US State Government Rolls Out IT Cost Model for Transparency

1. Case Study: US State Government Rolls Out IT Cost Model for Transparency
November 7, 2016
Mark S Mahre, ClearCost US
Business Challenges
The primary business challenge was to implement an accurate IT spending model that would create better
transparency. Additionally, this State Government needed a sophisticated IT catalog and usage methodology to
monitor investments. These challenges led our client to consider an ITFM tool to help structure and calculate the
total IT spend for all infrastructure, services, and support for the upcoming fiscal year.
Until January 2016, this State Government was using an outdated spreadsheet to charge state agencies their
yearly IT costs. Once the new IT Director of the Department of Public Safety (DPS) delved into the data, it became
apparent that this manual approach would no longer be an option for FY2017. The Director was under pressure to
justify the billing for services delivered to their clients. Additional challenges included:
 Providing the State Government cost transparency by department, by service, by user
 Partnering with Government Department Directors to show value of services
 Defining a clear process and providing a structured platform for yearly budget costs
 Implementing a solution that is simple efficient, and easy to use
Objectives
The DPS team aimed to research and review IT services costing tools to replace the former spreadsheet. In
addition to selecting a system that would generate consistent and accurate analytics, the team wanted a tool that
could be quickly and easily implemented. In order to meet the deadline for reporting year-end IT services costs,
the team would need to evaluate, scope, open a bid, approve a tool and vendor, implement, test, train, and move
to production within six to eight months.
Data Gathering
Given that the IT costs are located within different groups of the business in multiple formats, the data gathering
process would prove to be challenging. Once all the data was retrieved, the consulting team could import all
relevant information into the new ITFM tool. Most of the data was taken from the State IT accounting system,
which included current IT infrastructure, assets, applications, and services, along with DPS salaries, IT contracts,
and license data. All this data would feed into the new ITFM database during the first week of the consulting
engagement.
"The ClearCost solution exceeded all of my expectations."
IT Director, DPS

2. Implementation
During Week One, the DPS team prepared for the arrival of the ClearCost consultants by gathering all financial
data that would be imported into the new application database. The DPS team also arranged their calendar for
Week Two, scheduling management meetings in the mornings and reserving afternoons for one-on-one meetings,
workshop sessions, and any ad hoc data requests.
Week Two was primarily dedicated to giving the ClearCost consultants the IT financials, providing direct access
with business managers and stakeholders, and defining the outputs of metrics and reporting. The DPS team and
two ClearCost consultants attended group meetings in the mornings on Monday through Friday to discuss the
objectives for that particular day. The team reserved the afternoons to review any activities or alerts that could
potentially delay the on-site schedules. By the end of the week, the ClearCost team had imported 95% of financial
data and developed a strong understanding of DPS activities, technical services, business services, and
department structures.
After one week of prep followed by one week of on-site meetings, ClearCost collaborated with the DPS team over
the next four weeks via web conferences to import the remaining 5% of data, refine the IT financial flow, and
finally tighten the controls. In so doing, the team progressed to a balanced model in order to commit the budget,
implement the ITFM application, and generate dashboards, analytics, and reports.
Results
The ClearCost application provided accurate, transparent, and fully functional IT Financial Management analytics
and reporting. These new ITFM metrics have fully replaced the inaccurate and inefficient finance spreadsheet.
State legislature executives will consult these metrics in order to justify 2016 IT spending and to provide a blended
Chargeback and Showback model for 2017.
“We were looking for a simple method to collect IT-related costs associated with application, infrastructure, and
program support for our clients. Within the first year of implementing ClearCost, we could demonstrate the true
expense of providing each service, and we could invoice each cost appropriately. We look forward to adapting
more ClearCost capabilities in the future to further streamline our Chargeback and Showback process.”
IT Director, DPS
Benefits
With an accurate, flexible, and sustainable IT Financial Management application and methodology in place,
reporting will take minutes rather than days or weeks to produce. ClearCost was also able to provide:
 Ongoing training and technical support via web conferencing
 Start of Project to Production Deployment well within expectations
 Platform that can scale with the demands of the business
 Efficient data gathering process for assets, CapEx expenditures, and forecasting
 Service catalog reporting of a blended Chargeback and Showback model
 Accurate budgeting process
Most importantly, the DPS team gained trust with State Agencies by providing complete transparency, with direct
linkage to every cost and resource reported. Establishing this important linkage capability will ensure the
continued involvement of State Agencies in the budget, forecasting, and service planning processes, thereby
bridging the gap between the DPS and the State Governments they serve.
Tags: Technology, ITFM, SBM, TBM, IT Financial Management, Software Consulting