Ben Berry, CIO

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Top 10 Things to Save Money if You are A
Government Agency
presented by Ben Berry, CIO Oregon Department of
Transportation September 21, 2009
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State of Oregon Government
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• Demand for quality processes and outcomes-based
  strategies that deliver!

Prerequisites for Success

• Weve seen the business environment become far
  tougher and far less forgiving of mediocrity.

Business Environment

• We operate in a new economic reality, one of
  rapid change. Change in IT, in networked
  organizations, in knowledge workers carrying the
  business around in their heads, and in
  globalization.

New Economic Reality

• Products services being sold where income is
  higher.
• Production moving to where labor costs are lower.
• Labor moving to where wages are higher.

Globalization in three dimensions

• Service requirements increasing.
• Revenue opportunities declining.
• Pressure to lower costs.

24 x 7 Operations
Continuous Improvement

• Competition for capital more intense.
• More regulatory constraints.

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SWOT Analysis
External Factors
Internal Factors
Savings Strategies Built on Strength
Savings Strategies Built on Defense
Strengths, Weaknesses, Opportunities and Threats
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Bell-shaped CurveThe Law of Things
Internal Weaknesses Score
Internal Strengths Score
Strengths
Weaknesses
Improved Savings
M I N I M I Z E
M A X I M I Z E
0 2 5
8 10
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Operations
Process Improvement
Data Center Consolidation
SW Market Place
Process
S A V I N G S O P P O R T U N I T Y
Data Consolidation
SaaS
IT Cloud Computing
Business Process Change
Security Issues
Software Optimization
IT Contract Brokering
Operations
E-Gov Portal
Energy Conservation
Virtualization
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The Government Challenge
The Widening Gap
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Infrastructure Management
Server Consolidation
Utility Computing
Value Proposition
Maintenance
Network Consolidation
Collaboration
Governance
Mainframe
Storage
Long-term Savings
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System Integration
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9
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Oregon Consolidates for Virtualization (Video)
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SaaS
Value
Database Administration
Workflow Enabled
TCO
IT Contract Brokering
Cost Effectiveness
Service vs. Buy
Adoption Rate
Strategic Procurement
Price Agreements
Marketing
Utility
Portfolio
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Software as a Service Evolution
SaaS 1.0
SaaS 2.0
Wave I 2001-2006 Cost-effective Software
Delivery
Wave II 2005-2010 Integrated Business solution
Wave III 2006-2014 Workflow-enabled Business
Transformation

• Ubiquitous Adoption
• Optimized Bus. Ecosystems
• IT-targeted Ecosystems
• Inter-enterprise Collaboration
• IT Utility / SaaS Infrastructure
• Customized, Personalized Workflow
• Focus on Business Transformation

• Mainstream Adoption
• Integrated w Business portfolio
• SaaS integration
• Business Marketplaces and SaaS ecosystems
• Communication Capacity
• Focus on integration

• Early Adoption.
• Stand-alone Apps
• Multi-tenancy
• Limited Configurability
• Focus on TCO /rapid deploy

Source Saugaluck Technology
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CRM
HR
Finance
Compliance
SaaS Universe
Collaboration
Document Management
Procurement
Others
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Total Cost of Ownership TCOby Comparison
9 Software Licenses
68 Subscription Fee
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43
26
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7
1
14
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IT Contract Brokering
STATE WIDE PRICE AGREEMENTSGIS SOFTWARE
ENTERPRISE LICENSE OTHER ENTERPRISE LICENSE
AGREEMENTS
STANDARDIZED CONTRACT TERMS AND
CONDITIONSRENEGOTIATE IT CONTRACTS
CONTRACT BROKERING ACROSS AGENCIES
Source The Clearview Group
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Redesign
Process Change
Payoff Matrix
Synchronize the Organization
Evolutionary
Reengineering
SW Consolidation
Redesign
Collaboration
Business Process
Revolutionary
Improve
Transformational
Business Change
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5 Levels of IT-Enabled Business Process Change
High
Business Reengineering (Revolutionary)
Transform Organization (4)
Scope of Organizational Change
Business Process Improvement (Evolutionary)
Low
High
Range of Cost Savings Potential
Venkatraman (MIT Sloan Management Review, 1994)
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Personal Services Contracts Process
Improvement(ODOT Recommendation)
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State Procurement Office Strategic Process
Improvement Plan
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Process Intensive CHANGE
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Potential Solutions Mainframe System SW
Consolidation
Eliminate Software based on minimal use or
perceived lack of functionality or value. Reduce
Redundancy where low number of users dont
justify the expense of having two applications
that perform basically the same function. Replace
with less expensive package. Renegotiate
contracts based on actual licensing costs
compared to industry averages to identify
opportunities. Reconfigure software by managing
Million Instructions per Second
(MIPS). Cross-Platform Opportunity where one
package can be used across multiple computing
platforms Mainframe Mid-range Servers
Distributed Servers.
gt 1 Year
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Summary of Savings by Category
Potential Savings 5,004,528
Note These cost savings do not include the cost
of adapting to a different or new software.
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System SW Consolidation Payoff Matrix
Cost Savings Payoff (thousands)
Implementation ( Consolidation Difficulty)
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iaaS
Hosting
Cloud Computing
Platforms
Cooling
Energy Consumption
Server Virtualization
Desktop Virtualization
Flexibility
Energy Conservation
eGov Operations
Service vs. Buy
Internet
On-Demand
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Cost Effective Supply and Demand
Infrastructure Cost
Large Capital Expenditure
Time
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Cloud Computing Proposition?
Utility Computing
What Agencies See
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Whats the opportunity in Virtualization?

• Reduce IT spend
• Contract negotiations
• Bandwidth management
• Power/cooling management
• Purchasing decisions
• Physical growth
• Disaster recovery
• Fix broken economic model
• Capital expenses become operating expenses
• Costs track actual usage
• No more up-front provisioning
• Address the Prediction Problem

Server Virtualization
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Energy Conservation makes Business Sense Power
Upgrade for required SDC Capacity 1.5M _at_ 0 FTE
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e-Government Capability Continuum
Value of eGov Initiatives
Depth of relationship with citizen/customer
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Motor Carrier AD e-Gov Applications
Applications in green have an online payment
component
e-Government Capability Continuum
Level 5 - Transform
Agency which has created
new processes to support its
E-Government activities
Level 4 - Integrate
Agency which has integrated
Value of eGov Initiatives
its E-Government activities
into existing business
processes
Level 3 - Transact
Website Allows users to
search for and purchase
products and services
Level 2 - Interact
Website allows users to
search for information based
on their unique criteria
Business Complexity
Level 1 - Publish
Website only provides users
with information
Technical Complexity
Depth of relationship with citizen/customer
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As ODOTs Security Fabric Strategy Matures we
transition from Opportunistic and Project Level
to an overall Information Security Program
Enterprise
Information Security Business Risk Assessment
High
ISBRA
Security TIM/TAM Identity Management
Digital Signatures
Cancelled Q1 2009
Info Asset Classification Levels 4,3,2,and1
Information Systems Assessment (PII)
Identity Theft SB 583 Breach Mgt
Employee Security Policy (Q1 2009)
Scope
Active Directory Group Policies
Controlling Removable Storage Devices (Nov 2008)
Info Asset Classification Pilot 3 Region 2
Integration
Encrypt Laptops
Info Asset Classification Pilot 1 - OIT
Info Asset Classification Pilot 2 - SSB
Encrypt DMV Field Office Network
ID Theft Training
Transporting Info Assets
Acceptable Use Policy
Breach Incident Management Plan
Information Security Policy Update
Low
Opportunistic
Information Owner Education
Time/Maturity
Low
High
In Work
Cancelled
Not Planned
Legend
Completed
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Achieve Savings through Change
S A V I N G S O P P O R T U N I T Y
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The Hockey Stick Curve What are you doing
thats different?
Growth from single digits to double digits
generally does not happen because someone or even
everyone does a better job at doing the same old
thing!
Growth from single digits to double digits
generally does not happen because someone or even
everyone does a better job at doing the same old
thing!
Customer Service to top 90
Revenues at 10 growth
All of a sudden improvement?
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The Hockey Stick Curve Two Rules of Thumb
A sudden improvement from low single-digit
to double-digit growth (represented by the hockey
stick curve) comes from doing something different.
2. A sudden improvement from low single-digit to
double-digit growth (represented by the hockey
stick curve) comes from doing something different.
1. If you do what youve always done, youll get
what youve always gotten.
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- Savings - Pendulum Swing

• Evolutionary Change
• Incrementally steps to the next generation
• Can easily degenerate into bureaucracy or
  complacency
• Happens over a long period of time
• Revolutionary Change
• Jumps to the next generation
• Creates radical transformation
• Takes place rapidly and on a large scale

Evolutionary
Revolutionary
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Federal Stimulus System
Eliminate Duplicated Costs
Web Time Keeping
high
Open Source Catalog
Down Sizing Services
PC Support Consolidation
Issue Tracking
Just Enough Comm.
Collaborate with OUS
SDC Optimize Software
Scrub Expenses
SDC Optimize Software
Cheaper Tech
SDC Cap. Analysis
Funding Model
COST, TIME, and RISK
E-Government Portal
Curtail Projects
OPS Mergers
Data Sharing
IT Strategic Source
ERMS
Strategic Staffing
Open Source Consortium
Move to OS
Reduce Duplication
Business Architecture
Software as a Service
Management Scope
Governance to Act
Tele/Video Conferencing
Records Management
Prep for Big Changes
Software Re-Negotiation
Cloud Computing
One-Gov Planning
Enterprise Business Planning
low
IT Contract Brokering
Open Source Tools
State Communication Center
- VALUE
low
high
Oregon Statewide
CIO Council Fast Track Planning Results As of
April 15, 2009
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Business Process Change
high
Data Center Consolidation
E-Government Portal
COST, TIME, and RISK
IT Contract Brokering
SaaS
SDC- Optimize SW
Energy Conservation
Server Virtualization
IT Cloud Computing (IaaS)
Desktop Virtualization
low
- VALUE
low
high
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Ben.Berry_at_odot.state.or.us