Analysis Document

Analysis Document Task 2 Current Telework Technology Costs January 23, 2006

Table Of Contents Introduction Methodology Telework Architecture Components / Costs Teleworker Home Office Services Enterprise Findings & Conclusions Appendix

This report is the first effort to quantify the investments federal organizations are making in technologies that support telework • This report provides a baseline of telework costs based on interviews of federal organizations and the current costs of the telework supporting technologies used by these organizations • Subsequent reports will provide more details about the current telework technology, and they will provide recommendations and cost estimates for expanding the telework technology to support 25% to 50% of the federal workforce • This report estimates telework technology costs based on the current telework related infrastructure investments by 18 federal organizations interviewed for this report • These baseline cost figures will be used to develop estimates of future cost investments that will be needed to support expanded telework programs across the Federal Government

The Baseline Cost Report provides estimates of telework technology costs based on information from 18 Federal organizations • The Booz Allen team interviewed headquarters offices and/or components of ten cabinet-level departments and three bureaus • Department of Agriculture (OCIO) – Department of Interior (HQ) • Department of Commerce – Department of Justice (HQ) – U.S. Patent and Trademark Office – Department of the Treasury (OCIO) – U.S. Census Bureau – Internal Revenue Service • Department of Health and Human Services (ITSC)* – Department of Transportation (OCIO) • Department of Housing and Urban Development (HQ) – Department of Veterans Affairs (HQ) • Department of Education (HQ) • The team also conducted interviews with five non-cabinet agencies • Equal Employment Opportunity Commission (HQ) • General Services Administration (OCIO) • National Aeronautics and Space Administration (OCIO) • National Science Foundation (HQ) • Securities and Exchange Commission (HQ) * ITSC - Information Technology Service Center

This Baseline Cost Study found that most federal organizations are making investments that benefit telework, but support for telework is not the primary objective of these investments • None of the organizations have expanded their network infrastructure or Internet access in order to support telework • Few organizations have a separate budget line item for telework technology • Only two out of 18 organizations interviewed had IT investment programs in place in order to explicitly support telework • Because of security concerns some organizations do not allow their teleworkers to use non-government equipment to process organizational information • While teleworkers can take advantage of organization provided services like the help desk, teleconference services, and the enterprise connection to the Internet, teleworkers usually have to provide their own broadband or dial-up connections to the Internet • Teleworkers utilize the organization’s existing enterprise equipment and services • Resources used include virtual private network services, applications, and terminal services • Because these enterprise resources are shared across the entire organization, teleworkers typically introduce an insignificant additional cost burden from their use of these resources

How does this study define telework? • For this study, the definition of “telework” is limited to “the act of performing all or a portion of work functions outside of the regular place of business under circumstances which reduce or eliminate the need to commute to the employee's established worksite. Work outside of the regular place of business must occur at least one day per week on a recurring basis” • One or more days a week is the definition used by Office of Personnel Management (OPM) in their yearly survey of the status of telework in the federal government, “The Status of Telework in the Federal Government 2005”

4. Develop & Document Estimates Analysis Results 1. Define & Organize the Set of Cost Elements 3. Process & Analyze Data Cost Study Methodology & Approach: Booz Allen has organized the current Cost Study into four distinct phases 2. Identify Data Sources & Collect Data • Identified multiple data points for each cost elementbased on data culled from interviews or from engineering and professional estimates of expenses • Averaged data points in order to develop reliable per unit cost • Assigned per unit cost to each element • Developed foundational basis of estimate that captured project-specific drivers and assumptions • Identified and arranged interviews with key executive level leadership at each organization (e.g., CIO, Chief Technology Officer [CTO]) • Developed protocols for executive level interviews designed to provide agency-wide insights into current telework efforts • Conducted interviews at 18 organizations, including several key bureaus / divisions • Consolidated and compiled notes for further analysis • Defined global and project-specific drivers and assumptions (i.e., assumptions about the current telework environment at each organization) • Held working sessions to determine scope and complexity of typical telework solutions • Developed a comprehensive, standard set of cost elements to ensure cost estimation consistency • Grouped cost elements into 3 major categories • 1) Teleworker Home Office Costs • 2) Services Costs • 3) Enterprise Costs • Documented agency specific assumptions about respective telework environments • Produced cost profile for each organization that included per user total telework costs for each category, and overall per user costs

* *Public Switched Telephone Network The cost estimates were designed to capture typical telework related costs for the teleworker’s home office, services provided by external parties, and enterprise hardware and software • Remote equipment • Computers (laptop or desktop+) • Printers/copiers/facsimiles • Firewalls/routers/hubs • Cell phones/personal digital assistants • Other peripherals (e.g., webcam, modem) • Application access hardware and software • Terminal servers • Modems and remote access servers • Web applications • Security hardware and software • Virtual private network (VPN) facilities • Authentication devices • Firewalls/hubs • Collaboration and telecommunication facilities • Collaboration software • Broadband and dial-up facilities • Teleconference services • Technical support services • Help desk * Computers are often a no cost item because teleworkers are using their home computers or are using older unused office equipment

Since organizations were generally unable to identify telework-specific expenses, a cost estimation methodology was developed • In the interview phase, we identified the types of technologies that each organization was using in order to support telework • Teleworker home office costs* • Services costs • Enterprise costs • Once the components were identified, we developed annualized costs for each item and then created a cost profile for each organization that reflected an estimated annualized cost for its overall telework solution • In order to protect the confidentiality of the organizations, a numbering scheme is used in the presentation to follow • Many of these costs are incremental and distributed across the organization • Teleworkers primarily take advantage of equipment and services acquired for general use (e.g., remote access servers), as opposed to resources purchased specifically for telework • As a result, we have included only a percentage of their annualized costs in the organizations’ cost profiles *The Telework Technology Cost Survey found that more than 95 percent of teleworkers work from home; therefore the home office was used as the basis of cost estimates

A comprehensive, standard set of cost elements for estimating the costs of current telework costs at 18 federal organizations was developed • In line with established cost estimation methodologies, the Booz Allen team made assumptions and estimates to compensate for several data limitations • Component-level information was used for the cost estimates when overall organization’s information was not available – these estimates apply to the component organization only • Information provided did not cover all the cost elements needed for analysis and the available information differed between organizations – cost assumptions were made to compensate for the missing information • Global and project-specific drivers and assumptions (i.e., assumptions about the current telework environment at each organization) were defined • Prior year (i.e., sunk) costs are not included in the estimates • All costs are assumed to be in FY 2005 dollars • The cost elements were grouped into the three major categories: teleworker home office, services, and enterprise costs

The methodology culminated in the development of a cost profile for each organization • Defined cost elements that fully capture expected expenses associated with the implementation, operation and maintenance of telework programs during the most recently completed federal fiscal year (FY05) • Identified multiple data points for each cost element based on data obtained from interviews or from engineering and professional estimates of expenses • Averaged data points to develop reliable per unit costs • Assigned per unit cost to each element • Developed a foundational basis of estimate that captured project-specific drivers and assumptions (i.e., assumptions about the current telework environment at each organization) • Per user costs and an overall per user total cost was computed • Per User Costs were grouped into telework home office, services, and enterprise costs

The assumptions used to make the cost estimates were based on standard industry estimates of costs and equipment lifecycles • Hardware technology refresh cycle is based on government and industry standards and varies by product. The article “When to Upgrade” by John Dix, Network World, November 28, 2005 and professional experience were used to estimate the life-cycle of equipment • When applicable, an organization’s telework participation data (based on OPM’s “The Status of Telework in the Federal Government 2005,” December 2005) was used to estimate the number of teleworkers or the percentage of teleworkers in an organization • Each annualized per user cost includes the following components, where applicable: 1) the annualized purchase price; 2) annual maintenance costs; 3) annual lifecycle refresh costs; 4) annual recurring fees; 5) annualized one-time fees • Since every organization interviewed has a telework program in place, these estimates are designed to capture the annualized costs of previously-made purchases • In order to provide an annualized estimate for acquisition costs, the initial purchase prices are divided by their respective product lifecycles • Calculation of Maintenance and Lifecycle Refresh Costs • Recurring (i.e. maintenance) annual costs are assumed to total 15% of the acquisition cost of hardware and 20% of the acquisition cost of software • Refresh costs are calculated by dividing the acquisition cost of each element by its respective product lifecycle

Appropriate methodologies have been developed in order to estimate the per user costs for enterprise components • The Voice conferencing Per User estimate assumes that a teleworker uses an additional two hours a month of teleconferencing services as a result of their telework • The Enterprise Connectivity Per User estimate assumes that each agency’s Internet connection is a DS3, which has an annual recurring cost of $8,650 (per GSA’s Washington Interagency Telecommunications System pricing) • The Server Cost Per User estimate assumes that one server can support 6,000 staff • The Help Desk Support Per User estimate assumes that a teleworker is responsible for a 20% increase per year in help desk support costs based on them teleworking 20% of the time (equivalent of 1 day per week of telework) • The Appendix provides more details about these assumptions

Hub/FW Modem Modem Modem Modem Modem Modem Access Device Laptop or Home PC Mobile Devices Printer Teleworker’s Home Office* Costs associated with the teleworker’s home office include equipment and software required to perform job functions remotely • Laptop and docking station • Printers / Copiers / Fax Machines • Routers / Hubs (e.g., Broadband Router) • Web Cams • Telecommunication devices * • Standard telephones • Mobile telephones • PDA messaging devices (e.g., RIM Blackberry, Palm Treo) • Application Software • Security devices • Authentication devices • Firewall * Telecommunications costs for the Home Office only include the hardware. The reoccurring telecommunications service costs for the Home Office are in the Services section of this report.

The cost of equipment to support a teleworker in the home office varies from $2,072 for a laptop to $42 for authentication equipment

The data gathering for this study found varying levels of teleworker home office support • This study found four types of home office computer support of teleworkers • A current or reutilized computer, and other appropriate hardware and software, is provided for the teleworker to use at the home office • The teleworker is provided one set of equipment and software to be used in the office and for telework • The software needed for the teleworker to perform some or all work assignments is provided, but the teleworker is responsible for providing the home equipment • The teleworker provides all equipment and software needed to work at the home office • Security concerns are a driver for the type of equipment and software that is deployed and mandated for the teleworker home office • Union agreements sometimes influence the equipment and software provided to teleworkers in their home office • The largest driver of telework costs is the extent to which the organization provides home equipment for each teleworker

Federal agencies widely vary in the type of items they provide their teleworkers, but mobile devices are the most common *Only a limited number of staff at these organizations are provided with these components

Federal agencies widely vary in the type of items they provide their teleworkers, but mobile devices are the most common (cont.) *Only a limited number of staff at these organizations are provided with these components

Table Of Contents • Introduction • Methodology • Telework Architecture Components / Costs • Teleworker Home Office • Services • Enterprise • Findings & Conclusions • Appendix

Help Desk or Call Centers Satellite Satellite Service Service Enterprise Connection to Internet or Telephone Network Internet Internet / Provider Provider PSTN PSTN* Cable Cable Service Service Provider Provider Local Local Phone Phone Company Company Wireless Wireless Service Service Provider Provider Teleconference Services The cost of services includes network connectivity and support services regularly provided by external companies • Internet access costs • Enterprise • Teleworker home • Broadband access • Dial-up access • Voice conferencing services • Long distance calling cards • Managed VPN • Mobile phone access • PDA access • Additional telephone line • Help desk support services • Technical training *Public Switched Telephone Network

Services include the cost of enterprise connectivity and support services such as help desk and training

Most organizations interviewed are not paying for teleworker access to the Internet from the home, but are providing other services that benefit telework • One organization is in the process of establishing a direct relationship with broadband providers, so that teleworkers will be provided premium service and so the organization can be directly billed for the telecommunications services • A few organizations are supplying a second telephone line, so the teleworker can use the telephone while being connected to the enterprise network over dial-up on the other telephone line • Most teleworkers must provide their own Internet connections to enable access to their organizations • Most organizations’ help desks are available to the teleworker and are becoming increasingly educated about supporting teleworkers • Teleconferencing services are provided by all organizations • Most organizations are providing mobile communications services (e.g., cell phones, PDAs) to some of their staff to facilitate communications regardless of their staff’s location

GSA Telework Centers provide a well-equipped remote work environment as an option for telework and other remote work needs • Although Telework Centers are currently used by relatively few teleworkers, they provide a viable option for some individuals whose home offices are not adequate for telework • Inadequate space to support an environment conducive for effective work • Inadequate security in the home • Disruptive presence of other individuals in the home • Lack of facilities at the teleworker’s home such as broadband or a second telephone line • Several federal organizations also use the GSA Telework Centers for continuity of operations (e.g., during inclement weather or other emergencies that cause commuting difficulties) • The costs for the GSA Telework Centers in the Washington DC Metropolitan area depend on usage and facilities required for the teleworker • How many days a week the teleworker expects to use the center (see table at right) • What facilities are needed beyond standard desktop such as COOP support, administrative services, static IP addresses, or additional conference rooms

The GSA Telework Centers provide services similar to what would be provided to the teleworker in the office* • Standard Desk and Computer • IBM Compatible PC • High speed Internet • Microsoft Office Suite • PC Anywhere • Corel Perfect Office • Lotus 1-2-3 • Internet Explore/Netscape • Antivirus Software • Modem • Data Backup Facilities • Office Support Facilities • Copier/Facsimile/Printer • Shredder • Conference Room • Kitchen • UPS/Generator * The specific services offered by the Telework Centers vary, but they can usually accommodate specific needs of the teleworker

All organizations provided their teleworkers voice teleconferencing and help desk services *Only a limited number of staff at these organizations are provided with these components

All organizations provided their teleworkers voice teleconferencing and help desk services (cont.) *Only a limited number of staff at these organizations are provided with these components

Internet Firewall / PSTN* VPN VPN Server Server Office PC Enterprise Applications Agency HQ or Field Office The enterprise costs include the equipment and software located at the organization’s headquarters or field offices that support teleworkers • Remote access servers/modem bank • VPN system • Terminal emulation system • Enterprise Systems (email, web applications, security, and other enterprise applications) *Public Switched Telephone Network

The enterprise resources that most directly support the teleworker are access and security facilities, such as terminal/access servers and virtual private network systems *Negligible additional cost due to telework because the enterprise systems are already in place to support each organization's existing operations

Teleworkers use existing enterprise facilities without significantly impacting the organization’s enterprise resources • Only one organization stated that they needed to make modifications to the enterprise infrastructure to support telework • Teleworkers are able to use existing security and remote access facilities to access applications at the enterprise • Teleworker traffic does not appear to have a noticeable impact on the enterprise’s telecommunications infrastructure • Teleworkers may increase the concurrent user license fees for VPN services or other facilities; however, staff interviewed for the study did not notice a significant impact on license fees due to telework

Almost all federal organizations have resources in place that allow teleworkers to securely access enterprise applications

Almost all federal organizations have resources in place that allow teleworkers to securely access enterprise applications (cont.)

Total Per User Costs Range: $310 - $5,420 • Mean Total Per User Cost: $1,920 • Median Total Per User Cost: $1,088 The total telework cost per user varies from $310 to $5,420 across the 18 organizations interviewed

Most organizations are not making telework-focused investments in infrastructure, so teleworkers typically are leveraging existing facilities to work successfully from home • Telework is being enabled across government as agencies modernize their enterprise IT infrastructures with technologies that are favorable to telework • Technologies such as web-based applications, blackberry devices, laptops, and remote email access, allow for increased telework without additional costs • Most resources – and therefore costs – are shared across the organization by mobile workers, office workers, and teleworkers • Telework is typically funded at the office (not the departmental) level • Telework spending is incidental rather than strategic, therefore, costs are incremental and tend to be “off the radar” of agency budgets • For example, only two of eighteen organizations interviewed were able to identify costs specific to teleworking • The purchase of new laptops for teleworkers is the primary cost driver to agencies due to expenses associated with the initial acquisition, annual maintenance, and refresh cycle • Home office purchases, particularly laptops, are by far the greatest telework costs for agencies • However, most agencies do not currently purchase laptops for teleworkers in large quantities, so the overall telework costs are still a minimal portion of overall agency budgets • Other equipment and services used to support telework tend to be existing agency resources, and result in only incremental costs to the agencies

Appendix - Per User Cost Build-Up Methodology: Enterprise Connectivity • It is estimated that, during traffic peaks, 20%* of the user base is actively using the enterprise Internet access connection • The peak traffic is then multiplied by 20%, based on the assumption that staff telework one day a week • See sample calculation below; this calculation resulted in a per person cost of approximately $1 for each organization *1 day per week of Telework = 20%

Appendix - Per User Cost Build-Up Methodology: Voice Conferencing • Regardless of the number of teleworkers, this Per User Cost remains the same across each organization, illustrated by the following calculations which include dramatically different numbers of teleworkers *Source: The Office of Personnel Management’s (OPM) OPM’s 2005 Report “The Status of Telework in the Federal Government

Appendix - Per User Cost Build-Up Methodology: Help Desk Support • The $100 per user help desk support cost is based on the average annual per user cost of a contractor-operated help desk that supports 15,000 staff at a large cabinet-level department

Appendix - Per User Cost Build-Up Methodology: Server Costs • Server vendor estimates were used to determine the maximum number of users a server could support • The maximum number of concurrent users that one server can support is 250 • The total user base that one server can support is 6,250 • Therefore, 1,000 to 6,000 staff requires one server; 6,000 to 12,000 staff requires two servers, etc. • Annualized cost of server of $1,295 = $4,533 / 3.5 yrs (server lifecycle) • Per user cost of $.21 = $1,295 / 6,250 users

Appendix – Acronym List CIO Chief Information Officer COOP Continuing Operations CTO Chief Technology Officer DSL Digital Subscriber Line FTS Federal Telecommunications System FW Firewall GSA U.S. General Services Administration HD Help Desk HQ Headquarters IRS Internal Revenue Service ITSC Information Technology Service Center (Health and Human Services) KBPS Kilobits per second OCIO Office of the Chief Information Officer OPM Office of Personnel Management PC Personal Computer PDA Personal Digital Assistant PSTN Public Switched Telephone Network (also know as plain old telephone service) PTO Patent and Trademark Office TW Teleworker VPN Virtual Private Network WITS Washington Interagency Telecommunication System

Analysis Document