1

Help Desk Benchmark Study

A Financial MethodologyAnne Brisbois Denna

Information Services & Technology, Massachusetts Institute of Technology

March 15, 2004

2

Focus of this Presentation

• A ‘how-to’ guide for a low-tech, flexible, repeatable and sustainable method for determining costs across multiple institutions for a particular area of activity

• A description of our financial benchmarking process

• An opportunity

3

This presentation is not ~

• A high-tech solution

• A top-down solution

• A comprehensive benchmarking project plan

• An analysis of financial and performance benchmarks

4

Agenda

• Impetus at MIT and at Stanford• Project objectives• Financial objectives• Financial methodology objectives• Step-by-step methodology • Lessons learned and questions

5

Impetus at MIT

• Among the findings of Visiting Committee review of IT services in 2002 • “glaring need for meaningful data” • Lack of data an obstacle to completing the full scope

of the review• Specific data needed

• Detailed cost data for IT activities• Useful benchmark data from peer institutions

• Provost and Executive Vice President support

6

Impetus at Stanford

• “Sit on a ton of data and just don’t use it”

• Significant IT investments

• MIT asked

• Comparable high-level support

7

Common Threads • Reliance on anecdote rather than ‘designed’

management information to guide decision-making

• Need for quantitative as well as qualitative information

• Budget Pressures• Need to demonstrate value in IT investments• Ever present change factors

8

Project Objectives

• Understand each other’s IT services and performance• How effective are we?• How do we compare to other universities and by what

measures?• How can we use our IT systems to help us manage

ourselves and our investments better?• Develop meaningful metrics and comparative data• Develop a methodology to conduct comparisons• Use data to drive cultural change

9

Criteria for Success• In-depth understanding of each other’s processes

• Clearly defined and “normalized” operational data to ensure meaningful apples-to-apples comparisons

• Normalized method for capturing costs of first tier help desk services under study

10

Financial Objectives

• Gauge investment and effectiveness. • How do the demographics, budgets, total IT costs and

Help Desk activity compare and what do these measures tell us?

• Understand costs and the cost drivers

11

Financial Methodology Objectives

• Create a sustainable process for capturing detailed and summarized financial data for the activity being benchmarked

• Provide comparable total cost by institution for allocation to operational metrics to be used by on-line managers and decision-makers

• Ensure integrity of the financial data for apples-to-apples comparison

12

Before you begin …• Be patient

• Ask questions

• Appreciate complexity

• Remain focused and engaged

• Enjoy the team effort

13

Normalizing the Process

• Goal - Document cost component (general ledger account) definitions and group at a summary level

• Compare detailed G/L reports• What are the options for various report formats • Are they downloadable to Excel?• Similarities and differences in the types of costs?

14

Step-by-Step Methodology1. Determine and document all cost components,

direct, indirect and overheada) Define their meaning b) Agree on whether to include in cost poolc) Group similar costs in sub-categories and establish

common terminology

2. Determine staff effort and operating costs that are not part of the benchmark activity

15

Step-by-Step Methodology

3. Create individual cost object detail reports that reflect the excluded costs determined in Step 2

4. Create one-page summary view of cost components by sub-category with a total cost figure.

5. Allocate costs to first tier help desk cases

16

Cost Components

• Similarities and Differences• Do they matter?• What do they mean?• Are they meaningful to this effort and to whom?• How to capture significance • How or should differences be “normalized” across

institutions

17

1. Determine and Document Cost Components

• Iterative process to fine-tune understanding• Document cost by name and definition by institution• Allocate to ‘normalized’ sub-categories of expense• Record decisions about what are considered direct,

indirect and overhead costs and whether they are included in the cost pool

• Determine differences in cost components and decide whether ‘normalizing’ or determining equivalent cost is important

• Document what is in and what is out of the cost pool for future reference

Sample Direct Cost ComponentsCost Component Groups Description MIT Name Definition SU Name Definition

Professional Development:

Travel Travel (allow. & un-allow) Travel not for staff/prof devel. Travel (allow. & un-allow)at Stanford all travel is counted the same

Prof. Development & Training Travel - Prof. Developm'tProf. Development/Training Staff Training Tuition

Conference Fees Conference Fees Fees for confs outside MIT Conference fees Fees for conf outside StanfordMemberships and Dues Memberships and Dues Prof'l Memberships & Dues

Materials and Services:

Maintenance & Repair Maintenance & Repair

Costs for building and equipm't repairs not covered by service contracts Vehicle Repair & maint.

Gen Purpose Equipmt repairCosts for equipm't repairs not covered by service contracts

Service ContractsMaint contract costs for equipmt Maintenance Contracts same

Office Supplies, copying, printing Office Supplies Dept'l Supplies & Expenses

Copying expense -includes copyingPrinting Printing Services

Meetings, Food & Beverages Meetings - Food & Beverages Food and Entertainment Recreation-related expenses Employee Morale

Prizes & Awards - Other Alcohol or EntertainmentEntertainmentAudio Visual

Non-reimbursable expenses

Costs that do not qualify for reimbursement from Federal sponsors

Seminar/Workshop/Con ference Costs

costs of seminars/workshops offered by IS for MIT community.

Mailing and Shipping Postage Mailing & Shipping Service Center Charges ?Postage & Freight

Telecomm. & Networking Non-IS Tel & Network Chrgs

Non-IS telephone and network vendor payments and for reimbursements to staff for non-IS services at home for MIT purposes. Telecommunications same

IS Tel & Network one-time

one-time moves and intallation charges for jacks and telephones Not charged back at SU

IS Tel Monthly chrgsmonthly phone service, pager usage and voice mail charges Stanford Communications

IS Tel usage chrgstoll calls and tel credit card charges Billable calls

18a

Sample Direct Cost ComponentsCost Component Groups Description MIT Name Definition SU Name Definition

IS Network monthly chrgsIP address, tether, circuits and TSM charges

Stanford Communications or SU Data Ctr Services at SU, only TSM is charged for.

IS Network Usage chrgstether charges greater than 100 hrs/mo. Not charged back at SU

IS Tel Equipment chrgs monthly tel equipm't chrgs. Stanford Communications

IS Network Equipment chrgsmonthly network equipm't chrgs. Requires further discussion

Books, Publications, Subscriptions Books & Publications Books & Publications

Subscriptions

Software Software License SoftwareSoftware Maintenance Software

Equipment - Capital Equipm't/Furniture > $3000 Equipm't/Furniture > $1500 Non-Capital Equipm't/Furniture between $500 and $2,999 General Purpose Non Capital < $1500

Special Purpose Non-CapitalAncillary cost- cap equipment

Computer Supplies & Periperals < $500at SU, does this go into expendable M & S?

Rentals Equipment Rental Rent - Other EquipmentSpace Rental Rent - Buildings

Vehicle costs and maintenance no incidence Vehicle costs and maintenance

Other miscellaneous materials & services: Promotional items Promotional Memorabilia Promotional - unallowable Advertising for recruiting Space Advertising Employee recruitment

18b

Indirect and Overhead CostsThe following costs will not be included in the first pass of comparable benchmarks.

Description MIT Name SU Name A Denna Comments 10/6/02

A. Administrative and Operational Costs managed and paid for by IT but not included in the cost pool: (May or may not be charged back)

Other IT-provided services cha IS Mainframe chargesSU does not charge back for mainframe usage Eliminate from study.

Administrative and Operating costs not included in the Federal cost recovery rate at MIT

IS Recruiting and CG (HR) staff effort and costs some HR support

IS financial management team IT Finance Staff Building Site costs:

Water, coffee, tea, etc

Common area equipment and maintenance (copiers/printers) Moving costs for staff around ISRenovations to common building areas Renovation

ACD system costs To be determined Anything to add here on the SU side?

Etc.

B. Administrative and Operating Costs managed and paid for at the Institute or University-wide level: (May or may not be charged back)

Inst.-wide charged back costs:Campus Activities Complex See Rentals (line 80). Is this a duplicate

MIT costs included in F & A:Renovations RenovationOperating costs of MIT bldgs Contract Custodial Services

Interest & Depreciation Interest - External unallowableDepreciation

Central Admin salaries and expenses for CIO, IT Directors other than Director of Support, CAO, and central HR functions

ITSS Mgmt & Admin GL: -Designated Credits (cr) -Chrgs to/fr Other Depts (db) This is the 'G & A' removed

19

20

2. Exclusion of Effort

• Determination of non-benchmark activity made as a percentage of EFT by team leader/direct manager

• Cost of exclusion based on percentage of EFT x annual salary equivalent

• Total excluded cost subtracted from total salaries and wages costs for team for the period

Exclusion of EffortEXCLUDED EFT AND OPERATING $ BY TEAM

Sept-Feb Sept-Feb Sept-Feb Sept-Feb Sept-FebExcluded Excluded Excluded Excluded Total

Project EFT EFT $ Operations Operations $ Excluded Cost Explanations

Business Liaison Team

BLT - 1 EHS 0.1 $2,500 2,500Environmental Health & Safety project team. Work outside the scope of the Help Desk function.

BLT - 2 Distributed Support 0.20 $4,000 NEXTEL Cell 218 4,218

Dispatch work for the School of Science pilot & DITR is outside the scope of the Help Desk function, as is the cost of his cell phone for dispatch-related work.

BLT total 0.30 $6,500 218 6,718

ATHENA/RCC NOTE: Wireless and Linux costs are already excluded

A/RCC - 1 Other Infrastructure 0.10 2,500 0 2,500Teaching classes for Training team. Outside of Help Desk function.

IS Home Page Project 0.05 1,250 0 1,250 Outside of Help Desk function

A/RCC - 2 RCC Student Support 0.13 3,000 0 3,000 All RCC (student) related support - 80% for Sept. only

Other Infrastructure 0.40 9,000 0 9,000Discovery Projects, Distributed Support (Net Security, Housing, Residential Life), HP, Windows Cluster, MCCA project

A/RCC - 3 Client Advocacy 0.20 6,000 0 6,000 Residential computing, Academic Computing

Other Infrastructure 0.10 3,000 3,000 Non-Help Desk casetracker work

A/RCC - 4 RCC Database 0.40 9,000 9,000 RCC ticket tracking system and backfilling for A/RCC - 3

StudentsRCC Residential

Computing 0.0 38,644 38,644Residential computing consulting outside of Help Desk Function being benchmarked

Athena/RCC Total 1.38 $72,394 0 72,394

HELP DESK NOTE: Wireless and Linux costs are already excluded

HD - 1 Provost Help Dist. Effort 0.50 6,000 0 6,000 50% of his half-time or 25% FTE

HD - 2 Other Infrastructure 0.10 2,500 0 2,500 10% TSM migration meeting facilitation

HD - 3 VIP Distributed Help 0.50 12,500 Sprint Cell 174 12,674 50% for distributed support

HD - 4 VIP Distributed Help effort 0.50 17,500 Nextel Cell 294 17,794 50% for distributed support.

HD - 5 Housecalls 0.70 $21,000 21,000 70% for distributed support. 25% for Wireless, 5% for Linux OS

HD - 6 Housecalls 0.50 15,000 15,000 50% time for distributed support

HD - 7 Professional Services 0.00 $0 5,920 5,920 50% of HD - 7's 50% EFT in Help Desk

Help Desk Total 2.8 $74,500 0 6,388 80,888

21a

Exclusion of EffortSept-Feb Sept-Feb Sept-Feb Sept-Feb Sept-FebExcluded Excluded Excluded Excluded Total

Project EFT EFT $ Operations Operations $ Excluded Cost Explanations

SOFTWARE LIBRARIES

SW Lib - 1 IS Home Page 0.10 3,000 0 3,000 10% project time

SW Lib - 2 Support Staff 0.65 $14,050Software sold to

DLCs 28,142 42,192

Support staff is for administrative function only. Operations costs are software and software maintenance costs for Compaq, SGI and Sun operating systems that are sold to DLCs.

Software Libraries Total 0.75 $17,050 28,142 45,192

Total Exclusions 5.23 $170,444 34,748 205,192

21b

22

3. Cost Object Detailed Reports

• Download period detailed reports into excel, 1 cost object per tab of workbook

• Format by sub-category of expense as determined earlier with cost sub-totals

• Input total EFT for each cost object report • Link excluded EFT and dollars to exclusion of

effort spreadsheet

23

3. Cost Object Reports - cont.

• Formulate percentage of EFT excluded by cost object

• Multiply percentage of EFT excluded x each line of operating expense to get excluded operating costs

• Formulate last columns for final EFT and costs for benchmark activity

Cost Object TemplateSAMPLE DATA

FY03 Total Excluded Excluded Excluded * Final IS Roll Up G/L Code & G/L Description FY03 Budget Expenses EFT EFT EFT $ Operations $ Final EFT Cost Pool

ExpensesSalaries

400250 - Administrative Staff-On $800,000 $700,000 13.00 2.50 $100,000 $0 10.50 $600,000400450 - Hourly Personnel-On $0 $13,000 0 $0 $0 0.00 $13,000400754 - MIT Students-On $115,500 $80,000 0 $0 $0 0.00 $80,000TOTAL Salaries $915,500 $793,000 13.00 2.50 $100,000 $0 10.50 $693,000

Employee Benefits600204 - EB On $144,000 $128,340 $18,000 $110,340TOTAL Employee Benefits $144,000 $128,340 0.00 0.00 $18,000 $0 0.00 $110,340

Travel & Professional Development420050 - Travel Expenses $9,993 $1,884 $9,993420080 - Travel-Unallowable Cost $0 $0420081 - Travel-Professional Devel $16,750 $4,423 $834 $4,423420131 - Prof Development/Training $11,500 $11,437 $2,157 $11,437TOTAL Travel & Professional Develo $28,250 $25,853 0.00 0.00 $0 $4,875 0.00 $25,853

Materials & Services420140 - Conference Expenses $75 $14 $61420220 - Maint & Repairs $1,000 $2,700 $509 $2,191420226 - Materials and Services $150 $3,433 $647 $2,785420254 - Non-Reimbursable Expenses $250 $422 $80 $342420258 - Office Supplies $2,200 $992 $187 $805420302 - Promotional & Memorabilia $1,154 $218 $936420318 - Recreation Related Expens $200 $732 $138 $594420319 - Prizes & Awards-Other $500 $0 $0420321 - Rewards & Recognition $0 $125 $24 $101420338 - Service Contracts $500 $96 $18 $78420392 - Copying Expense $250 $82 $15 $66420800 - Books & Publications $500 $421 $79 $341420890 - Subscriptions $240 $30 $6 $24420900 - Mail List Expense $270 -$267 -$50 -$216420920 - Postage Mailing and Shipp $275 $19 $4 $16421000 - Meetings - Food & Beverag $6,250 $5,670 $1,069 $4,601421420 - Space Advertising $1,230 $232 $998421586 - Memberships and Dues $760 $560 $106 $454421753 - Non-IS Telephone & Networ $4,700 $4,958 $1,871 $3,087421765 - IS Telephone & Network On $3,000 $3,240 $611 $2,629421767 - IS Telephone Monthly Char $17,800 $18,123 $3,417 $14,705421768 - IS Telephone Usage Charge $1,700 $1,091 $206 $886421769 - IS Network Monthly Charge $21,000 $24,920 $4,699 $20,221421770 - IS Network Usage Charges $0 $30 $6 $24421900 - Computer Supplies & Perip $7,115 $13,106 $2,471 $10,635421925 - Software $6,000 $3,576 $674 $2,902421935 - IS Mainframe Charges $25 $5 $20421940 - IS Mainframe Charges-not $11 $2 $9422065 - Travel Advance and Tickets $0 $0 $0TOTAL Materials & Services $74,660 $86,553 0.00 0.00 $0 $17,257 $69,296

24a

Cost Object TemplateSAMPLE DATA

FY03 Total Excluded Excluded Excluded * Final IS Roll Up G/L Code & G/L Description FY03 Budget Expenses EFT EFT EFT $ Operations $ Final EFT Cost Pool

Equipment421772 - IS Telephone Equipment Ch $9,800 $9,860 $1,859 $8,001421773 - IS Network Equipment-not $7,300 $9,616 $1,813 $7,803421818 - Equip/Furniture-Major-not $20,000 $19,647 $3,705 $15,942421827 - Equip/Furniture-Minor $24,870 $12,873 $2,427 $10,446TOTAL Equipment $61,970 $51,996 0.00 0.00 $0 $9,804 $42,191

Professional Services/Consulting420298 - Prof essional Services $40,840 $15,776 0 0 $15,776 $0TOTAL Professional Services $40,840 $15,776 0.00 0.00 0.00 $15,776 0.00 $0

TOTAL $1,265,220 $1,101,518 13.00 2.50 $118,000 $47,712 10.50 $940,681Student EFT based on tot hrs/1750hr/yr 3.55 0 $0 3.55Total Benchmarking EFT including Students 16.55 2.50 * 14.05

* Percentage of excluded operating costs based on % of EFT excluded plus specific other costs noted on Exclusion of Effort template* * (Tot cost/$14.50/hr)/1750 hrs/yr

24b

25

4. One-Page Cost Summary

• Summarizes costs by sub-category and EFT from each cost object

• Provides ratio for $ spent per EFT by sub-category

• Establishes final total cost for benchmark activity

One-Page Cost Summary

FY03 FY03 FY03 Excluded FY03 Excluded Final Final CostDescription FY03 Budget Actuals EFT Excl EFT EFT $ Operations $ EFT Pool $/EFT

Salaries $1,800,000 $1,750,000 24.50 5.45 $393,568 19.05 $1,356,432 $71,204

Employee Benefits $414,000 $402,500 $90,521 0.00 $311,979 $16,377

Travel & Professional Development $56,750 $50,000 $8,427 0.00 $41,573 $16,377

Materials & Services $275,000 $300,000 $188,988 0.00 $111,012 $5,827

Equipment $100,000 $75,000 $23,933 0.00 $51,067 $2,681

Professional Services/Consulting $60,000 $55,000 0.00 0.00 $0 $15,776 0.00 $39,224 $2,059

TOTAL $2,705,750 $2,632,500 24.50 5.45 $484,089 $237,125 19.05 $1,911,287 $114,525Plus Student EFT 9.45 2.95 6.50

25.55

Annual Financial Data Exclusions Benchmarking Data

26

27

5. Allocating Cost

• Collected and sorted all cases by topic • Used estimated ‘time to resolve’ as weighting

factor when calculating cost per ticket• Sampled to ensure that ‘time to resolve’ was

roughly proportional to estimated ‘time spent’• Unit cost calculated based on time to resolve all

cases• Cost per case = ‘time to resolve for case X * ‘unit

cost’

28

Operationalize the Method Excel Workbook Formulation

• Top page is summary by sub-category of expense

• Each team contributing to benchmark activity rolls up to the summary page

• Excluded effort page rolls up to each team page to adjust for EFT and cost

29

Project Outcomes

• Process improvements • New and increased abilities to handle

spikes• Marked improvement in performance• Shift in management culture • Data quantified support for IT investment

30

Financial Benchmarks ~ 2002Gauging investment and effectiveness

MIT Stanford Variance

IT Dept Expense / University Expense 2.9% 4.4% N/AHelp Desk Expenses / IT Expenses 4.1% 2.9% N/A Help Desk Expenses / School Pop. $96 $106 10%Help Desk Tickets / School Pop. 2.2 1.8 -18%Pop. Per Help Desk Employee 712 901 27%Help Desk Cases / Help Desk FTE 1,595 1,675 5%Help Desk Expenses / Help Desk Case $41.83 $64.18 53%

31

Key Learnings

• Define your role and responsibilities • Change is constant. Be flexible• Communicate readily• Benchmarking is an iterative process• Unusual events provide interesting analysis• Don’t eliminate important cost component

differences. They tell a story too.• Learn by doing

32

Acknowledgments

• Stanford and MIT Team– Greg Anderson, Anne Denna, Jennifer Dowling-

Dougherty (Project Manager), Barbara Goguen, Rob Smyser, Oliver Thomas, Carol Wood and Esther Yanow for MIT

– Bill Clebsch, Catherine Knipe, Chris Lundin, Lynne Myers, Melissa Janetos and April Wen for Stanford

– Special thanks to Jean Roberge and Sue St. Croix in CAO at MIT

33

MIT/Stanford Benchmarking Project Website

http://web.mit.edu/ist/about/benchmarking

34

Questions?