Analysis Document

Analysis Document Task 8 Recommendations for Telework Cost Policy May 1, 2006

Table Of Contents Introduction Methodology Telework Program Investment Considerations Policy Guidelines to Enhance Telework Value Findings and Conclusions Appendix A – Value Measuring Methodology (VMM) Appendix B – Capital Planning and Investment Control (CPIC) Process

This report provides recommendations for technology investment strategy and value management policies for telework programs • This report on Recommendations for Telework Cost Policy is the eighth in a series of reports from the Telework Technology Cost Study • The overall study has three primary objectives • Describe the current telework technology environment • Estimate the costs of expanding telework supporting technologies so the infrastructure can support 25% to 50% of the federal workforce teleworking • Provide recommendations on how best to expand the telework supporting infrastructure • This report provides a strategic framework and policy recommendations for maximizing the value of telework investments and thereby enhancing the cost justification and return on investment • The information in this report will help government executives fully consider the multiple benefits of telework when making investment decisions and developing cost-related telework policies

Information for this study was collected from several sources within sixteen organizations that were chosen to be representative of the entire Federal Government • The Booz Allen team conducted interviews, focus groups, and surveys of Chief Information Officer staff, Telework Program Coordinators, Teleworkers, and Managers of Teleworkers, respectively • Ten Departments participated in the study: • Department of Agriculture  Department of Interior • Department of Commerce  Department of Justice • Department of Education  Department of Transportation • Department of Health and Human Services  Department of the Treasury • Department of Housing and Urban Development  Department of Veterans Affairs • Five Independent Agencies and one Departmental Component also participated in the study: • Equal Employment Opportunity Commission  National Science Foundation • General Services Administration  Securities And Exchange Commission • National Aeronautics and Space Administration  U. S. Coast Guard (Department of Homeland Security)

This report gives government executives guidance for making wise investment decisions for enhancing and expanding telework • Several prior reports in this study have concluded that telework programs are in need of specific technologies, as well as new plans for organization, management, and enhancement, all of which require the agency to make a considerable financial commitment • History has shown that the strategic focus and investment capital for telework programs is often lacking, and this is one of the primary roadblocks holding back initiatives for large scale telework expansion • One potential reason executives are reluctant to make large telework investments is that the direct financial return is often unclear • However, the cost justification becomes much more compelling when value is considered from multiple points of view – including value that cannot be quantified in dollars and cents • This report illustrates the disadvantages of the current decentralized approach to telework program support and describes how a wide range of benefits can be appreciated through an enterprise-wide telework investment strategy • Furthermore, a number of government-wide and agency-level policies are recommended to help guide telework investment decisions, manage telework costs, increase telework program value, and ultimately help the government gain maximum return on telework investments

Information from several detailed reports from this study was distilled into executive-level strategic guidance and policy recommendations High-Level Data Synthesis Data Sources Detailed Reports High-Level Synthesis of Findings to Determine Key Strategic Policy Recommendations Data Collection From Three Sources in 16 Government Organizations Development of a Series of Reports on Telework Technology and Related Costs • Several reports in this study have established the technologies, costs, and enhancement plans required for telework expansion • Reports from Task 2, Task 3, and Task 4 specify the technology components needed for scalability • Reports from Task 2 and Task 5 detail the costs required for recommended technology enhancements • Reports from Task 6 and Task 9 incorporate the technology and cost requirements from the other reports and provide recommendations for initiating and implementing telework program enhancement and expansion plans • Administered surveys to teleworkers and managers of teleworkers to obtain information about telework technology availability, usage, and performance • Conducted focus groups with Telework Program Coordinators to obtain information abouttelework program history and current state, technology issues, policy issues, and plans for expansion • Conducted interviews with CIOs and other IT staff members to obtain information aboutthe current status of the telework infrastructure and plans for enhancement • Distilled information about the need for policy improvements obtained throughout the data collection process • Conducted discussion sessions with telework and technology experts to determine additional policy recommendations • Used frameworks of the Capital Planning and Investment Control (CPIC) process and Value Measuring Methodology (VMM) value factors to organize and develop additional recommendations * • Combined and elevated recommended policies to a strategic level appropriate for executives • Further categorized recommended policies into those intended for agencies and those for government-wide oversight agencies Detailed Data Analysis High-Level Data Synthesis * See Appendix for more details about the CPIC process and the VMM value factors

Study findings and industry expertise were used to develop a comprehensive list of recommended cost and telework value enhancement policies for use by agency decision-makers • A multi-step process was used to develop the information and comprehensive policy recommendations for this report • Compiled the study data specifically addressing the need for policy improvements • Facilitated discussions with telework and technology experts to determine additional policy recommendations • Used CPIC and VMM frameworks to organize and develop additional recommendations • Elevated recommended policies to a strategic level appropriate for executive consideration and categorized them as agency-specific and government-wide • This report presents a high-level discussion of value factors and policy considerations for enhancing and expanding agency telework programs, including: • Incorporating telework into strategic enterprise planning • Developing policies to enhance the strategic value of telework programs • Specific policy recommendations for managing costs and maximizing success of telework improvement initiatives

Recognizing the multiple strategic benefits of telework programs can support a strong cost justification for telework investments • Telework programs have historically been considered a low-priority employee “perk” and therefore do not often receive dedicated funding or full consideration of their strategic value • However, telework programs have a high potential for strategic coordination with important enterprise-wide initiatives and can reap many different kinds of benefits for the organization • By taking these multiple benefits into account, organizations will likely find a compelling cost justification for enhancing their infrastructures and expanding telework programs • Slight modifications to the traditional Capital Planning and Investment Control (CPIC) process can help broaden strategic thinking about telework investments and their value • Similarly, the Value Measuring Methodology (VMM) is a robust, comprehensive approach to recognizing and analyzing investment benefits in several value factors • The CPIC and VMM frameworks are used to organize the discussion and recommendations • In this section, CPIC modifications are proposed as a way to elevate telework planning to the enterprise level • In the next section, telework value considerations and policy recommendations are aligned with the VMM value factors

Illustrative Lack of Enterprise Capital Plan for Telework • Telework technology and procurement concerns not viewed as part of overall enterprise planning • Components authorized to invest in telework as interest and budgets allow • Telework investments not tracked Department / Agency TOP-LEVEL STRATEGIC PLANNING DECENTRALIZED PLANNING Different Investment Strategies Across Different Organizational Components Component A A: Minimal telework investment – Allowed only for medical or disability situations Component B Component C B: Moderate telework investment – provides refreshed computer equipment and calling cards C: Considerable telework investment – provides home office equipment and services The current approach to telework technology procurement across government organizations is inefficient and lacks strategic focus Current Approach to Telework Capital Investment Planning • Results of Current Process • Administrative and procurement inefficiencies • Agency “mixed messages” about telework support • Lack of coordination between components • Low telework participation numbers • Diminished overall effectiveness of telework program

Disaster Preparedness & Continuity of Operations Multi-use Tools and Capabilities Additional Benefits Enterprise Modernization Telework Program Shared Costs, Risks, and Benefits with Other Enterprise Initiatives An enterprise-level capital planning process will help enhance telework program efficiencies, benefits, and overall strategic value • Continuity of Operations (COOP) readiness for public health, weather, and other emergencies • Accessible, modernized applications that allow staff to perform their work regardless of location • Adaptable applications that support changing business needs of organizations • Legislative Compliance and alignment with ongoing Congressional interest • Opportunities for real estate savings • Coordinated standards for technology configuration • Enhanced organizational process efficiencies • Ability to appreciate economies of scale • Reduction of traffic congestion and pollution • Compliance with OPM and GSA guidance • Potential for increased employee productivity while teleworking andduring office closures • Increased recruitment and retention potential • Potential for increased workforce diversity • Enhanced public image (“employer of choice”) • Increased work opportunities for people with disabilities • Improved support of mobile workers • Potential for tax incentives (in some states)

Capital Planning and Investment Control Process* Potential Enhancements Potential Enhancements Include compliance with telework legislation as another screening criteria (along with the Federal Information Security Management Act [FISMA], Enterprise Architecture [EA] plan, etc.) Evaluate the quantitative and qualitative benefits of potential telework investments (e.g., using VMM) Consider whether the potential investments will be multi-use (i.e., will they support telework as well as other business requirements?) 2 1 3 Determine whether telework investments are delivering multi-use benefits (i.e. are they supporting telework as well as other business requirements?) 4 Four minor enhancements throughout the standard CPIC process help integrate telework into enterprise-level planning and maximize the value and flexibility of technology investments *Appendix A provides more information and the Task 7 Report presents sample business cases developed using the CPIC process

VMM Key Considerations Government decision makers need information for comparing cost, benefit – both financial and non-financial, and risk that quantifies projected results in a meaningful and accurate manner • In July 2001, Social Security Administration (SSA) and General Services Administration (GSA) engaged Booz Allen Hamilton and Harvard University’s Kennedy School of Government to develop an effective methodology to assess the value of electronic services (e-Services) • The resulting Value Measuring Methodology (VMM)* was developed to be flexible, scaleable, and customizable • Its guiding principles and consideration of risk, value and cost are universally applicable in the government environment • This methodology enables important insight into the true business value of many types of investments • The groundbreaking VMM approach provides a means to quantify financial and non-financial value using five factors • Direct User (Customer) Value • Social (Non-direct User/Public) Value • Government Operational/ Foundational Value • Government Financial Value • Strategic/Political Value *Appendix B provides more information and the Task 7 Report presents sample business cases developed with the VMM framework in mind

VMM Value Factors Used to Evaluate Individual Telework Investment Options 100 100 Ideal Ideal 90 90 Infrastructure Infrastructure Ramp Ramp - - up up 80 80 70 70 60 60 VMM Value Factors VMM Value Factors Direct User Direct User V A L U E V A L U E 50 50 Basic Basic Social Social 40 40 Infrastructure Infrastructure Gov Gov ’ ’ t t Operational/ Operational/ 30 30 Ramp Ramp - - up up Foundational Foundational 20 20 Gov Gov ’ ’ t t Financial Financial 10 10 Strategic/Political Strategic/Political 0 0 $ $ - - $5 $5 $10 $10 $15 $15 $20 $20 $25 $25 $30 $30 $35 $35 $40 $40 C O S T ($M) C O S T ($M) Quantifying value enables agencies to fully appreciate its interaction with cost when making decisions about telework investments • Using VMM to Guide Policy Development • The VMM value factors can serve as a framework to develop investment and management policies for telework • The value factors overlap, so policies to increase the benefit in one factor can maximize overall telework value • Enhancing total benefit of telework helps support a positive return on investment • Things to Note About Using VMM • Different investment scenarios yield different potential values • VMM value factors help evaluate the full range of potential benefits associated with different investment options • Similarly, these value factors can identify and structure policies to help maximize value • These policies focus efforts to fully realize the potential value of the investment and thus support a stronger positive return on investment

The five VMM value factors help identify, define, and quantify the financial and non-financial benefits of telework investments

Agency-specific policy guidelines help organizations build mature telework programs, maximize their benefits, and become better stewards of the taxpayer dollars used to support them

Agency-specific policy guidelines help organizations build mature telework programs, maximize their benefits, and become better stewards of the taxpayer dollars used to support them (continued)

Government-wide policy guidelines can help integrate telework considerations into enterprise-level decisions

Government-wide policy guidelines can help integrate telework considerations into enterprise-level decisions (continued)

Agencies should adjust their policies and strategic vision to incorporate telework into enterprise-wide planning, maximizing total agency benefits and return on investment • Agencies should follow an enterprise-wide approach to telework program investments in order to maximize strategic value, efficiencies and cost savings over time • Investments in telework support the entire organization and support several critical agency-wide objectives, including: • Enhancement of Continuity of Operations Programs (COOP) • Information technology modernization efforts • Legislative compliance • Agencies need to measure the total value of telework – both financial and non-financial – when evaluating potential telework investments; the multiple telework benefits will lead to more compelling cost justifications • Focusing policy improvements in three areas will help agencies realize the potential benefits of telework • Comprehensive and coordinated telework program planning • Technical and managerial telework program support • Provision of basic equipment and services for teleworkers • Furthermore, government-wide oversight organizations should provide guidance and structure to encourage agencies to elevate telework program planning to a more strategic, enterprise-wide level

The Value Measuring Methodology is a structured approach for investment analysis that can be used to evaluate potential telework infrastructure enhancements • VMM PROCESS • Step 1. Develop a Decision Framework • Identify and Define the Value Structure – including the five Value Factors (Direct User, Social, Government Operational/Foundational, Government Financial, and Strategic/Political) • Prioritize the Value Factors • Identify and define the value measures • Prioritize the value measures • Identify and Define the Risk Structure – including risk inventory and risk probability and impact scale • Identify and Define the Cost Element Structure • Begin Documentation • Step 2. Alternatives Analysis • Identify and Define Alternatives – should be based on the information in the Value and Risk Structures • Estimate Value and Cost • Conduct a Risk Analysis • Step 3. Integrate Information • Aggregate the Cost Estimate • Calculate the Return-on-Investment – ROI metric often used by the Federal Government is the Savings to Investment Ratio • Calculate the Value Score – aggregate the estimated performance against the value measures according to the assignment Value Factor and value measure weights • Calculate the Cost and Value Risk Scores • Compare Value, Risk, and Cost • Step 4. Communicate and Document • Communicate the overall value of an initiative to a variety of stakeholders OUTCOMES Step 1 • Decision Framework • Global assumptions • Project-specific drivers and assumptions • Documentation of research and prioritization sessions Step 2 • Expanded descriptions of the alternatives • Complete, comprehensive list of both cost and value assumptions • Assumptions regarding the risks associated with a specific alternative Step 3 • Insight into cost, values, and risks of all alternatives Step 4 • Support / justification for budget requests Source: Booz Allen Hamilton’s “Value Measuring Methodology White Paper”

Appendix B – Capital Planning and Investment (CPIC) process Utility of the CPIC Process • Guides development of sound business cases, including Exhibit 300s & Exhibit 53s • Ensures compliance and alignment with multiple government regulations and strategies • President’s Management Agenda • Government Performance and Results Act of 1993 (GPRA) • Full implementation of IT security, privacy and electronic transactions policies • Alignment with organization strategies and performance measures

Appendix B – Capital Planning and Investment (CPIC) process (continued) CPIC Phase 1 – Pre-Select • The Pre-Select phase provides a process to assess a current investment’s support of agency strategic and mission needs and to provide initial information to further support investments • There are significant information requirements and a potential expenditure of funds in the preliminary planning phase to prepare for review and selection of IT investments • Identify the business/mission need • Establish relationships to the Department and/or agency strategic planning efforts • - For example, it assesses compliance of proposed business solution with Department’s Target Enterprise Architecture (EA), as well as with key security requirements such as FISMA • Provide opportunity to focus efforts and further the development of the initiative’s concept • Allows project teams to begin the process of defining key components of the business case: • - business requirements and associated system performance metrics • - performance measures, benefits, and costs • - subsequent completion of a business case and project planning efforts in preparation for inclusion in the Department’s investment portfolio

Appendix B – Capital Planning and Investment (CPIC) process (continued) CPIC Phase 2 – Select • In the Select phase, the agency ensures the IT investments that best support the mission and the Department’s approach to enterprise architecture, are chosen and prepared for success (i.e., have a qualified project manager analyze risks, etc.) • Individual investments are evaluated in terms of technical alignment with other IT systems and projected performance as measured by cost, schedule, benefit, and risk (CSBR) • Milestones and review schedules are also established for each investment during the Select phase • In this phase, the agency prioritizes each investment and decides which investments will be included in the portfolio • Investment submissions are assessed against a uniform set of evaluation criteria and thresholds • The investment’s CSBR are then systematically scored using objective criteria and the investment is ranked and compared to other investments • Finally, the organization selects which investments will be included in the Department’s portfolio

Appendix B – Capital Planning and Investment (CPIC) process (continued) CPIC Phase 3 – Control • The objective of the Control phase is to ensure, through timely oversight, quality control, and executive review, that IT initiatives are conducted in a disciplined, well-managed, and consistent manner • Investments should be closely tracked against the various components identified in the risk assessment and mitigation plan developed in the Select phase • This phase also promotes the delivery of quality products and results in initiatives that are completed within scope, on time, and within budget • During this process, senior managers regularly monitor the progress/performance of ongoing IT investments against projected cost, schedule, performance, and delivered benefits • Although the organization usually selects new investments annually, the Control phase is an ongoing activity • It requires the continuous monitoring of ongoing IT initiatives through the development or acquisition lifecycle • Agency reviews occur before the annual budget preparation process • Additionally, periodic summary reviews are completed based on the review schedule completed during the Select phase • The Control phase is characterized by decisions to continue, modify, or terminate a program • Decisions are based on reviews at key milestones during the program’s development lifecycle • The focus of these reviews changes and expands as the investments move from initial concept or design and pilot through full implementation and as projected investment costs and benefits change • The reviews focus on ensuring that projected benefits are being realized; cost, schedule and performance goals are being met; risks are minimized and managed; and the investment continues to meet strategic needs • Depending on the review’s outcome, decisions may be made to suspend funding or make future funding releases conditional on corrective actions

Appendix B – Capital Planning and Investment (CPIC) process (continued) CPIC Phase 4 – Evaluate • The purpose of the Evaluate phase is to compare actual to expected results after an investment is fully implemented • This is done to assess the investment’s impact on mission performance, identify any investment changes or modifications that may be needed, and revise the investment management process based on lessons learned • As noted in GAO’s Assessing Risks and Returns: A Guide for Evaluating Federal Agencies’ IT Investment Decision-Making, “the evaluation phase ‘closes the loop’ of the IT investment management process by comparing actuals against estimates in order to assess the performance and identify areas where decision-making can be improved” • The Evaluate phase focuses on outcomes: • Determining whether the IT investment met its performance, cost, and schedule objectives • Determining the extent to which the IT capital investment management process improved the outcome of the IT investment • The outcomes are measured by collecting performance data, comparing actual to projected performance and conducting a post implementation review (PIR) to determine the system’s efficiency and effectiveness in meeting performance and financial objectives • The PIR includes a methodical assessment of the investment’s costs, performance, benefits, documentation, mission, and level of stakeholder and customer satisfaction • The PIR is conducted by the agency, and results are reported to the OCIO and E-Board to provide a better understanding of initiative performance and assist the project sponsor in directing any necessary initiative adjustments • Additionally, results from the Evaluate phase are fed back to the Pre-Select, Select, and Control phases as lessons learned

Appendix B – Capital Planning and Investment (CPIC) process (continued) CPIC Phase 5 – Steady-State • The Steady-State phase provides the means to: • Assess mature investments • Ascertain their continued effectiveness in supporting mission requirements • Evaluate the cost of continued maintenance support, assess technology opportunities • Consider potential retirement or replacement of the investment • The primary review focus during this phase is on the mission support, cost, and technological assessment • Process activities during the Steady-State phase provide the foundation to ensure mission alignment and support for system and technology succession management

Analysis Document