The Cost of Technology: Total Cost of Ownership and Value of Investment - Rich Kaestner


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  • The Cost of Technology: Total Cost of Ownership and Value of Investment - Rich Kaestner

    1. 1. Total Cost of Ownership and Value of Investment CoSN K-12 Leadership Initiatives Rich Kaestner CoSN TCO/VOI Project Director SchoolDude University 2009
    2. 2. Consortium for School Networking Mission and Values <ul><li>CoSN </li></ul><ul><li>Washington DC based non-profit organization </li></ul><ul><li>Serving K-12 technology leaders who through their strategic use of technology, improve teaching and learning. </li></ul><ul><li>The primary challenge we face in using technology effectively is human, not technical. For that reason, CoSN focuses on Leadership and Policy . </li></ul><ul><li>Supported by institutional, individual, and corporate members </li></ul><ul><li>Free and member resources; annual conference in March </li></ul>SchoolDude University 2009
    3. 3. Areas of Investigation SchoolDude University 2009
    4. 4. CoSN’s TCO and VOI Projects <ul><li>Understanding Where You Are (TCO), </li></ul><ul><li>and </li></ul><ul><li>Helping to Plan Where You Are Going (VOI) </li></ul>SchoolDude University 2009
    5. 5. Total Cost of Ownership (TCO) <ul><li>A methodology for determining all of the costs for implementing and maintaining networked computers </li></ul><ul><li>“ ‘ Would you tell me, please, which way I ought to go from here?' ‘That depends a good deal on where you want to get to,' said the Cat.” </li></ul><ul><ul><ul><li>Lewis Carroll’s “Alice in Wonderland” </li></ul></ul></ul><ul><li>It’s difficult to determine your technology direction if you don’t understand current costs </li></ul>SchoolDude University 2009
    6. 6. Why CoSN’s TCO Project <ul><li>School leaders didn’t understand how to plan for the long-term costs of managing technology </li></ul><ul><li>Increasing complexity of networks makes understanding ongoing TCO more important </li></ul><ul><li>Schools need to manage networks to avoid backlash against educational technology </li></ul>SchoolDude University 2009
    7. 7. TCO Focus <ul><li>Help Identify all of the costs of acquiring and maintaining a networked computer environment </li></ul><ul><ul><li>Direct technology and labor costs </li></ul></ul><ul><ul><li>Indirect (end-user) labor costs </li></ul></ul><ul><li>Know where you are so that you can plan </li></ul><ul><li>Understand costs to drive efficiencies </li></ul><ul><li>Reassure constituents that dollars are being used wisely </li></ul>SchoolDude University 2009
    8. 8. Major Problems: IT Staff is Spread Too Thin <ul><ul><li>54% say half of workload is reactive, rather than proactive </li></ul></ul><ul><ul><li>55% say first area of need is more staffing for curriculum integration </li></ul></ul><ul><ul><li>60% couldn’t complete software installations in a timely fashion this year </li></ul></ul>SchoolDude University 2009 Source: Unique Challenges Facing the IT Professional in Education ©2007 eSchool News
    9. 9. The Unique Challenges Facing the IT Professional in K-12 Education <ul><li>K-12 schools have less than optimal IT staff levels </li></ul><ul><li>Mean number of computers per technician: 550 </li></ul><ul><li>During the past school year, 60% of those surveyed were unable to complete all software installations in a timely manner; 21% hired contractors to help. </li></ul><ul><li>49% of those surveyed said that the school board understands the importance of IT as it relates to the overall goals but is not as supportive of it financially; 8% felt that their school board did not feel IT was important to the overall goals. </li></ul>SchoolDude University 2009
    10. 10. CoSN’s Taking TCO to the Classroom SchoolDude University 2009 <ul><li>Launched June 1999 </li></ul><ul><li>Includes: </li></ul><ul><ul><li>Web-based TCO assessment tool developed by CoSN and Gartner (U.S. Schools Only) </li></ul></ul><ul><ul><li>8 TCO Case Studies (plus 3 One-to-one Studies) </li></ul></ul>
    11. 11. CoSN-Gartner TCO Tool: Output <ul><li>Total Costs – summary of direct and indirect district and per client costs </li></ul><ul><li>Asset Metrics – breakdown of pervasiveness of client computers </li></ul><ul><li>Asset Cost Metrics – amortized costs of computer and network hardware </li></ul><ul><li>Direct Labor Cost Metrics – overview of district-wide and per client direct labor costs </li></ul><ul><li>Direct Labor Staffing Metrics – illustrates number of client computers supported per support staff and average support staff costs </li></ul>SchoolDude University 2009
    12. 12. Analyzing Your Results <ul><li>A low TCO in any category is not necessarily good, and a high TCO is not necessarily bad </li></ul><ul><ul><li>Old or donated client computers reduce hardware costs, but… </li></ul></ul><ul><li>Case study high/low values help you to flag areas that require inspection </li></ul>SchoolDude University 2009
    13. 13. Measuring the Value of Investment <ul><li>TCO is key to knowing your current costs ( Where you are ) and helps to anticipate future costs </li></ul><ul><li>But… </li></ul><ul><li>How do you determine the value of proposed investments ( Which way to go )? </li></ul>SchoolDude University 2009
    14. 14. As Yogi Berra said… <ul><li>“ When you see a fork in the road, take it.” </li></ul><ul><li>“ If you don’t know where you’re going, you’ll wind up somewhere else.” </li></ul><ul><li>In response to, “Hey, Yogi, I think we’re lost,” he replies, “Yeah, but we’re making great time.” </li></ul><ul><li>Where are you going? </li></ul>SchoolDude University 2009
    15. 15. Measuring the Value of Investment (VOI) SchoolDude University 2009 <ul><li>A CoSN Leadership Initiative </li></ul><ul><li>Methodology to Help Schools Determine Costs and Benefits of Proposed Projects </li></ul><ul><li>Includes Project Cost Estimator and Benefits Worksheet </li></ul>
    16. 16. VOI and the School Mission <ul><li>The business of schools is education </li></ul><ul><li>Value of Investment = Total benefit towards school mission or goals vs. Anticipated costs of project </li></ul><ul><ul><li>ROI (used by business) is only effective as it allows resources to be diverted to school mission </li></ul></ul><ul><ul><li>Need to determine and measure qualitative benefits </li></ul></ul><ul><li>Costs can be estimated – </li></ul><ul><li>Measuring benefits is more difficult </li></ul>SchoolDude University 2009
    17. 17. Why Measure “Qualitative” Benefits <ul><li>Evaluate proposed projects </li></ul><ul><ul><li>Projects competing for funding </li></ul></ul><ul><li>Sell a proposed project </li></ul><ul><ul><li>Specifically, what we expect to accomplish </li></ul></ul><ul><li>Succinctly describe or justify a project </li></ul><ul><ul><li>Specific terms </li></ul></ul><ul><li>Sustain a project </li></ul><ul><ul><li>Going back for continued funding </li></ul></ul>SchoolDude University 2009
    18. 18. Methodology Determining Costs and Benefits <ul><li>Estimate project costs (Project TCO) </li></ul><ul><li>Subtract and $ savings for net cost </li></ul><ul><li>Measure (score) benefits </li></ul><ul><ul><li>Align with school mission, goals, mandates </li></ul></ul><ul><ul><li>State in measurable terms </li></ul></ul><ul><ul><li>Effect of project on applicable goal(s) (+ or -) </li></ul></ul><ul><ul><li>Importance of affected goal </li></ul></ul><ul><li>Assess risk </li></ul><ul><li>Weigh anticipated risk-weighted benefits vs. estimated net cost . . . </li></ul><ul><li>Was it worth it? - Evaluate Results </li></ul><ul><ul><li>Actual costs </li></ul></ul><ul><ul><li>Actual benefits </li></ul></ul>SchoolDude University 2009
    19. 19. 3 VOI Case Studies <ul><li>Online Learning - Wisconsin District with 5000 Students </li></ul><ul><li>Formative Assessment – Iowa District with 31,600 Students </li></ul><ul><li>One-to-one Computing – Arizona District with 2,400 Students </li></ul>SchoolDude University 2009
    20. 20. 1. Estimate Project TCO <ul><li>Budgeted Costs </li></ul><ul><li>Initial & Implementation Costs </li></ul><ul><li>Ongoing costs </li></ul><ul><li>Real Costs for Real VOI </li></ul><ul><li>Includes indirect labor for Project TCO </li></ul>SchoolDude University 2009 CoSN VOI Project Cost Estimator
    21. 21. 2. Calculate Estimated Savings <ul><li>Out-of Pocket Savings </li></ul><ul><li>User Productivity Enhancements </li></ul><ul><li>Cost Avoidance </li></ul><ul><li>Revenue to the District </li></ul>SchoolDude University 2009
    22. 22. 3. Measure (Score) Benefits <ul><li>$ Savings have been covered… </li></ul><ul><li>Now determine Qualitative Benefits (The business of schools is education) </li></ul><ul><li>State benefits in measurable terms </li></ul><ul><li>Tie project benefits directly to school or district mission, values, goals, mandates </li></ul><ul><li>If evaluating 2 or more projects: </li></ul><ul><ul><li>Importance of the value, goal, mandate </li></ul></ul><ul><ul><li>Effect of the benefit on this value, goal, mandate </li></ul></ul>SchoolDude University 2009
    23. 23. Project Benefits Worksheet <ul><li>Download (Excel .xls format) </li></ul><ul><li>Enter school/district mission, goals, mandates, values </li></ul><ul><li>Assign relative importance </li></ul><ul><li>Align measurable project benefits with these goals </li></ul><ul><li>Consensus effect of each project benefit on the goals (+ or -) </li></ul><ul><li>Project score is calculated </li></ul>SchoolDude University 2009 CoSN VOI Project Benefits Worksheet
    24. 24. SchoolDude University 2009
    25. 25. 4. Assess Project Risk <ul><li>Consensus of probability of success </li></ul><ul><li>For project evaluation purposes only: </li></ul><ul><ul><li>Apply to $ savings </li></ul></ul><ul><ul><li>Apply to qualitative benefits score </li></ul></ul>SchoolDude University 2009
    26. 26. 5. Evaluate Benefits vs. Cost <ul><li>Compare projects competing for the same funds </li></ul><ul><li>Student laptop pilot project </li></ul><ul><ul><li>Score 46 vs. cost of $53,000 Bang for the buck = .87 score/$1000 </li></ul></ul><ul><li>Upgrade and Refurbish auditorium and stage </li></ul><ul><ul><li>Score 35 vs. $83,000 Bang for the buck = .42 score/$1000 </li></ul></ul><ul><li>Confidently articulate costs and benefits in measurable terms </li></ul>SchoolDude University 2009
    27. 27. Don ’ t Evaluate Technology in a Vacuum <ul><li>Schools need to understand their educational goals and how technology will support their goals – something a TCO assessment and Value of Investment (VOI) project assessment helps to clarify </li></ul>SchoolDude University 2009 “ Success” should ultimately be measured by whether the educational goals have been met The business of schools is education
    28. 28. SchoolDude University 2009 Thank You CoSN TCO/VOI Project Sponsors!
    29. 29. TCO/VOI Resources <ul><li> </li></ul><ul><ul><li>CoSN-Gartner Tool, Data definitions and case studies </li></ul></ul><ul><ul><li>White papers and presentations </li></ul></ul><ul><ul><li>Additional tools and resources </li></ul></ul><ul><li> </li></ul><ul><ul><li>Articles and presentation </li></ul></ul><ul><ul><li>One-to-one case studies </li></ul></ul><ul><ul><li>Technology Project Cost Estimator </li></ul></ul><ul><ul><li>Project Benefits Worksheet </li></ul></ul><ul><li>Support: </li></ul>SchoolDude University 2009 Suggestions