# Presentation: 331857

## IT Cost AccountingDraft Discussion Brief for NOAA CIO Council

- Zach Goldstein
- NESDIS
- December 12, 2006

## 		Agenda

- Challenges
- Benefits
- Solution
- Approach
- Request of CIO Council

## 		Challenges

- Determining IT security cost has been difficult, time consuming and yields questionable results (e.g. C&A cost, % IT security dollars against IT budget)
- Recent increase in IT data calls have required more CFO and CIO interaction to determine IT cost
- Line Offices lack ability to easily capture IT cost data
- Line Offices do not have a uniform approach in capturing and analyzing IT costs
- Line Offices lack ability to review IT costs against organizational challenges and priorities in order to allow senior management to make informative decisions for capital reallocation (e.g. IT operation vs. IT security)

## Challenges

- Existing object classes for IT are too general in nature for meaningful cost collection and analysis by IT and Budget/Financial professionals
- Common IT performance metrics such as Total Cost of Ownership difficult to calculate and compare
- Cost distribution for proposed common IT services cannot be accurately measured or defended against scrutiny
- Lack of an IT cost accounting structure defeats establishment of robust portfolio analysis and management

## Benefits of Establishing a Common IT Cost Structure

- Better IT cost identification, analysis and reporting
- Enhances CFO and CIO interaction
- Uniform approach used by all Line Offices
- Program IT costs better understood, especially in IT security space
- Better links IT expenditures with Goals/Programs
- Foundation for better investment and portfolio management

## Solution

- Define high-level application requirements for IT investment management
- 	- OMB, DOC reporting requirements
- 	- NOAA, Goal, Council, LO management responsibilities
- Identify a common group of IT cost categories and/or elements that are implied by the application requirements
- Integrate into existing financial management system (e.g. Commerce Business System) and feeder systems (e.g. WebTA) with cost rollup (e.g. NOAA) and decomposition (e.g. Line Offices) capabilities
- Plan the implementation of data structure into future systems and plan the development of needed IT management applications

## Approach

- Assemble cross functional working group
- NESDIS willing to chair
- Working group members from OCIOs and OCFOs to be identified within two weeks of NOAA CIO Council approval of this approach
- Meet with Facility Management to leverage lessons learned and refine approach
- Select Line Offices to pilot approach (e.g. NESDIS and NWS)
- Develop project plan detailing tasks and interim deliverables
- Document CIO, CFO and NEP/NEC buy-in to project
- Define application requirements and recommend cost categories/elements
- Consider IT cost accounting structures of other organizations, federal and private sector

## Approach (continued)

- Develop proposed implementation plan,
- Allocate new applications to existing, emerging (e.g., a  NOAA commitments system) or future systems
- Target cost accounting structure for implementation in current financial systems, possibly in advance of specific applications which will use the cost elements
- Develop communication and implementation plan to raise awareness and facilitate organizational adoption
- Evaluate effectiveness and cost of pilots and implement refinements based on customer and stakeholder feedback
- Document CIO, CFO and NEP/NEC approval of solution
- Target completion of **cost structure** **and system implementation** plan within 9-12  months of CIO/CFO/Acquisition buy-in to project

## Request of CIO Council	

- Efficacy of approach?
- Propose specific changes
- Consider timeframes and task group members
- Target completion date?
- Composition of task group?
- Discuss with your CFO
- Explain why we can’t provide better IT security cost data and how this will support NOAA’s management in future
- Come prepared for discussion and decision on January 16, 2007