Information Technology Analysis
Hydro-Quebec Management Presentation
October 30th 2004
Table of Contents
„
Analysis Methodology
„
Objectives and Scope of Analysis
„
Executive Summary
measurement
Hydro-Quebec
Management Presentation
15 October 2004
Entire contents © 2002 Gartner, Inc.
Page 1
x
Analysis Methodology
measurement
Hydro-Quebec
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Entire contents © 2002 Gartner, Inc.
Page 2
Benchmark Methodology Overview
Kickoff
Data
Collection
Data
Validation
and
Normalization
Database
Analysis
Peer
Comparison
Executive
Action Plan
Results
„
The methodology employed by Gartner analysts enables a composite
overview of IT performance to be collected and evaluated against peer
organizations. A six-phase process is undertaken, starting with data
collection of workload and cost information for each functional area chosen.
Once collected, this information is verified, corrected and normalized to
ensure valid and equitable comparisons to other organizations with similar
sizes, business functions, architectures and configurations.
„
A key component of this analysis is the utilization of one key metric for each
functional area that leads to the formation of the Executive Report.
measurement
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Page 3
Analysis Methodology
Client
Workload
Client
Costs
Comparison of Key Metrics
Applications
Development
and Support
Mainframe
Systems
Midrange
Systems
Distributed
Computing
Networks
(Voice and
Data)
IT
Help
Desk
Packaged
Enterprise
Applications
Total IT Expenditure Database
The Rapid Assessment for Total IT Expenditure provides a comparison of
an enterprise’s key metrics with those of enterprises with similar workload
drivers drawn from the Rapid Assessment for Total IT Expenditure
database.
measurement
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Page 4
Methodology
Quantitative
and
Qualitative
Data
Database
Validation
and
Normalization
Process
Productivity
Measurements
General
Observations
Key Issues
Efficiency
Measurements
Recommendations
Models
Quality
Measurements
Data
Collection
Comparative
Analysis
Insights Unique to
Your Business
measurement
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Page 5
Individual Analysis Consensus Model Concepts
Hardware
Software
Application Code
MIPS
Extensions
Personnel
Transmission
Disaster Recovery
Calls/Minutes
Gigabytes
Devices
Call Volume
Cost
Workload
measurement
Hydro-Quebec
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Page 6
About the Total IT Expenditure Assessment
The Rapid Assessment for Total IT Expenditure provides a health check for H-Q’s
IT environment. This is a high-level look at the current environment and covers a
12-month time period. A number of functional areas have been evaluated.
For each functional area selected in this analysis, a composite peer group is
formed for comparison purposes. The enterprises selected have key workload
characteristics similar to those of H-Q. Each functional area has a different
selected peer group.
The selection of the different peer groups enables Gartner Measurement to
compare H-Q with other enterprises based on key metrics. These key metrics are
used to provide an indication of the cost-efficiency of the H-Q IS organization.
measurement
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Page 7
About the Total IT Expenditure Assessment
The metrics listed for the areas selected for inclusion by Hydro-Quebec represent a
portion of the aggregated metrics for each key IT functional area that we believe will
provide the “health check” information that CIOs and senior IT managers require, at
a minimum, to develop an IT baseline for those functional areas. These metrics set
the stage for a consistent methodology enabling the accurate identification of costs
and workload attributes as well as an internal and external comparative analysis to
determine how well each of the selected functional areas is performing.
measurement
Hydro-Quebec
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15 October 2004
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Chart of Accounts
Distributed & Help Desk Costs
Assets
„
Hardware
‰
‰
‰
‰
„
Labor
„
Servers
Clients
Peripherals
Network
‰
‰
‰
‰
Software
‰
‰
‰
‰
Operating
systems
COTS
Applications
Utilities
Management
Operations
„
Technical services
Planning and process
management
Database management
Service desk
Administration
‰
‰
Finance administration
Management
„
IS Equipment
„ Agent Equipment
measurement
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Objectivesxand Scope
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Objectives of the Analysis
„
To establish a baseline for IT expenditures and cost-efficiency
„
To provide a comparative analysis of expenditures against other
enterprises with similar workloads, complexity and performance
characteristics
„
To provide a “health check” of the IT services delivered to the IT end-user
community
„
To identify potential opportunities for increased IT efficiency
„
To offer recommendations to increase IT efficiency and effectiveness
„
To create a foundation for a continuous measurement program
measurement
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Scope
„
Functional Areas Studied
‰
IT Help Desk
‰
Distributed Computing
„
Benchmark analysis covers the period from January 2003 to December 2003.
„
$60.9M of Hydro-Quebec’s expenditures have been included in the consensus
model.
measurement
Hydro-Quebec
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Scope
„
Peer groups
‰
„
Chosen on basis of comparable workload that maps to Hydro-Quebec’s scope
of support, defined differently for each service being benchmarked
Each peer group chosen based on its workload profile:
‰
IT Help Desk
– Number of inbound calls, including abandoned, and the overall complexity
of the environment as defined by the type of calls taken
‰
Distributed Computing
– Number of end users supported, number of devices in the LAN
environment and complexity of the environment
measurement
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Executivex Summary
measurement
Hydro-Quebec
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15 October 2004
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Key Summary Observations
„
Overall, costs are 22.9% lower than what the peer groups would spend to
support the same workload ($60,892K vs. $79,010K).
„
Costs are lower than the previous benchmark in the 2 areas reviewed.
‰
„
Networking costs have been removed from the analysis
Overall personnel costs compare favorably with the workload peer group.
But there is considerable variance in staffing levels.
‰
Total FTE counts are 21.8% higher than the workload peer (365.8 FTEs vs. 300.3
FTEs).
‰
Total FTE costs in the areas reviewed are 3.4% lower ($29,610K vs. $30,650K).
‰
Average cost per FTE is 21% lower than the workload peer group ($80,944 vs.
$102,053)
‰
In addition, Hydro Quebec uses a 35 hour workweek, which could account for up
to a 12% differential in total headcount, since most organizations in the data base
and the peer groups utilize a 40 hour workweek.
‰
The workload peer group is made up of primarily US companies since these
provided the best workload match. The variance does not take into account the
difference between US and Canadian salaries.
measurement
Hydro-Quebec
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Key Summary Observations
„
Complexity is high in the Distributed Computing area and has increased
since the last analysis (11 vs. 8.8 in ’99).
„
Best Practices scores are higher than the database average in most areas.
‰
„
Operations management is a strength and inventory management is a weakness.
End User satisfaction is very good and much improved over the previous
analysis.
measurement
Hydro-Quebec
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Page 16
Total Cost by Technical Area
Observations
„
The aggregate IT consensus model costs for Hydro-Quebec for those modules
included in the analysis (at $60.9M vs. $79M) are $18.1M (or 22.9%) lower than
what the composite peer group would spend to perform Hydro-Quebec’s
Technical Area Comparison
workload.
„
Lower Costs
Distributed
Computing
-24.70%
H-Q
-2.50%
0%
-5
%
-1
0%
-1
5%
-2
0%
-2
5%
Alignment
-3
0%
„
IT Help Desk
measurement
Hydro-Quebec
Management Presentation
15 October 2004
Entire contents © 2002 Gartner, Inc.
Page 17
Total Cost by Technical Area
$90,000
$79M
Overall costs are
$18.1M lower than
the Peer would use
to support the same
workload.
$80,000
$70,000
$60.9M
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
H-Q
PEER
Distributed Computing
$54,753
$72,713
IT Help Desk
$6,139
$6,297
measurement
Hydro-Quebec
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Page 18
Total Cost by IS Cost Category
Observations
„
Hydro-Quebec’s spending, by category, varies
from the peers as show below:
Cost Category Comparison
Occupancy
Outsourcer
169.09%
-78.48%
Transmission
167.91%
H-Q
Hardware
-33.83%
20
0%
-21.74%
15
0%
Software
Alignment
10
0%
-3.39%
50
%
Personnel
0%
-5
0%
-1
00
%
Significantly lower costs
by total dollar value
measurement
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Total Cost by IS Component
$90,000
$79M
$80,000
$70,000
$60.9M
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
H-Q
PEER
Occupancy
$2,598
$965
Outsourcer
$1,760
$8,181
$205
$76
Personnel
$29,610
$30,650
Software
$5,328
$6,808
Hardware
$21,392
$32,330
Transmission
measurement
Hydro-Quebec
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15 October 2004
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Total Full-Time Equivalents by Area
Observations
„
The total number of full-time equivalent (FTE) personnel within the IT areas
measured is 21.8% higher than the peer group FTE staff that would be required to
support Hydro-Quebec’s workload.
„
‰
Total FTEs
H-Q
Peer
Variance
365.8
300.3
21.8% higher
FTE Count Comparison
IT Help Desk
40.8%
H-Q
45
%
40
%
35
%
30
%
25
%
20
%
15
%
10
%
18.0%
5%
0%
Distributed
Computing
measurement
Hydro-Quebec
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15 October 2004
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Total Full-Time Equivalents by Area
400.0
„
„
„
„
The charts numbers are inhouse FTEs.
The workload peer has
outsourcing which includes
labor.
Hydro-Quebec also has
outsourced services which
includes labor.
The equivalent FTEs
outsourced for the workload
peers are roughly:
„Help
350.0
300.3 FTEs
300.0
250.0
23.3% higher
200.0
150.0
Desk : 7.3 FTEs
„Distributed
„
365.8 FTEs
: 26.6 FTEs
Final normalized FTE count
for the workload peer is:
„334.2
100.0
50.0
FTEs
IT Help Desk
Distributed Computing
H-Q
PEER
71.0
50.38
294.9
249.95
measurement
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Total Cost per Call - Cost Overview
Help Desk Cost Comparisons
$30
$21
$24
$20
$15
$20
$20
$21
$25
$10
$5
$0
HQ04
measurement
Hydro-Quebec
Management Presentation
15 October 2004
HQ99
Peer
Util
DBA
HQ is in alignment with the 1999 analysis
HQ is in alignment with the peer group
HQ is 16.7% lower than the utility peer group
HQ is in alignment with the database average
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Total Cost per User - Cost Overview
Distributed Cost Comparisons
$1,500
$2,343
$2,000
$2,381
$2,500
$3,000
$3,000
$3,161
$3,332
$3,500
$1,000
$500
$0
HQ04
measurement
Hydro-Quebec
Management Presentation
15 October 2004
HQ99
Peer
Util
DBA
HQ is 29% lower than the 1999 analysis
HQ is 25% lower than the peer group
HQ is 21% lower than the utility peer group
HQ is in alignment with the database average
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Page 24
Best Practice Overview
Best Practice Comparisons
Hydro-Quebec vs. DBA
6.1 vs. 5.3
Overall Average
6.9 vs. 5.6
Technology Planning and Process
Management Total
2.7 vs. 3.4
-0.7
1.3
Training Total
7.2 vs. 5.4
Customer Service Total
5.4 vs. 5.5
Asset Administration Total
6.8 vs. 5.9
Operational Management Total
7.4 vs. 5.9
Change Management Total
-1.0
0.8
-0.5
0.0
DBA
1.8
-0.02
-0.1
0.9
1.6
0.5
1.0
1.5
2.0
This chart shows how Hydro-Quebec compares to the database average in each of the primary Best
Practice areas. Negative scores are below the database average and the positive score is above
average. The numbers on the left are the actual scores of H-Q and the corresponding dB average.
measurement
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Observations
What’s Good
„
Hydro-Quebec has done a good job in taking real action to address the
previous benchmark’s issues and have made improvements across the board.
„
Costs
„
‰
Overall cost performance is better than, or in alignment with, all the peers and the
database average.
‰
Cost has improved over the previous assessment (’99 ITOA) and come into better
alignment with the peer groups and database average.
Support Quality
‰
User satisfaction has significantly improved over the previous assessment. The
current environment seems more stable than in recent years and is contributing to
this.
‰
Currently the quality scores shown a marked improvement in quality of services and
user satisfaction and exceed the database average in all major areas.
‰
Users consider the Help Desk their Best Source of Technical Support as well as their
Best Source of ‘How To’ Support. This is uncommon with most organizations.
measurement
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Observations
What’s Good
„
Best Practices
‰
There are a number of areas that can be considered best practices in the HydroQuebec IT organization.
‰
Customer Service scores are strong with a score of 7.2 vs. 5.4 for the db. This
has helped to reduce costs in the help desk area with superior leveraging of
technologies and processes.
‰
Operation Management scores are strong and considered a best practice as well
at 6.8 vs. 5.9 for the db. Strengths include security and standards compliance.
‰
Security efforts are a best practice with a score of 7.5 vs. 3.8 for the db. Most
organizations are not as thorough where security is concerned.
‰
Overall Change Management score is very good with a score of 7.4 vs. 5.9 for the
db. Processes and technologies are superior in this area, contributing to overall
lower costs while sustaining higher quality scores.
‰
Change management technology and change management processes are very
strong with scores of 6.1 vs. 3.9 and 9.0 vs. 6.9 respectively for the db. Combine
this with superior deskside support (as identified by end users) and this area can
be considered a best practice for Hydro-Quebec (Change management includes
Processes, Deployment, Retirement & Moves, Technology).
measurement
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Entire contents © 2002 Gartner, Inc.
Page 27
Observations
What’s Good
„
End Users
‰
The majority of end user’s prefer the help desk.
– 60% say that it is the best source of technical support vs. 52% for the workload
peer, 58% for the utility peer and 50% for the db.
– 77% say that it is the best source of ‘how to’ support vs. 18% for the workload
peer, 21% for the utility peer and 23% for the db.
– This directly contributes to reduced downtime and lost productivity for the
given complexity.
measurement
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Page 28
Observations
What to Review
„
As can be expected, there is always room for improvement. The following
pages list the more significant points to review and address going forward.
„
There are several areas where Hydro-Quebec could gain significant
improvement in processes, automation and integration.
„
Asset Administration with a score of 5.4 vs. 5.5 for the db.
‰
Hardware Inventory Management score is a 4.2 vs. 5.5 for the db.
‰ Software Inventory Management score is a 4.2 vs. 4.0 for the db.
‰ Lifecycle Management score is a 5.5 vs. 5.7 for the db.
„
All training with a score of 2.7 vs. 3.4 for the db.
‰
End User Training score is a 1.7 vs. 2.7 for the db.
‰ IS Training score is a 3.7 vs. 4.1 for the db.
measurement
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Page 29
Observations
What to Review
„
Staffing levels remain higher than all the peers and database average. This
is a driver of direct costs.
‰
Overall Help Desk cost per FTE is lower than the peers and database average.
‰
$73,829 vs. $87,942 for the workload peer, which is 16% lower
‰
71.0 FTEs vs. 50.4 FTEs for the workload peer, which is 41% higher
‰
Overall costs are 18.2% higher at $5,238K vs. $4,431K
‰
Overall Distributed cost per FTE is lower than the peers and database average.
‰
$82,656 vs. $104,897 for the workload peer, which is 21% lower
‰
294.9 FTEs vs. 249.9 FTEs for the workload peer, which is 18% higher
‰
Overall costs are 7% lower at $24,372K vs. $26,219K
‰
Salary levels remain lower than the peer groups and database average for these of
the areas.
‰
Hydro Quebec uses a 35 hour workweek, which could account for up to a 12%
differential in total headcount, since most organizations in the data base and the
peer groups utilize a 40 hour workweek.
measurement
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Page 30
Strategies for Improved Performance
„
1. Asset Management
„
Findings:
‰
Best practices as well as analysis show less than optimal performance in most areas
of process maturity, automation and integration. Overall score is a 5.4 vs. 5.5 for the
database average.
‰
Hardware inventory management is an issue with a score of 4.2 vs. 5.5 for the db.
‰
Software inventory management score is not great, though higher than the db.
‰
Lifecycle Management is issue with a score of 5.5 vs. 5.7 for the db.
‰
Non-optimal controls and tracking can have a wide-ranging impact to support,
maintenance and costs.
Asset Administration Comparisons
7.5 vs. 6.4
Vendor Management
5.8 vs. 5.7
Procurement
5.5 vs. 5.7
Life-Cycle Management
4.2 vs. 4.0
Software Inventory Management
4.2 vs. 5.5
Hardware Inventory Management
-1.5
-1.0
-0.5
1.1
0.1
-0.2
0.2
-1.3
0.0
DBA
0.5
1.0
1.5
measurement
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Strategies for Improved Performance
„
1. Asset Management (Cont)
„
Findings:
„
‰
Operations staff is higher than the peers and database average. This is in part due to
issues around management and tracking of IT assets.
‰
Lifecycle management is basic.
‰
This contributes to:
– An aging inventory and cascading of assets resulting in greater support and
maintenance resource requirements (from deskside support to the help desk),
– A growing inventory of disparate equipment that becomes harder and harder to
track
– And a negative impact to productivity as equipment fails or becomes unable to
perform to even-increasing requirements.
Actions:
‰
Fully funding, implementing, integrating and actually leveraging an ITIL system will
greatly improve your asset management issues.
‰
Build a plan to improve key processes in critical need of improvement. These include
all aspects of hardware and software inventory management, lifecycle management
as well as procurement.
‰
Leverage the Governance Council in your efforts in building a consolidated and
centralized asset management foundation.
measurement
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Page 32
Strategies for Improved Performance
„
2. Distributed Complexity
„
Findings:
‰
Overall complexity has risen significantly since the previous benchmark.
– Currently complexity is 11 (high) vs. 8.8 (’99).
„
‰
Staffing levels are higher in all areas reviewed to support the elevated complexity in
the environment at current quality of support.
‰
Hardware and software complexity is higher than the database average.
‰
Low HW and SW best practice scores, describing processes and technologies, are
contributing to the negative impact of the higher complexity.
‰
Hydro-Quebec has higher complexity than the average utility organization (8.8) and
higher than all but 1 peer in the utility peer group.
Actions:
‰
Establish enforceable enterprise-wide standards and desktop policies that are
uniform, clearly defined, are in accordance with best practices and are capable of
having a cost cutting impact to the enterprise.
‰
Get approval to enforce these standards and policies at the executive level, doing so
will go a long way to reducing asset costs, repair costs, troubleshooting time and
support demands. Leverage the Governance Council in your efforts.
‰
Investigate other ways of reducing complexity in the Distributed environment.
measurement
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Page 33
Strategies for Improved Performance
„
3. Training
„
Findings:
‰
Training is lacking enterprise-wide for Hydro-Quebec.
– 72% of users receive no training for standard desktop applications
– 60% of users receive no training for alternative standard app training
– 56% of users receive no training for custom business applications
‰
End user training best practice is a 1.7, which is lower than the industry low
database average of 2.7 and IS training is a 3.7 vs. 4.1 for the database average.
‰
Lack of effective training will ultimately impact efficiency, productivity and drive up
support costs.
Percent of users recieving no training
90
80
70
60
50
40
30
20
10
0
Form al
Standard
Apps
DBA
Custom
Business
Apps
DBA
Alternative
Standard
Apps
DBA
measurement
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15 October 2004
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Strategies for Improved Performance
„
3. Training (Cont)
„
Actions:
‰
Review the specific training needs of the various users and departments
– Make training a priority and allocate the proper funds
– Establish training programs to meet the needs of the users
‰
Best-in-class organizations spend 7 percent to 10 percent of IT payroll on training. A
spending level of 5 percent can ensure a well-trained staff.
‰
Technical IT training programs typically yield 25 percent to 75 percent ROI of the
initial investment. For every thousand dollars spent on training, the organization
adds $250 to $750 to the bottom line.
measurement
Hydro-Quebec
Management Presentation
15 October 2004
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