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RightIT™Maximizing Government IT EfficiencybyEugene Boundsbounds_eugene@bah.comLouise Campanalecampanale_louise@bah.comMarguerite Morrellmorrell_marguerite@bah.comMichael Schoepschoep_michael@bah.com
RightIT™ Maximizing Government IT Efficiency The budget deficit and need for comprehensive spending become fragmented, reducing economies of scale and cuts have increased the need to control spending. Federal resulting in unnecessary cost burdens. Government agencies must acquire needed Information Technology organizations experience these inefficiencies across (IT) at the right costs. Booz Allen Hamilton’s RightIT™ all elements of their budgets from desktop to methodology baselines IT infrastructure and related data centers, in hardware and software, as well as costs, provides benchmarks to measure IT performance, telecommunications and data networks. Exhibit 1 analyzes alternatives and develops a plan to achieve shows how inefficient practices create unnecessary efficient and effective IT support. Then, Booz Allen brings complexity in the IT environment and drive up costs. In together certified cost analysts, world-class IT technologists addition, there are often hidden IT costs (e.g., the cost and other experts to deliver long-term IT solutions to our of power, real estate, and administrative overhead for federal agency partners. This paper provides an overview IT operations). of RightIT™, presents samples of the significant results Across the federal government, agencies spend almost achieved by our clients, and outlines how the approach can $80 billion per year on IT. Because of the significant be used by federal agencies to create efficient and effective size of the expenditure, IT is a target for cost- IT operations. rebalancing actions and directed budget reductions. Current State of Government IT Environment Today, the majority of federal IT investments are As IT enterprises have evolved over the decades, defined, funded, and operated by individual programs information infrastructure and related applications have of record or functional organizations in a decentralized, Exhibit 1 | Impact of Inefficient Practices in Current Government IT Environment Typical Current State Impacts ■ Multiple overlapping systems create a ■ Costly and complex technology need for expensive system interfaces environment ■ IT requirements are focused on supply ■ Ineffective demand management drives ■ Lack of enterprsise-level acquisition up cost per user strategy reduces buying power ■ IT is purchased in an ad hoc or ■ Server environments are managed by piecemeal fashion rather than in an multiple organizations ef cient, end-to-end acquisition ■ IT cost drivers are not well understood ■ Fragmented IT management and oversight makes accountability dif cult ■ Hidden IT costs often result in sub-optimal decisions Source: Booz Allen Hamilton1
often ad hoc, manner. In many cases, the individuals identify IT acquisition strategies that capture savingswho generate program requirements are not familiar and drive increased performance. Our comprehensivewith available enterprise capabilities. As a result, assessment will highlight performance improvementIT environments consist of a patchwork of one-off and savings opportunities as outlined in Exhibit 2.systems with incompatible, inefficient, and costly The overall objective of our approach is to reduce ITnetworks. Furthermore, budgets for power and real spending, while retaining value-added IT capabilitiesestate are managed outside of IT programs. These and improving enterprise-level performance.“hidden” IT costs can account for 30 percent or more The approach is designed to realize short-term savingsof annual IT operating budgets. The current planning, at the outset by implementing improvements within theprogramming, budgeting, and execution process immediate control of the IT organization. While initialdoes not provide adequate transparency. As a result savings are being realized, Booz Allen simultaneouslyof this lack of insight, it is nearly impossible for analyzes the IT environment for additional efficienciesfederal agencies to produce a comprehensive, current that can be harvested as savings over the longer term.state cost baseline. Without the ability to accuratelycharacterize IT costs, there is no effective way to With RightIT™, we begin using a diagnostic processquantify the return on investment (ROI) of IT initiatives to evaluate the client’s entire IT environment. Ouror recommend the most cost-effective approach to approach identifies the total cost of ownership (TCO),meet federal IT mandates. including hidden IT costs. Our experts then highlight potential savings in the areas of infrastructureAchieving Cost-Effectiveness with RightIT™ management (e.g., data center consolidation andBooz Allen’s RightIT™ methodology is a proven new technologies like cloud computing), requirementsapproach to achieve cost-effective IT capabilities. Our management (e.g., service level agreements to controlworld-class team of cost, IT, and change management demand), acquisition management (e.g., strategicexperts uses this powerful methodology to analyze sourcing), and process management (e.g., streamlinedboth supply and demand factors. It also helps us IT business processes).Exhibit 2 | Areas for Performance Improvement and Savings with RightIT™ Infrastructure Requirements Acquisition Process Management Management Management Management ■ Enterprise ■ Service Level ■ Strategic Sourcing ■ Change Management Architecture Agreements ■ Contract Consolidation ■ Security Organization ■ Data Management ■ Technology Limits ■ Contract Management ■ Performance ■ Data Center on Staff Measurement ■ Outsourcing Consolidation ■ Budget Transparency ■ Business Process ■ Service-based Pricing ■ Server Consolidation ■ Commercial Market Reengineering Surveys ■ Portfolio Management ■ Service Consolidation ■ IT Governance ■ Cloud/Virtualization ■ Asset ManagementSource: Booz Allen Hamilton 2
Booz Allen will identify opportunities for re-designing • We helped a major military command validate its IT infrastructure utilizing consolidation, virtualization, corporate architecture and performance (CAP) cloud computing and other technologies. These standards for IT services. Our experts then technologies maximize system availability and are baselined the command’s 10 installations against designed to be rapidly shifted to adjacent systems to the CAP standards, and provided the command’s accommodate maintenance windows, system outages, Chief Information Officer with “best practice” and other events that affect infrastructure availability. benchmarked costs for providing IT services at An enterprise focus eliminates service gaps and each base. The command used the cost model redundancies. we developed to identify inefficiencies and assess trade-offs on technology investments. The result was The RightIT™ approach evaluates IT requirements a well justified budget for base-level IT services. from both the supply and the demand management perspectives. We evaluate which investments are • Booz Allen helped a global pharmaceutical and required to align with the agency’s end-state goals, and consumer products company make informed IT we use multiple performance parameters to measure choices that saved between $34 and $50 million ROI and per-unit technical performance. on a $164 million baseline, or 20 to 30 percent. The company had a distributed IT function that was We use the strategic sourcing perspective to evaluate expensive and difficult to administer. Booz Allen an agency’s IT environment, identifying near-term helped them remedy those problems by establishing cost savings that can offset future investments. an IT shared services model that was both effective This analysis of the various cost efficiency drivers and economical. ensures that our clients are paying the right price for the IT services they need. As a result, IT acquisition • A large federal government organization lacked the management is rational and efficient. capability to effectively manage IT investments. As a result, it was unable to evaluate benefits, costs Identifying the right IT organization structures, and risk in its IT investment projects. Booz Allen streamlined business processes, and most effective developed and implemented a portfolio management governance models are included in our RightIT™ process that resulted in a 40-percent reduction in assessment. This is not only important by itself, but proposed enterprise architecture expenditures and a also helps to fit all the other management elements 21-percent reduction in office automation spending. together into an integrated IT environment that benefits The new portfolio management process is both and serves the entire enterprise. effective and transparent. Our comprehensive RightIT™ approach to improving • Booz Allen helped a government health organization IT environments ensures that our clients understand create an effective IT investment management and which activities have the greatest potential decision making framework that aligned spending for improvement and savings. We also deliver with medical transformation objectives. Booz Allen a comprehensive efficiency and improvement analyzed IT requirements, developed an investment implementation plan that considers mission evaluation process, built a detailed transition plan, requirements, available budget resources, timing, and stood up a governance structure to manage IT and risk factors, along with the value of enhanced IT investments. The enterprise wide solution will save performance and potential savings. more than $20 million. Helping Clients Get Results with RightIT™ • A national diagnostics testing company was Booz Allen’s RightIT™ approach has already helped undergoing a merger and was expected to reduce government agencies improve IT performance and operating expenses. Booz Allen developed an IT reduce costs. The following are some of our client infrastructure baseline, determined total cost of IT engagements: ownership, established benchmarks, and prepared3
short-term, mid-term, and long-term action plans or reviewed by government oversight entities. It also to rationalize IT operation within the merged provides an important support for agency budget organization. As a result, the client’s IT costs were requests. reduced by approximately 20 percent, a savings of $43 million. Diagnostic Phase• A defense acquisition program inherited numerous Compile Current State Baseline aging servers with no centralized management A comprehensive understanding of IT expenditures is process to effectively monitor or manage their important to create a current state baseline. Through system. As a result, IT costs were very high. Booz careful navigation of multiple appropriation baselines, Allen re-designed the IT infrastructure utilizing financial systems, and execution vehicles, Booz Allen consolidation, virtualization, and cloud computing can compile a comprehensive IT cost baseline. During technologies. These efforts reduced maintenance the initial diagnostic phase, we also establish a series downtime by 75 percent and saved $6 million in of per-unit costs (e.g., power consumption per server hosting and licensing costs. We also developed an and cost per user), which are then used to calculate optimized architecture that used virtualization to expected cost savings associated with IT alternatives. reduce the program’s IT footprint by 83 percent. Benchmark Against Best PracticesThe Three-Phased Approach of RightIT™ With a TCO baseline established, the RightIT™To improve IT performance and achieve savings, we approach benchmarks the status quo against industryimplement the RightIT™ approach in three phases: averages. The differences found when comparing theDiagnostic, Planning, and Implementation (as shown baseline line-items with the benchmarks will helpbelow in Exhibit 3). This approach ensures that our identify where cost savings can be achieved mostfederal clients are compliant with agency mandates effectively. Benchmarking will also highlight targetand documentation requirements that may be audited areas for IT service performance improvement.Exhibit 3 | Three Phases of Booz Allen’s RightIT™ Methodology Implementation Diagnostic Phase Planning Phase Phase Delivers improved IT Identi es each client’s Builds a detailed plan to performance unique IT challenges address the challenges and creates savings Implement Compile Deliver Benchmark Develop Prepare Ef ciencies Current Ef ciency Against Best Strategic Analysis of and State Implementation Practices Options Alternatives Technology Baseline Plan InitiativesSource: Booz Allen Hamilton 4
Develop Strategic Options Deliver Efficiency Implementation Plan With visibility into how an agency’s IT environment The efficiency implementation plan maps the approved compares to industry standards, alternatives can be IT solutions into an executable game plan that identified and evaluated. Our approach considers ensures all the improvement initiative priorities and which savings and improvement strategies will yield dependencies are integrated and work together to the greatest value to the organization. Trade-offs deliver the expected results. This step ensures that all between expected benefits, implementation costs, initiatives contribute to the enterprise-level end-state. desired service levels, budget resources, and delivery Booz Allen also ensures that robust documentation, methods are examined to determine which options communication plans, and stakeholder coordination are will achieve required service levels and generate the part of the planning process. most efficiency. Through this process, the optimal architecture and delivery methods are identified. Technology Efficiency Implementation Phase Typical alternatives include data center consolidation, Implement Efficiencies And Technology Initiatives migrating to cloud computing, and performing business The RightIT™ approach is designed to ensure that process reengineering across the enterprise. However, end-state goals for performance enhancement and every agency’s solution set will be unique. cost savings are achieved. During the implementation phase, the Booz Allen team expands to include Planning Phase appropriate IT experts needed to complete every task Prepare Analysis Of Alternatives on time and within budget. Our world-class IT expertise Our approach provides a robust mechanism to evaluate will ensure that the implementation fully achieves the the TCO of alternatives, whether those alternatives results outlined in the efficiency implementation plan. exist at the enterprise level (e.g., data center consolidation) or within a particular concentration Right-sizing with RightIT™ area (e.g., private cloud as opposed to public cloud or The RightIT™ approach is a comprehensive analytical hybrid cloud). Our methodology accounts for agency- framework for making informed decisions that specific compliance policies for evaluating technical maximize savings and IT performance, while reducing and cost parameters, as well as auditing requirements. costs and minimizing risks in pursuing the approved The RightIT™ approach leverages the expertise of IT solutions. It begins by developing a current state our world-class cost and IT analysts to evaluate IT IT cost baseline. Once this baseline is established, alternatives for decision makers. We use agency- appropriate benchmarks will help identify savings and specific Business Case Analysis (BCA) to highlight improvement targets. The efficiency implementation the benefits, costs, and risks of various solutions. plan provides a detailed roadmap for achieving cost The Booz Allen team has the capability to evaluate savings and improved performance. To implement the the industry vendor base, available contracting plan, Booz Allen will bring world-class talent to the mechanisms, and the requirements of the federal engagement, ensuring expected results are delivered. budgeting system to ensure BCA recommendations can be incorporated into the next budget cycle. Contact Information: Eugene Bounds Louise Campanale Marguerite Morrell Michael Schoep Senior Vice President Principal Principal Principal email@example.com firstname.lastname@example.org email@example.com firstname.lastname@example.org 703-377-4186 703-377-5242 281-280-6199 202-203-37465
About Booz AllenBooz Allen Hamilton has been at the forefront of resources, and deliver enduring results. By combiningstrategy and technology consulting for nearly a a consultant’s problem-solving orientation with deepcentury. Today, Booz Allen is a leading provider of technical knowledge and strong execution, Booz Allenmanagement and technology consulting services helps clients achieve success in their most criticalto the US government in defense, intelligence, and missions—as evidenced by the firm’s many clientcivil markets, and to major corporations, institutions, relationships that span decades. Booz Allen helpsand not-for-profit organizations. In the commercial shape thinking and prepare for future developmentssector, the firm focuses on leveraging its existing in areas of national importance, includingexpertise for clients in the financial services, cybersecurity, homeland security, healthcare, andhealthcare, and energy markets, and to international information technology.clients in the Middle East. Booz Allen offers clients Booz Allen is headquartered in McLean, Virginia,deep functional knowledge spanning strategy and employs more than 25,000 people, and hadorganization, engineering and operations, technology, revenue of $5.59 billion for the 12 months endedand analytics—which it combines with specialized March 31, 2011. Fortune has named Booz Allen oneexpertise in clients’ mission and domain areas to of its “100 Best Companies to Work For” for sevenhelp solve their toughest problems. consecutive years. Working Mother has ranked theThe firm’s management consulting heritage is firm among its “100 Best Companies for Workingthe basis for its unique collaborative culture and Mothers” annually since 1999. More informationoperating model, enabling Booz Allen to anticipate is available at www.boozallen.com. (NYSE: BAH)needs and opportunities, rapidly deploy talent andTo learn more about the firm and to download digital versions of this article and other Booz Allen Hamiltonpublications, visit www.boozallen.com. 6