
•   Data Networks (LAN, WAN)
•   Security Access and Tools
•   Servers, Printers and PCs and Office Automation (faxes, scanners, etc.)
•   Desktop Support
•   Data Center Operations
•   Contingency Planning/Disaster Recovery
•   Email Systems
•   Internet Connectivity

Enterprise Projects and Systems
•   Develop, maintain, and support Shared systems
•   Manage and deploy software development resources across the Enterprise

Agency Projects and Systems—Manages and delivers agency-specific IT services
•   Maintain and support agency-specific systems
•   Manage agency-specific software development resources
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III.     Proposed State IT Organization
The proposed State IT organization elevates the IT function to a cabinet level. Central IT will be
responsible for Shared systems and infrastructure which, as previously defined, includes as systems and
infrastructure that support business processes, activities, or needs that are common across multiple
agencies and are most cost-effectively supported by a centrally-managed solution. Each Agency will be
responsible for managing and delivering agency-specific IT systems and technologies. Agency-specific
systems and technologies as previously defined are those that that are peculiar or particular to the
services and operations of a given Agency.

In the longer term, elements of Enterprise IT operations that will initially be managed and delivered
through Central IT may migrate under the Service Minnesota umbrella.


 Central IT                                                               Business
                                    State CIO                            Technology
   Office (PMO)
                                                                         IT/Central IT
                                                                                                         Agency CIO

                                        Enterprise                                                         Agency
   Enterprise       Enterprise                         Enterprise IT
                                       Projects and                                                      Projects and
  Architecture    Infrastructure                         Planning
                                         Systems                                                          Systems**

    Enterprise       Enterprise          Systems       •Enterprise       *Structure TBD; could          Agency-specific:
   architecture    infrastructure      development     governance        encompass a Central              •Agency IT
    standards        operations             and        policies and      IT/Agency Liaison role
                                                                                                         planning and
                                       maintenance      procedures       reporting through Central IT
                                       resource pool     •Contract       **Software development            •Systems
                                                       Management        resources report through        development
                                                       and Vendor        the Agency only if dictated        project
                                                         Relations       by a clearly demonstrable
                                                                         business need that cannot
                                                                         be cost effectively met           •Systems
                                                                         through development             maintenance
                                                                         resources from the Central       and support
                                                                         IT pool
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IV.     IT Project Planning Model
A primary goal of the IT governance model is to enable the identification and escalation of opportunities
for Shared solutions, including extensions of existing systems or projects, and help enforce Enterprise
standards, manage Enterprise risk, and enable more effective project implementation. This requires a
collaborative day-to-day working relationship between agency and Central IT that adds value in project
definition, qualification, approval, planning, and execution.

Roles in Project Definition and Qualification
                                Agency IT/Central IT
 Agency                         Coordination Mechanism           Enterprise IT Planning               Enterprise IT PMO

 •    Develop project concept   •    Review project concept      •    Provide collaborative,          Provide program
   for review through           •    Identify opportunities        value added feedback to            visibility to the BTC
   Coordination Mechanism         for Shared solutions,            agency:
 •    Define agency-specific      including extensions of          –         Identify synergies
   Project Plan:                  existing systems or                across Agencies
   –         Business Case        projects                         –         Identify
   –         Business           •    Provide feedback and            opportunities for more cost
     Requirements                 direction to agency in             effective implementation
   –         Technical            defining Project Plan            –         Suggest alternative
     architecture                                                    approach, technologies,
                                                                     solutions, etc.
   –         Project budget
   –         Project staffing                                    •    Assist agency in defining
     plan                                                          project
                                                                 •    Review Project Plans
                                                                   –         Adhere to Enterprise
                                                                     architecture standards?
                                                                   –         Consistent with
                                                                     Enterprise IT Strategy?
                                                                   –         Adhere to
                                                                     procurement standards?
                                                                   –         Is the level of risk
                                                                     acceptable to the

Roles in Project Approval, Planning, and Execution
 Project Type      Central IT Role                                   Agency IT Role

 Shared Projects   •   Approve                                       •      Collaborate with Central IT to determine proper
                   •   Prioritize                                        funding and staffing allocation (TBD)
                   •   Fund and staff
                   •   Manage
                   •   Procure IT assets and services

 Agency–Specific   •    Approve                                      •    Approve
 Projects          •    Monitor project progress and spending        •    Prioritize
                   •    Advise on project direction and scope        •    Fund, staff, and procure IT assets and services
                   •    Enforce Enterprise IT standards and            according to Enterprise IT procurement and
                     policies                                          staffing policies and standards
                   •    Set Enterprise IT procurement policies       •    Manage
                     and standards
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Measuring Enterprise IT performance
The To Be Governance model will include mechanisms to set targets and provide feedback. Initial
Enterprise IT performance measures and targets have been defined as follows:
•     Customer Satisfaction Rating
•     IT Operating Spend as % of Total State Operating Budget
•     IT Service Level Performance—% SLA Targets Achieved

More detailed initial performance measures include:

    Discipline        Expected Outcome                             Performance Measure

    IT Governance     •      Quality service is ensured            •    Retention rate
                      •      Enterprise IT Standards adhered to    •    % of compliance to approved governance
                      •      Leadership, structures, and             procedures
                          processes enable IT to sustain and       •    Number of programs/projects successes
                          extend organization’s strategies and
                          objectives, focusing on agency mission

    Operations        •    Improved security, reliability, and     •   Enterprise budget/annual IT operating costs
                        performance of infrastructure                per FTE
                      •    Workforce reliably conversant in        •   System performance
                        standard desktop technology tools          •   Help desk metrics—calls, response time
                      •    Technology is operated and
                        administered reliably and cost
                        effectively at an acceptable level of

    Delivery          •    Enterprise applications meet the        •     Connectivity expansion, % accessibility
                        needs of all agencies                      •     Projects on-time/on-budget
                      •    Mechanism to bubble up                  •     Business requirements satisfaction
                        needs/ideas exists
                      •    Agencies have input into Enterprise
                        solution/product requirements,
                        selection, testing, etc.
                      •    Development and delivery of IT
                        projects/programs and services are
                        optimized to on time, on budget and
                        with an acceptable level of risk

    Architecture      •    Enterprise technical architecture is    •      Architecture alignment to plan
                        directive                                  •      Technology adoption rate
                      •    Flexible and adaptable information,     •      Percent of agency security systems integrated
                        application and technology foundation          by architecture and technology
                        are support effective reliable and
                        secure Enterprise operations and
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    Discipline            Expected Outcome                            Performance Measure

    IT Strategic Planning •    Improved Enterprise technical          •   Average ROI
                            planning and direction                    •   Planning cycle time
                          •    IT products and services are           •   Scorecard rating
                            defined correctly for improved
                            constituent satisfaction and mission
                          •    Measurability of efficient and
                            effective use of technology across the
                          •    Greater emphasis on innovation,
                            quality improvement, and cost
                            reduction per the Drive to Excellence
                            high-level goals

    IT Sourcing           •    Improved customer service (e.g.,       •    Volume discount negotiated (%)
                            faster purchasing lead times)             •    Unit cost improvement (%) for a given service
                          •    Lower per unit purchase costs            level
                          •    Improved vendor service                •    Percent of total vendors evaluated annually

    CRM                   •    Well-defined and communicated          •    Customer sign-off/customer acceptance
                            portfolio of IT services                  •    Percent of constituent satisfaction relating to
                          •    IT products and services are             IT systems delivery and systems training
                            defined correctly for improved            •    Information relevancy/information
                            constituent satisfaction and mission        requirements

    Resource/Talent       •    Appropriate staffing models skill      •   System performance
                            sets in place.                            •   Employee recognition
                          •    Effective IT career management         •   Technology adoption
                          •    Resources are provided at the right    •   Employee satisfaction
                            time, cost effectively
                          •    Resources grow internally to meet
                            Enterprise goals and mission

    IT Business           •    An organized culture that positions    •    Progress toward goals and objectives of the
    Management              IT as an Enterprise value center            strategic plan
                          •    A MN IT strategic plan where IT is a   •    Enterprise value management (note avoided
                            value center, not a cost center             budget measure)

The performance measurement system will require effective mechanisms to report performance between
and among agency, Enterprise, and shared IT structures. Specific mechanisms are to be determined.
Examples include:
•     Published annual report
•     Enterprise IT strategy website
•     IT scorecard
•     User satisfaction surveys
•     Help desk reports
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V.            Next Steps
The To Be IT Governance Model requires further definition in the next phase. Items to be further defined
include the following:

    Governance Element             Key Next Steps

    Overall                        •    Develop a Strategic IT Resource Plan with State HR in order to determine
                                     the appropriate staffing model
                                   •    Define in more detail the resource allocation and sourcing model with the
                                     goal of allowing agencies the flexibility to determine how to serve business
                                     needs (subject to Enterprise guidelines)
                                   •    Tie individual performance measures to direct accountability

    Business Technology Council    •   Determine how smaller agencies will be represented

    IT Project and Spending Plan   •     Refine criteria to define agency-specific vs. Shared Service/Center of
    Review                           Excellence
                                   •     Define standard project structure and tools
                                   •     Develop detailed IT Project and Spending Plan Review process and decision
                                   •     Determine process to address when an agency budget or project request is
                                     rejected by Central IT

    IT Funding Model               •   Need to develop process to determine funding mechanisms:
                                   •   What is the Enterprise IT financing model?
                                   •   What is the impact on Federal funding for IT?

VI.           High-Level Implementation Approach
The objectives of the implementation plan include:
•     Creating a blueprint that defines clearly what new organizational, process, technical, service, and
    procedural changes are required to support the implementation of the governance model
•     Establishing a clear understanding as to when initiatives or projects should be implemented based
    upon available resources and dependencies
•     Defining necessary communications and outreach
•     Establishing the structure and approach for the further definition and implementation of the IT
    governance structures
•     Defining resources and roles required to support ongoing operations and implementation efforts

The implementation plan will address:
•     Enterprise IT Planning and Performance Management
•     IT Advisory and Decision Making
•     Enterprise IT Management Services
•     Enterprise IT Monitoring and Compliance
•     Running the Central IT Business
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Overview of the approach for IT Governance “Start-Up” (February 1 to July 1 2005):

                                            Project Management

                                              Change Leadership

       Issue Executive            Develop Detailed         Build Detailed             Implement and
       Order and                  Project Plan             Design for                  Refine Model
       Initiate                   and Build                Implementation
       Legislative                Enterprise IT
       Changes                    Strategy

     • Codify Governance         • Develop detailed plan   • Based on high-level     • Implement new IT
       Model, and specify          to guide project          model, define the         governance model
       initial Central IT        • Define Enterprise IT      detailed IT             • Align resources in
       organization,               direction based on        governance bodies,        accordance with
       reporting                   business needs            processes,                Enterprise IT
       relationships, staffing                               performance               Strategy
       and funding                                           reporting, and
                                                                                     • Review and
     • Initiate freezes on                                   organizational model
       new projects and                                                                modify as
                                                             Develop detailed IT
       new staff                                             governance model
                                                                                       conditions change
       augmentation                                          implementation plan
       contracts as

                                          Implement “Quick Wins”
                           Implement “Quick Wins” enabled by the IT Governance Model, e.g.
                           • Rationalize contractor spend
                           • Rationalize redundant projects
                           • Etc.
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Detailed activities for the project planning, Enterprise IT strategy, detailed design, and implementation
steps include:

 Step                  Activities

 Develop detailed      Develop detailed project    •     Detailed project work planning
 project plan and      plan                        •     Team roles and responsibilities
 build Enterprise IT
                                                   •     Project resource requirements
                                                   •     Expected outcomes/deliverables
                                                   •     Communication matrix

                       Build Enterprise IT         •     Define business needs and drivers
                       strategy                    •     Link to business strategy
                                                   •     Develop Enterprise IT performance goals
                                                   •     Develop Enterprise IT spending targets
                                                   •     Define screening criteria for defining Enterprise vs.
                                                       agency initiatives and systems

 Design IT             Design processes:           •     IT planning and budgeting
 Governance Model                                  •     Service Level Management
                                                   •     Risk Management
                                                   •     IT Strategy planning
                                                   •     IT Governance change management

                       Design Governing bodies:    •     Roles and responsibilities
                                                   •     Operations (agenda, meeting frequency, etc.)
                                                   •     Performance measures

                       Design central IT           •     Organizational structure
                       organizational model:       •     Roles and responsibilities
                                                   •     Staffing requirements
                                                   •     Skill set requirements

                       Develop Performance reporting measures and framework

 Implement and         •   Communicate model and train
 Refine                •   Define initial agendas, mobilize governing bodies and kickoff
                       •   Fine tune IT governance model
                       •   Align resources in accordance with Enterprise IT strategy
                       •   Measure and review results (continuous)
                       •   Refine (continuous)
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IT Governance Model Implementation Approach—High-Level Timeline:

                                           2005                                                             2006
    Feb    Mar      Apr     May     June   July      Aug       Sept       Oct     Nov      Dec      Jan     Feb         Mar

     2/1/05 Executive Order Issued and Legislative Changes Initiated

          Start-Up IT Governance              7/1/05 IT Governance Model Implemented

                                                                        Refine Model (ongoing)

     Implement “Quick Wins” and Build
     Additional IT Implementation Plans

                                           Initiate First IT Projects

                                            Implement Additional
                                              IT Opportunities

                                                                             Reallocate IT Budget, Service, and Staff

Return on Investment
The IT governance model is an enabler of IT cost savings opportunities. The projects listed in the IT BTS
business cases assume a working Enterprise IT governance model. The governance model is therefore
not a generator of ROI but an enabler of it.
IT cost savings opportunities that are enabled by the IT governance model are included in the Appendix.

VII. Potential Risks and Risk Mitigation
Risk Management will be particularly important in implementing the IT governance model due to the
complexity, breadth, depth, and focus that the work will entail.
For statewide IT, risk is the possibility of any event occurring that can negatively affect the success of
achieving the State’s intent or the specified mission or vision of statewide IT. Risk mitigation will include
the identification of potential risks and strategies to mitigate the likely occurrence or the severity of the
impact if a risk event occurs.
Implementing the IT governance model will require a proactive approach to Risk Management. This will
•    Encouraging proactive rather than reactive management
•    Implementing steps to reduce or control risks
•    Planning contingencies to mitigate consequences of risks
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Potential Risks
The following table summarizes some of the potential risks associated with the design and
implementation of the plan and the respective initiatives. A likelihood of occurrence as well as an impact
of occurrence (high, medium, or low) and possible mitigation strategies are described for each risk.

 Potential Risk:                Possibility of    Impact of
 Implementation                  Occurrence      Occurrence   Mitigation Strategy

 Central IT will not be             High            High      •    Develop detailed organizational model based
 appropriately staffed and                                      on business needs (roles, staffing requirements,
 managed to effectively                                         and needed skill sets)
 serve Enterprise business                                    •    Identify “gaps” in the current organization
                                                              •    Implement a plan to address gaps (training,
                                                                recruitment, etc.)

 Lack of agency                     High            High      •    Communicate benefits of participation to
 participation delays                                           agencies
 schedule and/or prevents                                     •    Obtain clear executive support (Governor and
 acceptance                                                     Directors) for project plan and goals
                                                              •    Create documented commercial processes.

 Lack of executive                   Low            High      •    Commitment of implementation plan,
 sponsorship, alignment                                         approach and timing by all key project
 with governor’s priorities                                     stakeholders
 and business needs from                                      •    Executive leadership; conduct “all-hands” work
 BTAs                                                           session to define common ground and

 Lack of available or skilled       High            High      •    Look to agencies to supplement and support
 resources required to                                          as appropriate
 complete initiatives                                         •    Create a prioritization scheme to select
                                                                “critical” initiatives and focus on successfully
                                                                completing a few
                                                              •    Consider obtaining external help as

 Ineffective communication         Medium         Medium      •    Development of a detailed communication plan
 on Enterprise goals,                                           identifying all stakeholders, required
 objectives, plans, policies,                                   communications and communication channels
 standards or projects to                                     •    Active participation by State Executive Team in
 leads to poor stakeholder                                      communication effort

 Lack of human, technical          Medium           High      •      Agreement with Governor’s Office on inclusion
 or financial resources to                                        of resource needs in budget submission.
 successfully implement an

 Resistance to change by            High            High      •     Create communication on results and benefits.
 State of Minnesota IT staff                                      Implement a change leadership effort.
 or customers

 Unrealistic goals or targets      Medium         Medium      •    Identification of resource requirements and
 for initiatives including                                      required time frames for initiatives.
 completion dates,                                            •    Development of detailed business cases.
 participation levels,                                        •    Validate plan with key stakeholders.
 technical standards creates
 a pattern of failure                                         •    Project oversight in place and regularly
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                                                                               Information Technology Governance

VIII. Key Business Case Assumptions

Mission Critical IT Organizational “Design Rules”
The following are key organizational design characteristics as rated by the IT Governance Project Team
(detailed team results included in the Appendix):
Support service delivery at levels required by the State Enterprise
•     Customer and business value focused service delivery
•     Specialized skills can be mobilized when needed
•     Improved ability to target IT resources and solutions
•     Maintenance of technical excellence

Builds strong organizational role and mission clarity
•     Ease of managing performance/accountability
•     Strong collaboration and coordination

Enables cost efficiencies
•     IT resource cost control
•     Efficient; little or no duplication

IX.       Stakeholder Analysis

                                                                               Level of
    Stakeholder     Stakeholder Impact            Stakeholder Concerns         Impact     Mitigation

    All State       •      Agency business        •    Perceive that there’s      M       •    Implement a change
    employees           staff utilize shared IT     no one stop shop for IT                 management program
                        services for common         services; confusion                   •    Assigned Specialists to
                        IT functions and            regarding “where to go                  areas to develop working
                        agency specific IT          for what”                               relationships and business
                        services for unique       •    Perceived increase in                understanding
                        agency functions            numbers of specialized
                                                    staff supporting their
                                                    needs rather than a few
                                                    key office IT staff
                                                  •    Perceived loss of
                                                    personal contact with
                                                    local IT staff
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                                                                             Information Technology Governance

                                                                             Level of
Stakeholder     Stakeholder Impact          Stakeholder Concerns             Impact     Mitigation

Agency IT Staff •    Agency IT staff is     •    Workload impacts               M       •    Implement a change
                  only focused on           •    Job security                             management program
                  delivery of IT                                                        •    Change union contracts
                                            •    Loss of direct customer
                  services for unique                                                     for area Seniority
                  business processes
                                            •    Potential Job
                •    Staff currently          relocations
                  involved with
                  common IT services        •    Potential of becoming
                  transition to an            too specialized and losing
                  Enterprise service          broader IT background
                  organization                and job role flexibility

Agency          •    Commissioners          •    Loss of control over IT        L       •   Lay out true costs and
Commissioners     work with Central IT        services                                    benefits to get buy-in
& Deputies        and agency CIOs to        •    Expected negative                      •   Develop enforceable
                  ensure business             impact on service levels                    SLAs
                  strategy alignment
                                            •    Prioritization issues                  •   Establish Business
                  and IT service
                                              between programs and                        Technology Council
                                              central IT planning
                •    Communication          •    Concern that IT service
                  required between            will become more
                  agency programs and         expensive and less
                  Enterprise IT               responsive and flexible to
                                              business changes

Agency CIOs     •    Potential transfer     •      Supporting agency            L       •   Lay out true costs and
                  staff and technology          specific IT staffs in                     benefits to get buy-in
                  to the Enterprise IT          small/medium sized                      •   Establish enforceable
                  organization                  agencies may no longer                    SLAs
                •    Work with the              be viable                               •   Establish mechanisms for
                  Enterprise IT             •      Loss of direct control                 CIOs to provide feedback
                  organization to               over IT services                          and issue resolution
                  develop the service       •      Competition for IT
                  requirements and              resources with other
                  SLAs for their specific       agencies
                                            •      Service provided as a
                                                lowest common
                                            •      Concern that IT service
                                                will become more
                                                expensive with less
                                                quality and

Employee        •    Governance model       •   Work load impacts               M       •    Implement a change
Advocacy          will need approval        •   Labor relations                           management program
entities        •    Staffing moves           concerns                                  •    Implement a
                  and job description       •   Loss of jobs                              communications plan
                  changes may require                                                   •    Develop one IT HR team
                                            •   Loss of levels/pay
                  approval                                                                to resolve IT related labor
                                                                                          issues across the
                                                                                          department rather than per
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                                                                             Information Technology Governance

                                                                             Level of
 Stakeholder       Stakeholder Impact        Stakeholder Concerns            Impact     Mitigation

 HR Directors      •    HR transitional      •    Labor relations               M       •      Develop one IT HR team
                     services will be          planning for impacted                        to resolve all IT related
                     required                  personnel                                    classification, evaluations,
                   •    HR will be focused   •    Clear job descriptions                    Hay ratings, training,
                     primarily on the          and career paths must be                     relocations, labor issues,
                     Enterprise IT             provided for personnel                       etc. across the department
                     organization              who remain under the                         rather than per agency
                                               new model
                                             •    Impacts to IT job
                                               levels and re-evaluations
                                               based on changes
                                               (reduced number and
                                               level of managers,
                                               supervisors, technical,

 Legislators and   •    Need to be           •    Communication from            M       •    Develop communication
 key Legislative     knowledgeable of          constituents and pressure                  plans that outline costs,
 staff               transition                regarding privacy                          benefits, performance, etc.
                   •    Communicate with       concerns and job loss                    •    Established technology
                     constituents            •    Concern that IT service                 strategy and plan provides
                                               will become more                           basis to approach
                                               expensive                                  legislature for IT funding

 Governor &        •    Create an            •    Disruption of IT service      M       •    Develop communication
 Cabinet             executive mandate         within State government                    plans that outline costs,
                     for change              •    Concern that IT service                 benefits, performance, etc.
                   •    Provide executive      will become more                         •    Established technology
                     sponsorship               expensive, less quality                    strategy and plan provides
                                               and less responsive                        basis to approach
                                                                                          legislature for IT funding

X.      Agencies Impacted
Potentially all agencies will be involved or impacted by the new IT Governance model.
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                                                                                                                              Information Technology Governance

Other State IT Governance Models

  Ohio                                                                                                           Overall Model: Federal
Overall Goal of IT Governance Change                                                     State CIO elevated from Administration
•Improve efficiencies, decrease costs, maximize the use of resources                     agency CIO position.
•Support an enterprise-wide approach to information technology strategic and long
range planning                                                                           Agency CIO’s have dotted line connection
•Improve services to customer, reduce redundancies through centralizing information
technology planning, investment and development
                                                                                         to State CIO. Governance Board
                                                                                         oversees State CIO operations
                           Central State                                                Agency

 IT Spending Plans         Approves all project spends                                  Proposes project and application spends
 IT Projects               Sets overall IT project portfolio                            Proposes projects through agency’s strategic plans
                                                                                        Responsible for executing and maintaining
                                                                                        application development
 IT Priorities             Sets central and agency IT priorities                        Proposes agency project and application priorities
 IT Strategy & Direction   Sets enterprise strategy and direction                       Propose agency specific
 Policies and Standards    Sets enterprise policies and standards

                                                  Primary Governing Bodies/Roles
  •The Enterprise Information Technology Advisory Committee has the power to oversee all operations of the State CIO.
  •State CIO has three deputy CIO’s each with four to six reports.
  •Three deputies responsible for Infrastructure, Enterprise Project Management and Oversight, and Strategy/Planning/Policy
  •Agencies responsible for application development and providing strategic plans for the agency
  •Central State responsible for executing roles

  Other Points:
  •Benefit: Policy/governance separate from technology
  •The central agency implements and maintains enterprise applications, networks, and data

  Pennsylvania                                                                                                   Overall Model: Federal
Overall Goal of IT Governance Change
•increase the effectiveness of product development projects
                                                                                         Central IT Governance Board
•reduce research and development investments
•enable volume hardware and software purchases
                                                                                         oversees all Agency IT. Board sets
•enhance system compatibility and data sharing                                           priorities, makes plans and policy.
•improve organizational efficiency
•streamline data collection and data sharing
                           Central State                                                Agency
 IT Spending Plans         Oversees all Investment and IT plans (recent                 Community of Practice agencies develop budgets
                           not yet completely implemented)                              and plans
 IT Projects               Manages Project performance of Central IT                    Agency implements and maintains applications.
 IT Priorities             Sets Priorities for Central IT Staffing and                  Agency sets initial priorities and submits to Board
 IT Strategy & Direction   Oversees all IT Strategy/Provide Counsel to                  Agency required to submit an IT strategy
 Policies and Standards    Set and enforce Statewide standards           Participate in standards setting teams and Implement
                                               Primary Governing Bodies/Roles
  •Central IT Governance Board is responsible oversight of IT and Interagency dispute resolution
         –Board made up of Secretary of Administration, Secretary of the Budget, the Governor's Chief of staff, and Secretary of General Services
  •Board provides advice to Governor

  •Board is accountable to Governor
  •Agency IT are accountable to State CIO
  • Central State responsible for hiring agency CIO and establishing all performance measures

  Other Points:
  Procurement responsibilities for all State IT services over 100K centralized approval by CIO
  Centralize infrastructure and systems support accountability,
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                                                                                                                      Information Technology Governance

  Michigan                                                                                           Overall Model: Monarchy
Overall Goal of IT Governance Change                                               Operates under a strong central
•Better management of IT investments                                               model. Agency Information Officers
•More integrated enterprise planning of IT projects
•Standardization of processes, tools, software and hardware                        put in place of agency CIOs.
•Increased economies of scale
•Improved services to customers and constituents of the State
•Shared resources
                            Central State                                         Agency

 IT Spending Plans          Sets all IT spending                                  Provides insight and consultation, advisor role
 IT Projects                Sets all IT Projects                                  Provides insight into Project nuances, advisor role
 IT Priorities              Sets all IT Priorities                                Offers potential priorities list
 IT Strategy & Direction    Sets all IT Strategy and Direction                    Offers candidates for Strategy/Direction
 Policies and Standards     Sets all Policies and Standards                       Provides feedback on Policies and Standards

                                            Primary Governing Bodies/Roles
 •Agencies operate through Agency Operating Agreements that cover roles and responsibilities.

 •Central CIO holds a cabinet level and is responsible for delivering against Agency Operating Agreements
 •Individual responsibilities are laid out with in the AOA agreements

  Other Points:

  Ontario                                                                                                Overall Model: Federal
Overall Goal of IT Governance Change                                               Ministries (Agencies) are served by seven
•Make Ontario better by leading e-Government
                                                                                   IT clusters grouped on business themes.
•Focus on citizen/customer
•Meet public expectations and create new opportunities for partnership             Allows cluster CIO’s to focus on
with other levels of government, vendors, etc.                                     developing solution that support ministry
                                                                                   business requirements.
                            Central State                                         Agency
 IT Spending Plans          Funding for e-Government centralized only for         IT clusters receive funding from ministries they report to.
                            common systems (web, content management), most
                            funding 80%+ is at the cluster level; Cabinet often
                            targets funding to IT clusters.
 IT Projects                Common services to enable the clusters are under      Address ministry/program-specific needs, including
                            development in the central e-Government group. All    development, operation and contract management.
                            server services are now consolidated.
 IT Priorities              Government initiatives are selected for greatest    Innovative systems that address program-specific demands;
                            customer impact.                                    inter-jurisdictional enablement (province-province, province-
                                                                                federal, province-municipal).
 IT Strategy & Direction    Corporate CIO develops government wide strategy and Business-specific strategies.
                            policies. Is working towards an enterprise-wide
 Policies and Standards     Corporate CIO develops corporate polices and        Cluster-only standards and policies.
                                            Primary Governing Bodies/Roles
 •Management Board Secretariat oversees the Office of the Corporate CIO, which develops e-Government strategy
 •Ministries oversee IT clusters
 •Cabinet oversees Ministries and Management Board Secretariat
 •IT clusters have dotted line accountability to Corporate CIO; hard line to ministries
 •Corporate CIO has hard line accountability to Management Board Secretariat
  Other Points:
  • Strategic Partnerships – practitioner training / solution sets
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                                                                                                             Information Technology Governance

XI.          Cost-Savings Opportunities
The following is an analysis of cost savings opportunities that are enabled by the proposed IT governance
model. A list of cost savings opportunities derived from experience gained by Deloitte was used to:

•      Compare to existing IT BTA—Opportunity areas that were explored in some detail by IT BTAs.
•      Other Opportunities—Cost savings opportunities that were not explored by the IT BTA.

    Compared to existing IT BTA

        Proposal                  Hypothesis                                        Action                                     Cost Impact                Time to     Indicative
                                                                                                                                                          Impact       Saving*

Voice Over IP/IT Telephony (IT BTA 001)
    Renegotiate        Multiple disparate networks         • Collect data on current contracts                       • Lower tariffs                     6-12 mos.    10-25%
    network sourcing   services are sourced and            • Seek opportunities to rationalize current network and   • Lower administration costs
                       managed separately.                   telecom usage (e.g. cancel unused lines)
                       Unfavorable legacy contracts        • Define service requirements and technical standards
                         i t ith       f         ti ti

Consolidation of Data Centers (IT BTA 002)
    Consolidate data   Multiple data centers exist which   • Conduct cost/benefit analysis of consolidating data     • Lower cost structure              6-12 mos.    15-40%
    centers            could be rationalized or              centers                                                   (employees, space)
                       consolidated                        • Instigate rigorous program of equipment                 • Significantly reduced occupancy
                                                             rationalization, reorganization and retirement            costs

Enterprise Software Licensing (IT BTA 003)
    Retire redundant   Licenses/Data                    • Gather usage data to identify redundant, rarely used or    • Avoided License fees              1-3 mos.     10-20%
    software           storage/applications are           low value-added items                                      • More competitive deals from       (licenses)
    licenses,          maintained when they rarely used • Drop redundant licenses and renegotiate retained             vendors                           3-6 mos.
    hardware &         or provide little benefit          licenses based on actual usage                             • Reduced hardware and              (data,
    applications                                        • Retire redundant and underutilized hardware (servers,        software costs                    apps,
                                                          desktops, storage devices, network devices)                • Reduced maintenance               hardware)
                                                                                                                     • Reduce physical hosting costs

Shared application development planning (IT BTA 004)
    Standardize        Software projects use a variety of • Standardize on one software development                  • Reduced technical resource        1-2 yrs      15-25%
    software           methods and tools which prevents     methodology                                                costs through easier
    development        technical resources from easily    • Train all technical staff in method and tools              reallocation of resource
    methods & tools    switch projects and increases                                                                 • Reduced maintenance
                       maintenance costs                                                                               through standardized
                                                                                                                       development style

Apply reengineering analysis to the operation of InterTech (IT BTA 005)


•      Proposal—Name of the cost savings opportunity
•      Hypothesis—Assertions about the opportunity for cost savings
•      Action—Actions to be taken to explore the cost savings opportunity
•      Cost Impact—Areas of cost that will be effected by the opportunity
•      Time to Impact—Deloitte experience: amount of time to expect full savings
•      Save % range—Deloitte experience: range of cost savings to be expected
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                                                                                                                                              Information Technology Governance

    Other Opportunities

        Proposal                    Hypothesis                          IT Governance Assumptions                               Cost Impact                   Annual       Save %     Savings          Time to
                                                                                                                                                              Baseline      range    Opportunity       Impact

    Cut Contractor     Contractors are being hired for        • Enterprise IT PMO will evaluate requests for       • Reduced contractor fees and             $150M        10 - 50%   $15-$75M        1Yr est.
    Spend              activities that could be done in-house   contractors. It will reallocate other resources      contractor administration costs         Contractor
                       or are not worth the extra expense       evaluating the entire portfolio of IT projects.                                              Spend

    Kill redundant     Redundant projects exist within or      • Enterprise IT projects will be prioritized and  • Reduced technical and project             $100M est.   15-30%     $15-$30M est.   6-12 mos.
    or marginal        between groups; duplicated                evaluated by Office of the State CIO. IT          resource                                  MAX                     MAX             est.
    projects           development projects exist. Some          projects falling under the agencies will not be • Reduced maintenance costs in              Enterprise
                       projects have questionable ROI.           effected                                          medium and longer term                    IT project

    Set more           Projects could be delivered in a        • Controlled by Enterprise IT PMO                   • Reduced project teams costs             $100M est.   5-10%      $10-$20M est.   1-2 Yrs
    demanding          shorter timeframe without losing                                                            • Savings on contractors                  MAX                     MAX             est.
    targets for        much functionality                                                                          • Lower testing & maintenance costs if    Enterprise
    project delivery                                                                                                 systems are simpler                     IT project

    Reduce bought-     A proportion of bought-in goods and     • Enterprise IT spend will be prioritized and     • Reduced wastage costs                     indirect     5-15%      “Not            6-12 mos.
    in goods &         services are wasted, unnecessary or       evaluated by Office of the State CIO. IT        • More cost-efficient methods &             goods                   Calculated”     est.
    services           lower cost alternatives exist             projects falling under the agencies will not be   processes are discovered                  spend

    Centralize         Services are provided to each group     • Reallocate infrastructure processes to central • Reduced support costs (headcount           $150M est. 10-20%       $15-$30M est.   1-2.5 Yrs
    common             which could be shared to improve          IT. These include operations, desktop, help      and infrastructure) through higher         Current                                 est.
    services and       efficiency and certain services are       desk and other support, etc.                     utilization and de-duplication             infrastructur
    remove             provided by central IT function and                                                                                                   e costs
    duplicated         at a local group level
    Standardize,       Hardware is frequently sized to         • Baseline reporting processes and                  • Reduced hardware costs through          Server       10-30%                     1-2.5 Yrs
    rationalize and    serve peak utilization and for growth                                                                                                 hardware                Calculated”     est.
                                                                 communication will locate potential                 increased utilization
    consolidate        A lack of standardization has led to      opportunities for consolidation. Business                                                   spend
    hardware           an overcrowded fragmented data            Technology Council will review opportunities
    devices            centre environment                        and request consolidation/retirement plans

    Introduce          Internal services such as desktop       • Dependent on Service Level Management             • Reduce cross-charges for services       $150M est. 10-30%       $15-$45M est.   1-2.5 Yrs
    demand             support, helpdesk, network services       strategy selected. IT Shared Services will        • Reduced support headcount               Current                                 est.
    management for     are demanded with little regard to        also influence.                                     through reduced demand                  infrastructur
    infrastructure     costs and there is a pattern of                                                                                                       e costs
    services           similar problems being continually

    Ensure             Although a standard set of software,    • Coordination mechanism between Central IT • Reduced maintenance of exceptions &             $100M*       15-25%     $15-$25M est. 2-3 Yrs est.
    compliance to      hardware, tools, packages etc has         and agency IT. CIOs will also be accountable   customizations                               est. MAX                MAX
    standard           been defined it is not consistently       for compliance.                              • Reduced design costs as reduced              Enterprise
    architecture       being used                                                                                    number of combinations are embedded     IT project
    Manage all IT      The range of IT initiatives is often    • Enterprise IT projects will be prioritized and    • Avoided investment spend as ill-        $100M*       10-20%     $10-$20M est    1-1.5 Yrs
    projects as one    uncoordinated and projects do not         evaluated by Office of the State CIO. IT            timed or marginal projects are not      est. MAX                MAX.            est.
    portfolio and      support each other                        projects falling under the agencies will not be     undertaken                              Enterprise
    apply evaluation                                             effected                                          • Reduced project staff through better-   IT project
    criteria to                                                                                                      focused project portfolio               spend

Other Opportunities

•        Proposal—Name of the opportunity
•        Hypothesis—Assertions about the opportunity for cost savings
•      IT Governance Assumptions—Components of the IT Governance model that enable the cost savings
•        Cost Impact—Areas of cost that will be effected by the opportunity
•      Annual Baseline—Total Cost Impact areas in annual dollars and location that will be targeted by the
•        Save % range—Deloitte experience: range of cost savings to be expected
•        Savings Opportunity—Calculated range of estimated savings (Annual Baseline * Save % range)
•        Time to Impact—Deloitte experience: range of cost savings to be expected
                                                                                                                                                                           Information Technology
                                                                                                                                                             Information Technology Governance

The following chart summarizes the IT cost savings opportunities presented above.

                                                                               Assumptions                                Notes: A) $600M annual Enterprise IT spend includes $280M estimated program spend not tracked by
                                                                                                                          A) The $600M annual enterprise IT spend includes: $280M estimated program spend and $220 estimated operating
                                                                                                                          State governments separately from the programs, $100M project spend, not tracked by State governments
                                              Cost Area     Annual Contractor Spend                 $150 MIL              separately
                                                                                                                          spend. from the programs; $100M project spend; and $220 estimated operating spend.
                                              Cost Area     Annual Infrastructure Spend             $150 MIL
                                                                                                                           B) To avoid double counting savings opportunities within a cost area, the first opportunity is calculated based on total
                                                                                                                           baseline spend. The cost baseline used to calculate each additional a particular cost area, the first opportunity is
                                                                                                                          B) To avoid double counting savings opportunities within opportunity within that cost area is then reduced by
                                                                                                                           savings assumed to on been realized through the preceding opportunities.
                                                                                                                          calculated based havetotal baseline spend. The cost baseline used to calculate each additional opportunity
                                              Cost Area     Annual IT Project Spend                 $100 MIL              within that cost area is then reduced by s
                                                                                                                           C) Numbers are shown in annualized, half, and quarter amounts to reflect the analysis done for this effort, and indicating a
                                              Total Spend   Total Enterprise IT Spend               $600 MIL               7%—20% savings range. Annualized indicates a best-case scenario; half indicates a most-likely case scenario and during
                                                                                                                          C) To produce the high - low range for all Cost Areas the lowest and highest values were trackedis based
                                                                                                                           on calculation of this spreadsheet
                                                                                                                          theadditional in-depth analysis done for the DTE project and it recognizes some State agencies are doing a better job in IT
                                                                                                                           services than the benchmark averages; and quarter indicates a worst-case scenario that may occur in a large organization

                                                                                                                          D) Numbers are shown in annualized, half, and quarter amounts to reflect the analysis done for this effort,
                                                                                                                          and indicating a 7% - 20% savings range. Annualized indicates a best-case scenario; half indicates a most-
                                                                                                                          likely case scenario and is based on addi

   Cost Area                            Baseline              % to be saved            Savings                       Time (yrs)                        Annualized                              Half                               Quarter
                                 LOW        HIGH            LOW      HIGH     LOW         HIGH                                               LOW            HIGH                   LOW           HIGH                  LOW            HIGH
   Annual Contractor Spend         $150 MIL                     10%       50%     $15 MIL      $75 MIL                1                  1          $15 MIL       $75 MIL                 $8 MIL     $38 MIL                   $4 MIL     $19 MIL
                                                                                                                                                                                           $ MIL       $ MIL                    $ MIL       $ MIL
                                   $150 MIL                      10%         20%          $15 MIL    $30 MIL          1               2.5           $15 MIL            $12 MIL            $8 MIL      $6 MIL                   $4 MIL      $3 MIL
   Annual Infrastructure Spend
                                   $120 MIL      $135 MIL        10%         30%          $14 MIL    $36 MIL          1               2.5           $14 MIL            $14 MIL            $7 MIL      $7 MIL                   $3 MIL      $4 MIL
                                                                                                                                                                                           $ MIL       $ MIL                    $ MIL       $ MIL
                                   $100 MIL                      15%         30%          $15 MIL    $30 MIL        0.5                 1           $30 MIL            $30 MIL           $15 MIL     $15 MIL                   $8 MIL      $8 MIL
                                    $70 MIL       $85 MIL        15%         25%          $13 MIL    $18 MIL          2                 3            $6 MIL             $6 MIL            $3 MIL      $3 MIL                   $2 MIL      $1 MIL
     Annual IT Project Spend
                                    $70 MIL       $85 MIL        10%         20%           $9 MIL    $14 MIL          1               1.5            $9 MIL             $9 MIL            $4 MIL      $5 MIL                   $2 MIL      $2 MIL
                                    $70 MIL       $85 MIL         5%         10%           $4 MIL     $7 MIL          1                 2            $4 MIL             $4 MIL            $2 MIL      $2 MIL                   $1 MIL      $1 MIL

                                                                       SUM                $84 MIL   $210 MIL                                       $93 MIL           $150 MIL            $46 MIL          $75 MIL            $23 MIL          $38 MIL

                                                                                                               Annualized Cost Savings                  15%                25%                 8%              13%                 4%               6%

Description: Governance of Information Technology document sample