2012-MGM07

IT Service-Based Costing: Standardizing Provisioning and Servicing IT Resources

Management Track

MGM07_Presentation_ITService-BasedCosting_Jessen

Abstract:

In today’s current economic environment, there is a strong focus on constraining spending of appropriated funds to meet the mission particularly within the Intelligence Community and Department of Defense (DoD). Part of the DIA’s mission includes the delivery of IT products and services. In the past, IT services have been provided to non-Core customers for free, but in the new fiscal environment, the DIA does not have sufficient resources to continue to operate in this manner. In compliance with the Economy Act of 1932 and DoD Financial Management Regulations, the DIA has been taking steps to quantify the IT services it deploys in order to recover costs of those services.

The DIA IT Service Catalog, Pricing Supplement, and Service Request Pricing Tool (SRPT) were created in 2010 as a first attempt to identify standard IT services and estimate their costs from a purely IT service perspective. They were developed as part of the Reimbursable project under the DIA Reinvention Initiative. The project implemented the first ever standardized valuation methodology for the agency. The effort enhances customer focus by providing customers with service pricing information and allows them to make informed decisions about the services they wish to acquire.

The IT Service Catalog is a Word document that describes each of the IT services offered by the agency. The Pricing Supplement is an appendix to the IT Service Catalog that contains the standard pricing for each IT service. The final Pricing Supplement product is a Word document, but the costs are developed in an Excel tool comprised of a Cost Element Library and Services Library. While the Pricing Supplement was originally developed in 2010, the pricing was not fully validated and the costs were not traceable. The Pricing Supplement was updated in 2011 with more traceable cost data although there were still a number of constraints including lack of actual cost data, lack of identified service owners to validate the costs, and difficulty in allocating components of a service. The Cost Element Library and Services Library both feed the Standard Request Pricing Tool (SRPT) which is a dynamic Excel tool. The SRPT provides the ability to quickly develop an estimate of costs for standard IT services as well as provide a Bill of Materials (BOM). The SRPT also allows for services to be customized based on customer needs and requirements.

The paper will focus on the approach used to determine the standard prices for provisioning and sustaining services and discuss how they are used to facilitate reimbursement in a constrained fiscal environment. It will discuss the issues and constraints in developing the standard pricing for IT services and identify areas for improvement in the future. The paper will also give an overview of the functionality of the SRPT and how the DIA uses its outputs to facilitate reimbursement.

Author(s):

Emily Jessen
TASC, Inc.
Emily M. Jessen is a Cost Analyst for TASC, Inc currently supporting the Defense Intelligence Agency (DIA). At the DIA she is responsible for preparing service valuations, preparing business case analysis, and developing cost estimates and assessments. Previously Emily supported the National Geospatial-Intelligence Agency (NGA) where she developed several Life Cycle Cost Estimates for large IT systems and led an inter-agency study on developed software reuse. Emily has been a member of the Society of Cost Estimation and Analysis (SCEA) for the past four and a half years. Emily earned her B.S. in Mathematics and a Minor in Statistics and French from Penn State University in 2007. She earned her M.B.A. from George Washington University in 2011.

Paul Brown
TASC, Inc.
Mr. Paul Brown is a cost analyst for TASC Inc, currently assigned to the Defense Intelligence Agency (DIA). He has been with TASC since 2008 and at DIA since 2011. His role at DIA primarily consists of conducting service valuations and zero-base reviews. Prior to being assigned to DIA, Mr. Brown supported the National Geospatial-Intelligence Agency (NGA) and Federal Aviation Administration (FAA) working on various IT Independent Life Cycle Cost Estimates (I-LCCEs), and the National Reconnaissance Office working on agency-wide business case analyses. Mr. Brown has BS in Industrial & Systems Engineering from Virginia Tech, an MS in Industrial & Systems Engineering from Virginia Tech, and is currently pursuing an MBA.