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Analysis Document

Analysis Document. Task 5 Cost Estimates for Telework Scalability. March 21, 2006. Table Of Contents. Introduction Methodology Overview of Current Telework Solutions Cost of Enhancing and Expanding Telework Findings & Conclusions Appendix.

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Analysis Document

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  1. Analysis Document Task 5 Cost Estimates for Telework Scalability March 21, 2006

  2. Table Of Contents Introduction Methodology Overview of Current Telework Solutions Cost of Enhancing and Expanding Telework Findings & Conclusions Appendix

  3. This report presents the costs of the technical upgrades needed for federal agencies to expand their telework programs • This report on Cost Estimates for Telework Scalability is the fifth in a series of reports that are part of the Telework Technology Cost Study • The overall study has three primary objectives • Describe the current federal telework technology environment • Estimate the costs of expanding telework supporting technologies so the infrastructure can support 25% to 50% of the federal workforce teleworking • Provide recommendations on how best to expand the telework related infrastructure to support more teleworkers • Based on interviews, surveys, and focus groups of federal IT staff and Telework Coordinators this report reviews the current levels of support that federal organizations’ currently provide in their telework programs • This report will identify and describe the costs associated with expanding federal organizations’ telework programs from their current levels

  4. Information was collected from several sources in sixteen agencies that were chosen to be representative of the entire Federal Government • The Booz Allen team conducted interviews, focus groups, and surveys of Chief Information Officer staff, Telework Program Coordinators, Teleworkers, and Managers of Teleworkers, respectively • Ten Departments participated in the study: • Department of Agriculture  Department of Interior • Department of Commerce  Department of Justice • Department of Education  Department of Transportation • Department of Health and Human Services  Department of the Treasury • Department of Housing and Urban Development  Department of Veterans Affairs • Five Independent Agencies and one Departmental Component also participated in the study: • Equal Employment Opportunity Commission  National Science Foundation • General Services Administration  Securities And Exchange Commission • National Aeronautics and Space Administration  U. S. Coast Guard (Department of Homeland Security)

  5. Table Of Contents Introduction Methodology Overview of Current Telework Solutions Cost of Enhancing and Expanding Telework Findings & Conclusions Appendix

  6. Analysis & Results This report identified the costs associated with the key solutions required to expand telework programs Data Sources Surveys of Teleworkers and Managers of Teleworkers Focus Groups with Agency Telework Coordinators Estimated Costs of Each Scenario Estimated Costs of Expansion Interviews with Agency CIO Staff • Reviewed gap analysis of what is required to meet basic / ideal solutions determined from industry standards and best practices • Estimated per teleworker costs required to bridge gap from each scenario’s current solution to the basic and ideal solutions • Reviewed findings to develop overall conclusions about federal government’s ability to successfully expand teleworking • Reviewed groupings of the 20 organizations into five common scenarios, based on commonalities in their current telework infrastructures • Estimated per teleworker costs of each of these scenarios • Conducted interviews with CIOs and other IT staff members in 20 organizations (including headquarters offices and/or components of the 16 agencies participating in the study) • Collected information about the current status of the telework infrastructure and plans for enhancement • Conducted focus groups with Telework Program Coordinators and other telework management staff in 15 out of the 16 agencies participating in the study • Collected information about telework program history and current state, technology issues, policy issues, and plans for expansion • Administered surveys to teleworkers and managers of teleworkers in 14 out of the 16 agencies participating in the study • Received valid responses from 6,784 teleworkers and 1,540 managers of teleworkers • Collected information about telework technology availability, usage, and performance

  7. Because of the study’s approach and methodology, this report provides a representative picture of the costs associated with expanding telework across the federal government • The multi-method approach to this study was designed to collect information from three data sources, which are complementary and lead to a comprehensive understanding of the issues • When information is missing from one data source, information from the other data sources is available to compensate • Many of the CIO interviews provided information about specific components, rather than the overall department • However, the organization-wide data from surveys and focus groups round out this information and enable the development of broad findings that are representative of the government • The Booz Allen team followed a structured process to estimate the cost of expanding telework programs throughout the federal government • Reviewed information about current agency infrastructures, derived primarily from interviews, surveys, and focus groups conducted for the study • Estimated and described the per teleworker costs associated with supporting telework in each scenario • Estimated the per teleworker costs required to bridge gap from each scenario’s current solution to the basic and ideal solutions

  8. The methodology evaluated the ability of federal organizations to significantly expand the telework participation of their workforces • In order to assess the ability of an agency to expand teleworking, the current infrastructure was analyzed in three areas; home office, services, and enterprise • Basic and ideal telework solutions were defined to baseline and identify key components / services required at the home office and enterprise to support telework expansion • Agencies were grouped into five different scenarios based on infrastructure and technical capabilities used to currently support teleworking • A gap analysis was performed to identify the missing components and technologies required within each scenario to meet the basic / ideal telework solution requirements • Analysis was performed to determine how agencies can extend their current infrastructures to support expanded telework programs

  9. The key technologies that support telework fall into three areas: Home Office, Services, and Enterprise

  10. In order to develop a cost profile for each scenario, unit costs were identified for every component • Identified multiple data points for each component based on data obtained from interviews or from engineering and professional estimates of expenses • Averaged data points to develop reliable per unit costs • Annualized each cost by dividing the purchase price by the number of years in the appropriate product lifecycle • All costs provided in this report are annualized • Assigned per unit cost to each component • Developed a cost profile that captured project-specific drivers and assumptions (i.e., assumptions about the current telework solution of each scenario) • Per teleworker costs were grouped into telework home office, services, and enterprise costs and then compiled for each solution (i.e. current, basic and ideal) in each scenario • Finally, the cost of scaling from one solution to the next was calculated for each scenario • Additional information about cost calculations and assumptions is provided in the Appendix

  11. Table Of Contents Introduction Methodology Overview of Current Telework Solutions Cost of Enhancing and Expanding Telework Findings & Conclusions Appendix

  12. Basic and ideal solutions have been defined to distinguish between the technologies that are essential for enabling teleworkers to be productive and those that are helpful to teleworkers • The basic and ideal telework solutions are based on commercial and federal best practices that define components and services required at the home office and enterprise levels • Both solutions provide consistent application access for the teleworker through an always-on, secure, and centrally-managed connection to the network that essentially makes the teleworker’s home office a functionally transparent extension of the enterprise • Basic solution includes key components and services that allow teleworkers to efficiently perform their job duties • Government covers all hardware and services costs except for broadband access • Sufficient voice and data resources are provided for effective communication with the enterprise and external clients • The ideal solution not only includes the basic components, but provides enhanced services and tools to help increase network performance and teleworker productivity • Government covers all hardware and services costs; no cost to teleworker • Fully redundant system and connectivity architectures provide operational resilience and disaster recovery benefits • Use of collaboration tools and technologies can be a more efficient means of communication while also avoiding the higher costs of traditional voice technologies

  13. Home Office Enterprise Services The largest cost per teleworker at their alternative site is the cost for their computer but if this is the same computer used in the office then this does not represent a significant additional cost The Annual Cost Per Teleworker Per Alternate Site Component Including Maintenance Costs • *Only one of the 2 options needs to be provided for remote telephone communications equipment

  14. Home Office Enterprise Services Providing telecommunications services to teleworkers is the most significant services cost for teleworkers The Annual Cost Per Teleworker Per Services Component Including Maintenance Costs 3 OPTIONS • *Only one of the 3 options needs to be provided for telephone communications access

  15. Home Office Enterprise Services Depending on the current remote accessibility of enterprise applications, providing access to applications is the most significant enterprise cost for teleworkers The Annual Cost Per Teleworker Per Enterprise Component Including Maintenance Costs *Web Interface total does not include labor costs or software licensing costs. Please see Appendix for more detail.

  16. The dot indicates where each scenario falls based on the defined Basic and Ideal telework solutions. For each of the scenarios, a gap analysis was conducted to: • Establish the infrastructure currently in place (including Home Office, Services, and Enterprise components) • Determine the additional infrastructure components required to meet the defined Basic solution to support teleworking • Determine the additional infrastructure components required to meet the defined Ideal solution to support teleworking SAMPLE Each scenario includes varying levels of infrastructure, resources, access, and support to expand / scale current teleworking capabilities Organizations fall into 5 different scenarios in terms of the cost to upgrade their telework supporting infrastructure

  17. Table Of Contents Introduction Methodology Overview of Current Telework Solutions Cost of Enhancing and Expanding Telework Findings & Conclusions Appendix

  18. The organizations that participated in the study were grouped into 5 scenarios based on how much additional investment was required to provide the basic and ideal telework IT environment • Scenario A organizations provide basic telework infrastructure including home office support, services, and enterprise access, but additional investment is required to bring them up to the ideal environment • Scenario B organizations provide some basic telework infrastructure including some home office support and services and full enterprise access. However additional investment is required to provide all basic and ideal telework technologies to teleworkers • Scenario C organizations provide some basic telework infrastructure including some home office support, services, and enterprise access. However additional investment is required to provide all basic and ideal telework technologies to teleworkers • Scenario D organizations provide a few basic telework infrastructure components and services for the home office but limited if any enterprise access. Substantial investment is required to provide basic and ideal telework technologies to teleworkers • Scenario E organizations provide few if any basic telework infrastructure and significant investment will be required to provide basic and ideal telework technologies to teleworkers

  19. Ideal Basic Scenario A (2 of 20 Agencies) Scenario A’s total per teleworker gap between the Current and Basic solution is $0; the gap between Basic and Ideal is $512 Component costs are the annual lifecycle costs of the component per teleworker including maintenance if applicable • Infrastructure, resources, access, and support in place to support full-scale telework program • Agency covers all associated costs * Includes components indicated in Basic Solution Gap Analysis

  20. Ideal Basic Scenario B (8 of 20 Agencies) Scenario B’s total per teleworker gap between the Current and Basic solution is $2,171 – $2,952; the gap between Basic and Ideal is $1,420 Component costs are the annual lifecycle costs of the component per teleworker including maintenance if applicable • Infrastructure in place to support large scale telework program • Sufficient resources, enterprise access, and support available • Agency covers some associated costs * Includes components indicated in Basic Solution Gap Analysis

  21. Ideal Basic Scenario C (3 of 20 Agencies) Scenario C’s total per teleworker gap between the Current and Basic solution is $2,244 – $3,025; the gap between Basic and Ideal is $1,420 Component costs are the annual lifecycle costs of the component per teleworker including maintenance if applicable • Infrastructure in place to support existing telework program • Limited resources and enterprise access available • Agency covers no costs * Includes components indicated in Basic Solution Gap Analysis

  22. Ideal Basic Scenario D (5 of 20 Agencies) Scenario D’s total per teleworker gap between the Current and Basic solution is $2,323 – $3,104; the gap between Basic and Ideal is $1,420 Component costs are the annual lifecycle costs of the component per teleworker including maintenance if applicable • Infrastructure in place to support minimal telework program • Limited or no resources and enterprise access available • Agency covers no costs * Includes components indicated in Basic Solution Gap Analysis

  23. Ideal Basic Scenario E (2 of 20 Agencies) Scenario E’s total per teleworker gap between the Current and Basic solution is $3,040 – $3,821; the gap between Basic and Ideal is $1,420 Component costs are the annual lifecycle costs of the component per teleworker including maintenance if applicable • Minimal Infrastructure in place to support teleworking • Critical resources and support not available • Agency covers no costs * Includes components indicated in Basic Solution Gap Analysis

  24. Ideal Ideal Ideal Ideal Ideal All necessary Home Office, Services, and Enterprise components are provided to support teleworking, including some enhanced capabilities Basic Basic Basic Basic Basic Critical Home Office, Services, and Enterprise components available to support teleworking LEVEL OF ADDITIONAL HOME OFFICE, SERVICES, AND ENTERPRISE COMPONENTS REQUIRED Minimal Services and Enterprise components available to support teleworking ; No Home Office resources or support available Scenario A Scenario C Scenario D Scenario B Scenario E Network infrastructures and the ability to scale resources and support for expanded telework programs vary across the federal government *Cost varies depending on which voice communication option is chosen **Cost of upgrading from basic solution to ideal solution ***Cost of upgrading from current to ideal solution

  25. The preceding slides on each scenario can be used to estimate the enterprise’s expense of expanding the infrastructure to support 25% to 50% of the staff teleworking • The following assumptions were made when developing these sample calculations: • The number of teleworkers is calculated by multiplying the federal staff size by OPM’s 2005 federal telework participation rate of 7.7% • Scenario B was used for this estimate since this is where most agencies (i.e. 8 / 20) fit • It is assumed that, in order to scale up, each agency will use the basic solution, which requires a per teleworker investment of $2,171 to reach in Scenario B • It is assumed that each agency will provide calling cards instead of mobile phones

  26. Table Of Contents Introduction Methodology Overview of Current Telework Solutions Cost of Enhancing and Expanding Telework Findings & Conclusions Appendix

  27. Agencies must consider their own unique situation to identify the most appropriate solution for enhancing telework infrastructure • Although some agencies may be able to scale up their current infrastructure, this may not be the most cost-effective and technologically efficient approach • Agencies vary in the maturity of their current infrastructure, availability of resources, and other factors impacting scalability • Therefore, when possible, this report identifies different robust, scaleable options for technical capabilities needed for extensive telework participation • When assessing the cost of telework expansion, it is useful to bear in mind the size of annual budgets throughout the federal space • 21 out of 27 agencies are slated for IT budget increases in FY07 • An agency with ~10,000 staff will receive ~$300 million in FY07 • An agency with ~40,000 staff will receive ~1.5 billion in FY07 • An agency with ~100,000 staff will receive ~$2 billion in FY07 • Organizations that find themselves in scenarios far removed from the basic and ideal solutions should take a phased approach to scaling up through several budget cycles

  28. A variety of strategies can help agencies manage the costs of telework technology enhancements • The cost of scaling up from a current to basic solution can be lowered by nearly $800 per teleworker by providing staff with calling cards (instead of mobile phones) • The cost of home office equipment and services components is basically a one-for-one increase based on the number of individual teleworkers (e.g., one computer for one employee) • Scaling up other components, such as help desk, voice conferencing, and enterprise components allows for the realization of economies of scale • Certain technologies that are in place are more easily scaleable than others; for example, Microsoft’s Outlook Web Access (email access) is easier to scale than a client-based email system

  29. Table Of Contents Introduction Methodology Overview of Current Telework Solutions Cost of Enhancing and Expanding Telework Findings & Conclusions Appendix

  30. A comprehensive, standard set of cost elements for estimating the costs of current telework costs at 18 federal organizations was developed • In line with established cost estimation methodologies, the Booz Allen team made assumptions and estimates to compensate for several data limitations • Lower-level organizational information was used for the cost estimates when overall organization’s information was not available – these estimates apply to the lower-level organization only • Information provided did not cover all the cost elements needed for analysis and the available information differed between organizations – cost assumptions were made to compensate for the missing information • Global and project-specific drivers and assumptions (i.e., assumptions about the current telework environment at each organization) were defined • Prior year (i.e., sunk) costs are not included in the estimates • All costs are assumed to be in FY 2005 dollars • The cost elements were grouped into the three major categories: teleworker home office, services, and enterprise costs

  31. The assumptions used to make the cost estimates were based on standard industry estimates of costs and equipment lifecycles • Hardware technology refresh cycle is based on government and industry standards and varies by product. The article “When to Upgrade” by John Dix, Network World, November 28, 2005 and professional experience were used to estimate the life-cycle of equipment • Each annualized per teleworker cost includes the following components, where applicable: 1) the annualized purchase price; 2) annual maintenance costs; 3) annual lifecycle refresh costs; 4) annual recurring fees; 5) annualized one-time fees • Since every organization interviewed has a telework program in place, these estimates are designed to capture the annualized costs of previously-made purchases • In order to provide an annualized estimate for acquisition costs, the initial purchase prices are divided by their respective product lifecycles • Calculation of Maintenance and Lifecycle Refresh Costs • Recurring (i.e. maintenance) annual costs are assumed to total 15% of the acquisition cost of hardware and 20% of the acquisition cost of software • Refresh costs are calculated by dividing the acquisition cost of each element by its respective product lifecycle

  32. Appropriate methodologies have been developed in order to estimate the per teleworker costs for enterprise components • The voice conferencing per teleworker estimate assumes that a teleworker uses an additional two hours a month of teleconferencing services as a result of their telework • The enterprise connectivity per teleworker estimate assumes that each agency’s Internet connection is a DS3, which has an annual recurring cost of $8,650 (per GSA’s Washington Interagency Telecommunications System pricing) • The server cost per teleworker estimate assumes that one server can support 6,000 staff • The help desk support per teleworker estimate assumes that a teleworker is responsible for a 20% increase per year in help desk support costs based on them teleworking 20% of the time (equivalent of 1 day per week of telework)

  33. Per Teleworker Cost Build-Up Methodology: Enterprise Connectivity • It is estimated that, during traffic peaks, 20%* of the teleworker base is actively using the enterprise Internet access connection • The peak traffic is then multiplied by 20%, based on the assumption that staff telework one day a week • See sample calculation below; this calculation resulted in a per person cost of approximately $1 for each organization *1 day per week of Telework = 20%

  34. Per Teleworker Cost Build-Up Methodology: Voice Conferencing • Regardless of the number of teleworkers, this Per User Cost remains the same across each organization, illustrated by the following calculations which include dramatically different numbers of teleworkers *Source: The Office of Personnel Management’s (OPM) OPM’s 2005 Report “The Status of Telework in the Federal Government”

  35. Per Teleworker Cost Build-Up Methodology: Standard and Enhanced Help Desk Support • Standard Help Desk Support:The $100 per teleworker help desk support cost is based on the average annual per teleworker cost of a contractor-operated help desk that supports 15,000 staff at a large cabinet-level department • Enhanced Help Desk Support Costs: Per the basis of estimate above, a help desk provided solely for teleworkers would cost $100 per teleworker on an annual basis

  36. Per Teleworker Cost Build-Up Methodology: Basic Web Application Development Cost • Basic Web-Based Application Development Solution: Total Cost of $256,500 • Two-tier Microsoft-based architecture (less scaleable, more affordable) • 4 yr lifecycle • Tier 1: web front end = • 2 servers at $20,000 each  $40,000 • 1 load balancer  $25,000 • Software license  cost not included since it can vary widely due multiple vendor solutions available and due to an application’s specific requirements, e.g. business rules, data manipulation • Tier 2: web app = • Network switch  $25,000 • 2 servers at $50,000 assumed $100,000 • Annualized cost of $64,125 ($256,500 / 4) • Annual 15% hardware maintenance  $28,500; Annual 20% software maintenance  $38,000 • Supports up to 200 concurrent teleworkers which is scaleable to 5000 teleworkers who access it once a week on average • Per teleworker cost of $13 (not including software and labor costs)

  37. Per Teleworker Cost Build-Up Methodology: Basic Web Application Development Cost (cont.) • Labor costs are not included here since they vary widely due to the scale and scope of development work, however some guidelines are below: • 2-8 staff per development is range, with 3-5 being the median • $110 per hour is typical outsource cost for web development work • Timeframe: small application = 2-3 months; large application = 6 months – 1 year • System Administrator is needed to manage each application

  38. Per Teleworker Cost Build-Up Methodology: Ideal Web Application Development Cost • Ideal Web-Based Application Development Solution: Total Cost of $526,500 • Build 1 component (that uses a 3-tiered component-based architecture) that can used by multiple apps and can serve multiple requests simultaneously much more cost effective • Multi-tier Unix-based architecture (more scaleable and robust) • 4 yr lifecycle • Tier 1: web front end = • 2 servers at $20,000 each  $40,000 • 1 load balancer  $25,000 • Software license  cost not included since it can vary widely due multiple vendor solutions available and due to an application’s specific requirements, e.g. business rules, data manipulation • Tier 2: middle tier = • 2 servers at $100,000 each  $200,000 • Tier 3: web application = • Network switch  $25,000 • 2 servers at $50,000 $100,000

  39. Per Teleworker Cost Build-Up Methodology: Ideal Web Application Development Cost • Ideal Web-Based Application Development Solution (cont.): Total Cost of $526,500 • Annualized cost of $131,625 ($526,500 / 4 ) • Annual 15% hardware maintenance  $58,500; Annual 20% software maintenance  $78,000 • Supports up to 200 concurrent teleworkers which is scaleable to 5000 teleworkers who access it once a week on average • Per teleworker cost of $26 (not including software and labor costs) • This per teleworker cost must be doubled to $52 to account for redundancy (again, this does not include software and labor costs) • Labor costs are not included here since they vary widely due to the scale and scope of development work, however some guidelines are below: • 2-8 staff per development is range, with 3-5 being the median • $110 per hour is typical outsource cost for web development work • Timeframe: small application = 2-3 months; large application = 6 months – 1 year • System Administrator is needed to manage each application

  40. Per Teleworker Cost Build-Up Methodology: Collaboration Resources, i.e. Live Communication Server 2005 Costs • Centrally managed and secured resources such as instant managing, document sharing, and virtual meeting tools are made available to teleworkers • Microsoft Live Communication Server (LCS) 2005: Total Cost of $251,000 • This sample solution assumes a teleworker base of 20,000 • 3.5 yr lifecycle • Annualized cost of ($251,000 / 3.5)  $72,000 • 2 load balancers (for redundancy) at $25,000  $50,000 subtotal • Array of 4 servers at $30,000 each  $120,000 subtotal • $3150 LCS licensing cost per server  $12,600 (does not include federal government discount, which could result in significant savings) • Annual 15% hardware maintenance  $28,000 • Annual 20% software maintenance  $37,000 • Supports 4000 concurrent teleworkers, which is scaleable to 20,000 teleworkers teleworkers who access it once a week on average • Client Access License (CAL) if $31 but Microsoft does not charge this amount if the customer has valid MS Exchange licenses (which we assume each organization has) • Per teleworker cost of $4

  41. Per Teleworker Cost Build-Up Methodology: Remote Email Access Costs • Microsoft Outlook Web Access (OWA) Solution: Total Cost of $233,000 • This sample solution assumes a teleworker base of 20,000 • 3.5 yr lifecycle • Annualized cost of $67,000 ($232,500 / 3.5) • 2 load balancers (for redundancy) at $25,000  $50,000 • Array of 4 ISA servers at $30,000 each  $120,000 • $2000 - $4000 ISA total servers licensing cost (varies) $3000 assumed • Annual 15% hardware maintenance  $34,000 • Annual 20% software maintenance  $26,000 • Supports 4000 concurrent teleworkers, which is scaleable to 20,000 teleworkers who access it once a week on average • Per teleworker cost of $3 • It is estimated that, during traffic peaks, 20%* of the teleworker base is actively using remote email • The peak traffic is then multiplied by 20%, based on the assumption that staff telework one day a week

  42. Per Teleworker Cost Build-Up Methodology: VPN Costs • Standard VPN Solution: Total Cost of $25,000 • 3 yr Lifecycle • Annualized Cost of $8300 ($25,000 / 3) • Cisco VPN concentrator • Includes end teleworker licenses • Supports 1500 concurrent teleworkers, which is scaleable to 37,500 teleworkers • Per teleworker cost of $6 • Clientless SSL VPN Solution: Total Cost of $350,000 • 3 yr Lifecycle • Annualized Cost of $117,000 ($350,000 / 3) • includes hardware and software and maintenance) • supports 5000 concurrent teleworkers, which is scaleable to a teleworker base of 125,000 teleworkers • Per teleworker cost of $1 • It is estimated that, during traffic peaks, 20% of the teleworker base is actively using VPN • The peak traffic is then multiplied by 20%, based on the assumption that staff telework one day a week

  43. Per Teleworker Cost Build-Up Methodology: “Limited” vs. “Full Costs • To account for the fact that in each scenario, the current solution provides limited versions of the components we identified, we have reduced the per teleworker costs to appropriate percentages • Explanation of 10% PDA Access – provided for executive staff only • Explanation of 10% Mobile Phone - provided for executive staff only • Explanation of 10% Mobile Phone Access - provided for executive staff only • Explanation of 25% Peripherals – assumes printer only • Explanation of Web Interfaces – different architecture, redundant system

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