P.K. Agarwal, Director

2. 2 Agenda

3. Approve June 25, 2008 Meeting Minutes

4. Chairperson’s Report Teri Takai Chief Information Officer State of California

5. 5 Chairperson’s Report State IT Update TSB Services and Finance Committee Charter

6. Director’s Report

7. 7 Cannery Relocation WHY DTS IS MOVING Obsolete facilities and infrastructure Improve security of state’s data by geographic separation of sites Lower DTS’ overall facility costs

8. 8 Cannery Relocation OPTIONS CONSIDERED Upgrade Existing Cannery and South Annex Build New computing facility outside of Sacramento Lease Computer room space outside of Sacramento

9. 9 Cannery Relocation MAJOR CONSIDERATIONS Budget constraints dictate lease vs. build Negotiating leased raised floor space in Vacaville; to be remotely managed Expiring leases (25 years) July 2009 – South Annex May 2011 – Cannery Minimize impact on DTS service delivery

10. 10 Cannery Relocation MAJOR CONSIDERATIONS (CONT.) Minimize impact on DTS rates Major dependent DTS projects Remote Management Enterprise Storage Service Continuity for Mainframe Systems Various Gold Camp Campus infrastructure upgrade projects

11. 11 Cannery Relocation BENEFITS OF RELOCATION Improved infrastructure and opportunities Different Regional Threat Zone Ability to implement disaster recovery at both data center sites Improved capabilities and time to recover Lower facility/lease costs

12. 12 Cannery Relocation TIMEFRAMES Dependent on Customer Migration Plans January 2009 - Target for new lease agreement May 2009 - Move mainframes from South Annex to Cannery - Begin South Annex decommissioning Fall 2009 - New location ready for use 4Q 2009 - Move Cannery mainframes to new location May 2010 - Cannery decommissioning Spring 2010 - New site for staff presently at Cannery

13. 13 Cannery Relocation COMPLEX MOVE PREPARATIONS All new networks must be in place prior to equipment moves All infrastructures (power, cabling, LAN, phone lines, etc.) must be in place All storage must be in place prior to mainframe and server moves Work will be clustered in months prior to May 2009, September 2009, and May 2010 Other DTS project dependencies factored in

14. 14 Cannery Relocation DEDICATED TEAM 15 DTS subject matter experts Including mainframe, server, storage, network, security, facilities, procurement, communications and HR Responsible customer department staff DGS building and leasing experts Project governance Steering Committee - DTS Senior Management Project Sponsor - Steve Rushing Project Director - Megan Johnson Project Chief Architect - Mike Baker

15. 15 Cannery Relocation MOVE EFFORTS Customers Provide single point of contact for DTS Communicate their service availability requirements Provide resources to assist with move planning, migration and testing DTS Relocate DTS managed services Relocate DTS’ internal applications Provide customers with consistent and timely communications

16. 16 Cannery Relocation MOVE EFFORTS (CONT.) Joint – DTS and Customers Relocate customer owned/managed equipment Plan system migrations and manage migration projects Test hardware, software and applications

17. 17 Cannery Relocation NEW DTS FACILITIES New Leased Computing Facility Focus on shorter term disaster recovery needs Vacaville lease negotiations underway Remotely managed No permanent staff Lower cost New Leased Staff Facility Between downtown Sacramento and Gold Camp Site search during 4th Quarter of 2008

18. 18 Cannery Relocation KEEPING CUSTOMERS INFORMED Regular updates at Technology Services Board, AIO, CIO and DTS Customer Council meetings Briefings at executive meetings with AIOs and CIOs Department directors and program areas Individual customer meetings Customer single point of contact  DTS Single Point of Contact David Rial, Customer Delivery Division David.Rial@dts.ca.gov (916) 739-3309

19. 19 GO ONLINE! Green Output Online WHERE WE ARE TODAY Print, microfiche and tape Issues Environmental impact

20. 20 GO ONLINE! Green Output Online WHERE WE ARE TODAY (CONT.) 15 million pages of print 2.3 million sheets of microfiche

21. 21 GO ONLINE! Green Output Online WHERE WE ARE TOMORROW Green movement Public awareness DTS taking leadership role 

22. 22 GO ONLINE! Green Output Online GO ONLINE PROJECT Implement alternatives Online viewing

23. 23 GO ONLINE! Green Output Online PROJECT OBJECTIVES Reduce costs Reduce carbon footprint Improve security Overall the objective is to move customers from mainframe printed output to online viewing and archiving of the same documents via a standard web browser. The software is already available for viewing from a mainframe terminal. Additionally, the GO-ONLINE Project incorporates the following objectives for the implementation of alternatives to physical media: Establish the GO-ONLINE Program, which will have responsibility for customer adoption of online viewing and secure file transfer as alternatives to physical media through a continuous marketing program. Improve data security for the DTS and its customers. Reduce the carbon footprint (the volume of consumable resources utilized) by the State. Reduce media output costs. Implement standards and best practices for green technology Reduce dependency outside print and microfiche vendors and reduce dependency on couriers for access to output, . Overall the objective is to move customers from mainframe printed output to online viewing and archiving of the same documents via a standard web browser. The software is already available for viewing from a mainframe terminal. Additionally, the GO-ONLINE Project incorporates the following objectives for the implementation of alternatives to physical media: Establish the GO-ONLINE Program, which will have responsibility for customer adoption of online viewing and secure file transfer as alternatives to physical media through a continuous marketing program. Improve data security for the DTS and its customers. Reduce the carbon footprint (the volume of consumable resources utilized) by the State. Reduce media output costs. Implement standards and best practices for green technology Reduce dependency outside print and microfiche vendors and reduce dependency on couriers for access to output, .

24. 24 GO ONLINE! Green Output Online SOLUTION Online viewing and archiving More secure Web-enabled viewing

25. 25 GO ONLINE! Green Output Online NEXT STEPS Market technologies Finalize product selection Implement “Green” Culture

26. 26 State Network Strategy AGENDA Objectives Gartner Recommendations DTS Recommendation Implementation Approach Implementation Roadmap

27. 27 State Network Strategy OBJECTIVES Improve network security Provide departmental privacy/security Enhance network performance Support interdepartmental shared services Reduce costs

28. 28 State Network Strategy OBJECTIVES (CONT.) Offer advanced capabilities Consider timeliness/migration Develop a governance model Departmental acceptability

29. 29 State Network Strategy RESEARCH CONDUCTED Gartner completed: Agency discovery sessions Business vision focus groups States’ best practices Private sector vision workshops Statewide agency survey Recommendations for DTS

30. 30 State Network Strategy GARTNER RECOMMENDATIONS Develop a single enterprise network with mandatory participation Develop enterprise state network architecture and service levels based on adoption of modern network technologies

31. 31 State Network Strategy GARTNER RECOMMENDATIONS (CONT.) Align network decision-making and reporting relationships under State CIO Move to outsourced model with separate formal procurement Transform the role of DTS from network provider to service manager

32. 32 State Network Strategy Split business model Utilize CALNET 2

33. 33 State Network Strategy VENDOR MANAGED SERVICES WAN Operations Engineering Procurement Provisioning Management Monitor/Fix

34. 34 State Network Strategy STRATEGIC GOAL Transition all state agencies and departments to a consolidated, statewide enterprise network within five years

35. 35 State Network Strategy NEXT STEPS Obtain DGS procurement buy-in Obtain executive buy-in Document new DTS roles and responsibilities Define managed service provider requirements Establish baseline security standards Establish network standards Bundle managed services

36. 36 State Network Strategy NEXT STEPS (CONT.) Provide requirements to CALNET vendors CALNET 2 contract amendment(s) Develop migration strategy Develop CSGnet support plan Determine rates and funding Determine migration and transition cost

37. 37 State Network Strategy IMPLEMENTATION APPROACH Migrate departments to managed networks End-of-life migration New or expanding departmental networks Forced migration of CSGnet customers to new managed networks Shutdown CSGnet within 24 months No major investments in existing departmental networks and migrate as they reach end-of-life Minimize CSGnet investment

38. 38 State Network Strategy

39. Ad Hoc Committee Report

40. 40 DTS Financial Plan BACKGROUND Slow but steady growth in last 3 years Overall value created Rate reductions PY reduction (11.7 PY reduction from consolidation) Workload growth Starting new statewide programs Email, network, portal and disaster recovery Cannery relocation Customer perceptions Network and storage rates

41. 41 DTS Financial Plan DRIVING FORCES Unpredictable revenues Historic misalignment of rates Changing federal rules Non-optional Cannery relocation

42. 42 DTS Financial Plan

43. 43 DTS Financial Plan HISTORY OF RATE ALIGNMENT 1st FY 2006/07 $16M rate reduction 10% reduction in mainframe rates 2nd FY 2006/07 – Mid-Year Package $27M rate reduction 25% reduction in mainframe rates New network rate structure (effective 7/1/07)

44. 44 DTS Financial Plan HISTORY OF RATE ALIGNMENT (CONT.) 3rd FY 2007/08 Rate changes with minimal revenue impact Introduced tiered storage and zAAP processing Realigned COM and disaster recovery rates to recover costs 4th FY 2008/09 – Proposed Proposed +$1M rate increase Introduce Statewide Email enhancements Realign COEMS and print rates to recover costs

45. 45 DTS Financial Plan SUPPORT OF STATE CIO’S VISION Four Specific Initiatives Statewide Email Enterprise Network eServices Cannery/South Annex Relocation

46. 46 DTS Financial Plan ENTERPRISE PROJECTS & SERVICES (~$10M) Investing for the Future Enterprise Network Service Oriented Architecture Identity Management Statewide Email (e-Hub, archiving, encryption, eDiscovery, and Active Directory) Web Portal Enterprise Storage Service Delivery Improvement Training Center

47. 47 DTS Financial Plan TWO ISSUES Matching Revenue with Expenses Managing Cash (DTS Revolving Fund)

48. 48 DTS Financial Plan OVER/UNDER BY SERVICE Projected 2008/09 Over Collections Disk Storage +$6.8 M Mainframe +$4.3 M Under Collections Network Services -$9.1 M Statewide Email -$4.1 M Output Services -$3.6 M Server Based Computing -$1.5 M

49. 49 DTS Financial Plan DISK STORAGE +$6.8M Introduced Open Systems Tiered Storage effective 1/1/08 Investigating further rate reductions for storage in FY 2009/10

50. 50 DTS Financial Plan MAINFRAME +$4.3M Several rate reductions Loss of Child Support Case File Management System (CASES) Recent declines (August - September) possibly due to Executive Order Potential new revenue from new customer projects

51. 51 DTS Financial Plan NETWORK SERVICES <$9.1M> TSB approved alignment of network rate structure with a nominal 10% rate increase effective 7/1/07 Backlog of upgrades Transition to managed services Will add costs in the short run Migration of state networks over next 5 years

52. 52 DTS Financial Plan EMAIL SERVICES <$4.1M> Planned subsidization through October 2009 Target 45,000 mailboxes Current 22,000 mailboxes Significant added costs due to: e-Hub, Archiving, Encryption, eDiscovery, Active Directory and Exchange 2007 migration

53. 53 DTS Financial Plan OUTPUT SERVICES <$3.6M> Print and COM outsourced services continue to increase with each contract renewal Rate Increases 7/1/08 for COM and proposed 1/1/09 and 7/1/09 for Print Move customers away from Print and COM Services “Go Online” Initiative

54. 54 DTS Financial Plan SERVER BASED COMPUTING SERVICES <$1.5M> Utilization has not materialized Pursue telework strategy Input from the Enterprise Leadership Council

55. 55 DTS Financial Plan CANNERY RELOCATION Estimated One-Time Costs Cannery relocation $ 8.6M Cannery change in lease cost $ 2.2M New Admin site $ 5.9M Admin site change in lease cost $ 0.8M TOTAL $17.5M One-times to be Financed $11.6M Ongoing Overall annual rent reduction $ 1.7M

56. 56 DTS Financial Plan EXPENDITURE RECOMMENDATIONS Reduce overhead and indirect cost expenditures by 10% this year ($4M) Reduce non-profitable services - Output Services, VM Processing, Human Resources Information System (HRIS), Server Based Computing, Linux on Mainframe next year ($6M)

57. 57 DTS Financial Plan REVENUE GAP OPTIONS Need to Close the Gap $17.5M relocation and consolidation of Cannery/South Annex $9 - 11M of annual revenue gap

58. 58 DTS Financial Plan RELOCATION STRATEGIES Alternatives $1,044/hour Current Mainframe Rate 1. If one-time costs recovered in one year $1,322/hour (27% increase) 2. If one-time costs occur over two years $1,183/hour (13% increase)

59. 59 DTS Financial Plan PROPOSED RATE PACKAGE Revised COEMS Rate $830/Cabinet $545/Reservation Fully Align Print Rates with Cost Two Phases; 1/1/09 and 7/1/09 Encryption and e-Fax Pass-through cost

60. 60 DTS Financial Plan PROPOSED RATE PACKAGE (CONT.) Revenue Impact FY 2008/09: $1.0M FY 2009/10: $2.7M

61. 61 DTS Financial Plan NETWORK RATE STRATEGIES Simplify rate structure Replace 5-tiered network rate structure with a single connection rate or fee Reallocate expenses Align one-time installation charges Charge DTS hourly consulting rates forcustomized network services Overall 20 - 25% rate increase Provide proposed rate in February

62. 62 DTS Financial Plan OUTPUT SERVICE STRATEGIES Print Services 100% rate increase 1/1/09 150% rate increase 7/1/09 Transition to new service provider Go Green strategy Microfiche Processing 50% increase 7/1/09 Revenue Impact for Print Services FY 08/09 $539k FY 09/10 $ 1.8M

63. 63 DTS Financial Plan

64. 64 DTS Financial Plan CASH MANAGEMENT Average Revolving Fund ($75M) On hand ($25M) Accounts receivable ($50M) Average monthly obligations ($20 - 25M) Future obligations Aged telecommunication invoices ($5M) Potential federal liability FY 2006/07 (~$5 - $20M)

65. 65 DTS Financial Plan CASH FLOW ISSUES Accounts Receivable (A/R) average $50 - $80M On average, customers pay within 90 - 120 days $3.6M/month is received from customers on direct transfer program Manually intense process to collect receivables

66. 66 DTS Financial Plan CASH FLOW ISSUES (CONT.) Slow payment results in inability to pay vendors and run payroll Last year’s large A/R forced DTS to finance a large contract that we were unable to pay (an additional $1M expense) Strategy: Implement mandatory direct transfer

67. 67 DTS Financial Plan SUMMARY Action Items Approve proposed Rate Package ($+1M) Approve Cannery relocation one-time surcharge on mainframe rates Align network rates in FY 2009/10 Complete alignment of Output Service rates in FY 2009/10 Implement mandatory direct transfer

68. MiscellaneousNon-Discussion Items

69. New Agenda Items

70. Public Comment

71. Meeting Adjournment