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Analysis Document Task 7 Recommendations to Assist Cost Recovery / ROI Strategies and Budget Analysis Document Task 7 Recommendations to Assist Cost Recovery / ROI Strategies and Budget Planning May 2, 2006 0

Table Of Contents 4 Introduction 4 Methodology 4 Sample Telework Program Business Cases – Table Of Contents 4 Introduction 4 Methodology 4 Sample Telework Program Business Cases – BCA 1 – Home Office (In-Depth) – BCA 2 – Services (High-Level) – BCA 3 – Enterprise (High-Level) 4 Findings and Conclusions 4 Appendix A: Benefit Savings Calculations 4 Appendix B: Development of Telework Costs 4 Appendix C: Resources for Developing Telework-related Business Cases

This report provides guidance for cost recovery, strategizing return on investment, and budget planning This report provides guidance for cost recovery, strategizing return on investment, and budget planning related to telework 4 This report on Recommendations to Assist Cost Recovery / ROI Strategies and Budget Planning is the seventh in a series of reports in the Telework Technology Cost Study 4 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 4 This report provides a strategic framework and methodology for identifying the value of telework investments, and thereby enhancing the cost justification and return on investment 4 The information in this report will help government executives develop business case analyses that fully consider the multiple benefits of telework for making investment decisions 2

For this study Booz Allen gathered information from 20 different federal organizations in 11 For this study Booz Allen gathered information from 20 different federal organizations in 11 Departments and 5 Independent Agencies 4 The Booz Allen team conducted interviews, focus groups, and surveys of Chief Information Officer staff, Telework Program Coordinators, Teleworkers, and Managers of Teleworkers, respectively 4 Ten Departments and one Departmental Component 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 – U. S. Coast Guard (component of Department of Homeland Security) 4 Five Independent Agencies also participated in the study: – Equal Employment Opportunity Commission National Science Foundation – General Services Administration Securities And Exchange Commission – National Aeronautics and Space Administration 3

This report presents three sample business case analyses that could be used in an This report presents three sample business case analyses that could be used in an agency’s investment process as project managers try to fund various telework initiatives 4 For this report, three sample business case analyses (BCAs) were developed – One in-depth BCA with detailed costs, benefits, and risks. It also included a cost justification and return on investment (ROI) analysis – Two high-level BCAs with detailed costs and high level benefits and risks 4 The Capital Planning and Investment Control (CPIC) process and Value Measuring Methodology (VMM) value factors were used to outline and develop the BCAs 4 Additionally, this report provides resources that project managers can use to develop their own telework-related BCAs – Cost data from deliverables two and five were consolidated for easy use by the reader, e. g. unit costs, web-based application development costs, server capacity guidelines – A guide explaining how to use the cost data to build a cost estimate for a telework BCA or telework funding requests is included – An inventory of risks and benefits typically associated with telework initiatives is provided in the Appendix – An explanation for how to tailor the example BCAs for their organization (e. g. , an agency can add or subtract costs of components from sample BCAs as appropriate, if an agency provides more or less than is included in the BCA examples) 4

Table Of Contents 4 Introduction 4 Methodology 4 Sample Telework Program Business Cases – Table Of Contents 4 Introduction 4 Methodology 4 Sample Telework Program Business Cases – BCA 1 – Home Office (In-Depth) – BCA 2 – Services (High-Level) – BCA 3 – Enterprise (High-Level) 4 Findings and Conclusions 4 Appendix A: Benefit Savings Calculations 4 Appendix B: Development of Telework Costs 4 Appendix C: Resources for Developing Telework-related Business Cases

The information for this report was distilled from other data gathering and analysis that The information for this report was distilled from other data gathering and analysis that was previously performed for this study and from business case development best practices Data Sources Development of a Series of Reports on Telework Technology and Related Costs • Conducted interviews with CIOs and other IT staff members to obtain information about the current status of the telework infrastructure and plans for enhancement • Several reports in this study have established the technologies, costs, and enhancement plans required for telework expansion • Task 2, Task 3, and Task 4 specify the technology components needed for scalability • Task 2 and Task 5 detail the costs required for recommended technology enhancements • Task 6 and Task 9 incorporate the technology and cost requirements from the other tasks and provide recommendations for initiating and implementing telework program enhancement and expansion plans Findings to Develop Sample Cost Recovery / ROI Strategies High-Level Data Synthesis • Conducted focus groups with Telework Program Coordinators to obtain information about telework program history and current state, technology issues, policy issues, and plans for expansion Detailed Data Analysis Data Collection From Three Sources in 16 Government Organizations • Administered surveys to teleworkers and managers of teleworkers to obtain information about telework technology availability, usage, and performance High-Level Data Synthesis Detailed Synthesis of Detailed Reports • Information about costs, benefits and risks associated with telework investments • Conducted discussion sessions with telework and technology experts to evaluate potential cost reduction and cost recovery / ROI strategies • Used frameworks of the Capital Planning and Investment Control (CPIC) process and Value Measuring Methodology (VMM) value factors to organize and develop sample business cases analysis (BCA) • Estimated costs and benefits associated with sample telework investments that bring agencies to the “basic” and / or “ideal” levels for Home Office, Services, and Enterprise solutions defined in Task 4 • Developed one in-depth and two high-level sample BCAs that incorporated cost estimates, cost reduction and cost recovery / ROI strategies, and addressed risk 6

The sample BCAs were developed to bring agencies to the “basic” and / or The sample BCAs were developed to bring agencies to the “basic” and / or “ideal” levels for Home Office, Services, and Enterprise solutions Additional Technology Needed for Basic Solution Additional Technology Needed for Ideal Solution BCA 1: Home Office • Reutilized PCs (no security software) • Limited peripherals (printer/copier/fax) • Network interface (broadband router) • Limited mobile telephone (exec staff only) • Security resources (including firewall and authentication devices) BCA 1: Home Office • Laptop & docking station • Peripherals for all teleworkers (printer/copier / fax) • Mobile telephone for all teleworkers* BCA 1: Home Office Ideal solution is not covered in BCA 1; these components are not calculated** Advanced authentication devices Collaboration tools (web cam) PDA devices for all teleworkers BCA 2: Services Enterprise connectivity, • Voice conferencing, mobile telephone access (exec staff only) • Help desk support • Technical training (general) BCA 2: Services • Voice communications (calling card) BCA 2: Services Residential broadband service BCA 3: Enterprise • Secure network access, including VPN/ firewall solution • Remote email access, terminal emulation system, web interfaces (limited) BCA 3: Enterprise • Basic solution is currently in place (no additional components necessary) BCA 3: Enterprise Web interfaces (all admin functions) Ideal Solution Technology Currently in Place* Basic Solution Red text indicates the components included in the BCA calculations * The Task 4 Report listed cell phone, calling card, or additional telephone line as three voice communication options in the basic solution; in this sample BCA series, a calling card was selected to meet teleworker voice communication requirements ** BCA 1 focuses on funding a “basic” solution only. 7

The Capital Planning and Investment Control (CPIC) process provides the context for the development The Capital Planning and Investment Control (CPIC) process provides the context for the development of BCAs in the federal government 4 Regardless of the dollar size and ultimate recipient of a BCA (i. e. , bureau Office of Chief Information Officer (OCIO), department OCIO, or Office of Management and Budget (OMB)), each BCA must step through the process outlined in the graphic to the right Context for Sample BCAs 4 Each of the sample BCAs in this report are assumed to be in the “Select” phase, which is where investments are developed, submitted and scored 4 “Select” phases across government require each BCA to analyze the potential value, cost and risk for the investment in question 8

The Value Measuring Methodology (VMM) is a structured approach for investment analysis that can The Value Measuring Methodology (VMM) is a structured approach for investment analysis that can be used to evaluate potential telework infrastructure enhancements… Sample VMM Outputs: Sample VMM Framework Used to Structure the BCAs in this Section: VALUE Value Factors Value Measures Priority Metric, Target, Scale Priority Risk Inventory RISK % - impact on costs ied antif s Qu efit Ben Degree of Caution Required LE EX P AM % - impact on value (benefits) Risk Tolerance Boundary COST FY 07 Sub Total: Pre-Risk Total FY 08 Sub Total: osts ct C res) Dire Figu lar (Dol FY 09 Sub Total: …including the evaluation of the three essential factors of decision making in a structured, quantifiable and repeatable manner 9

For the purposes of these sample BCAs, an abridged version of VMM’s methodology was For the purposes of these sample BCAs, an abridged version of VMM’s methodology was employed Overview of VMM Methodology* 4 Cost, value and risk are estimated for one alternative, instead of the three that OMB’s Circular A-11 requires for business cases 4 Step 1. Develop a Decision-Framework – Identify & Define the Value Structure – Identify & Define the Risk Structure – Identify & Define the Cost Element Structure – Begin Documentation 4 Value definition is confined to the “government financial” value factor only – One of VMM’s key strengths, the quantification of qualitative benefits (i. e. , the other four value factors), 4 Step 2. Alternatives Analysis (estimate requires a prioritization process that is most effective value, cost, & risk) when completed in an interactive session using an – Identify & Define Alternatives appropriate automated tool – Estimate Value and Cost – This process should be done at the highest – Conduct a Risk Analysis appropriate level of agency management – On-going Documentation 4 Risk inventory and possible risk mitigation strategies 4 Step 3: Pull Together the Information were defined in lieu of detailed risk analysis – Aggregate the Cost Estimate – Assessment of probability and impact would need to – Calculate the Return-on-Investment be done in collaborative sessions with technical and – Calculate the Value Score policy staff or representatives of partner agencies – Calculate the Cost and Value Risk Scores – Only then could its impact on the value and risk – Compare Value, Risk and Cost scores be determined * Only the actions in “bold” were performed in sample BCAs 4 Step 4: Communicate and Document 10

The five VMM value factors help identify, define, and quantify the financial and non-financial The five VMM value factors help identify, define, and quantify the financial and non-financial benefits of telework investments Value Factors Direct User (Customer) Value Description Relevant Telework Benefits 4 Value associated with the delivery of highquality, citizen-centered services 4 Realization of value in this factor typically drives the realization of value in all the other factors 4 Enhanced Quality of Work Life – Telework affords employees flexibility to better accomplish work and non-work responsibilities 4 Workforce Improvements – Telework has been found to increase employee productivity, morale, and retention Social (Non-direct 4 Secondary or indirect benefits directly 4 Environmental/Civic Benefits – Widespread telework reduces User/Public) Value attributable to the investment under traffic congestion and pollution due to fewer daily commuters consideration 4 Continuity of Operations – Telework program can be used to 4 Society benefits anytime the government is a help government work continue during emergencies good steward of public funds 4 Potential Real Estate Savings – Telework enables reduced need for office space, resulting in taxpayer savings Government Operational/ Foundational Value 4 Value associated with investments in building 4 Continuity of Operations – Telework program can be used to up the infrastructure - whether in staff skills or help government work continue during emergencies technology - required to accommodate a 4 Enhanced Recruiting – Telework is an attractive benefit that changing environment gives agencies a competitive advantage in recruiting high-quality candidates Government Financial Value 4 Traditional direct cost information used in 4 Continuity of Operations – Telework program can be used to financial return-on-investment ratios help government work continue during emergencies 4 In the past, only this value was quantified and 4 Potential Real Estate Savings – Telework enables reduced factored into decision metrics need for office space, resulting in taxpayer savings Strategic/Political 4 Captures and quantifies the value associated 4 Legislative Compliance – Agencies are required to provide Value with advancing organizational and telework opportunities to all eligible staff government-wide initiatives and mandates 4 Continuity of Operations – Telework program can be used to help government work continue during emergencies 11

Table Of Contents 4 Introduction 4 Methodology 4 Sample Telework Program Business Cases – Table Of Contents 4 Introduction 4 Methodology 4 Sample Telework Program Business Cases – BCA 1 – Home Office (In-Depth) – BCA 2 – Services (High-Level) – BCA 3 – Enterprise (High-Level) 4 Findings and Conclusions 4 Appendix A: Benefit Savings Calculations 4 Appendix B: Development of Telework Costs 4 Appendix C: Resources for Developing Telework-related Business Cases

This section provides three sample BCAs that seek funding required to close the gap This section provides three sample BCAs that seek funding required to close the gap between the organization’s current infrastructure and the “basic” or “ideal” telework infrastructure BCA Size of Agency Detail Level of BCA 4 In-Depth: – Detailed costs 4 Large Agency – Detailed benefits (100 K Staff) 1. – Sample risk impacts Home Office 4 Scaling up to 50 K teleworkers – Cost justification – ROI analysis 2. Services 3. Enterprise Technical Investments Covered 4 Increasing from current to basic level of infrastructure for teleworker-at-home equipment – Laptop with software (basic) – Printer/copier/fax (basic) 4 Medium Agency 4 High-Level: (50 K Staff) – Detailed costs 4 Scaling up to 25 K – High-level cost justification teleworkers – General discussion of risks 4 Increasing from current to ideal level of infrastructure for telecommunications services – PDA or cell phone service (basic) – Broadband service (ideal) Does not include help desk support since the study found that all agencies currently provide this service 4 High-Level: – Detailed costs – High-level cost justification – General discussion of risks 4 Increasing from current to ideal level of infrastructure for enterprise application access – Web access application development (ideal) 4 Small Agency (10 K Staff) 4 Scaling up to 5 K teleworkers Assumptions 1. Each sample agency’s current level of infrastructure is assumed to be consistent with Scenario B (see Appendix) 2. Agency objective is to close the gap between their current infrastructure to the ‘basic” and / or “ideal” level of telework support 3. Agencies are scaling up to 50 percent of the agency teleworking 13

Table Of Contents 4 Introduction 4 Methodology 4 Sample Telework Program Business Cases – Table Of Contents 4 Introduction 4 Methodology 4 Sample Telework Program Business Cases – BCA 1 – Home Office (In-Depth) – BCA 2 – Services (High-Level) – BCA 3 – Enterprise (High-Level) 4 Findings and Conclusions 4 Appendix A: Benefit Savings Calculations 4 Appendix B: Development of Telework Costs 4 Appendix C: Resources for Developing Telework-related Business Cases

Implementing a “Basic” Teleworker-at-Home solution for 50, 000 employees at an agency with 100, Implementing a “Basic” Teleworker-at-Home solution for 50, 000 employees at an agency with 100, 000 staff can yield over $36 million of benefits in a 3 -year period VALUE Value Factors Government Operational/Foundational Value Government Financial Value Government Operational/Foundational Value Direct User (Customer) Value Corresponding Benefits Reduced Employee Absence Savings Real Estate Footprint Savings Employee Retention Savings Improved Employee Productivity Key Metrics: ROI – ~225%, NPV - $20. 2 million, Payback – Year 1 Risk Impact: ROI – ~180%, NPV - $13. 9 million, Payback – N/A Teleworker-at-Home Components in this BCA: • Laptop with Docking Station • Combination printer/ copier/fax machine Risk Inventory RISK +5%: impact on costs -15%: impact on value (benefits) Risk Tolerance Boundary COST $16. 0 million: Pre-Risk Total $16. 8 million: Risk-Adjusted Total FY 07 Sub Total: $5. 4 million FY 08 Sub Total: $5. 3 million FY 09 Sub Total: $5. 3 million 15

An investment of approximately $16 million over 3 years is required to provide a An investment of approximately $16 million over 3 years is required to provide a “Basic” Teleworker-at-Home solution for 50, 000 staff at an agency with 100, 000 staff 4 A 3 -year implementation allows for phased Hardware approach over multiple budget cycles and allows all Laptop with Docking Station desktops to be refreshed with laptops Less 80% Less Cost of Desktop Sub Total The acquisition cost of a laptop can be offset by the Peripherals current cost of acquiring a desktop Printer / Copier / Fax – The approximate annualized cost of a desktop, Sub Total including maintenance, is $326 Total Per User – 4 All estimates are in FY 07 dollars 4 Since Telework frequency per OPM is one day per week (or 20%), only 20% of the laptop expense was charged to the telework initiative – Annual Number of New Users ($1, 658) ($326) $88 $238 $326 4 The laptop and printer / copier / fax unit costs are annualized and include refresh and annual maintenance expense The remaining 80% of the expense can be shared by agency cost categories, such as annual infrastructure and COOP compliance $2, 072 – FY 07 Please refer to Appendix B for further detail on costs FY 08 FY 09 Total 16, 667 50, 000 $326 $333 $348 N/A Total Annual Cost (Inflated) $5, 433, 333 $5, 552, 867 $5, 799, 880 $16, 786, 080 Total Annual Cost (Present Value) $5, 433, 333 $5, 303, 598 $5, 290, 853 $16, 027, 784 Annual Per User Cost* * Annual costs are inflated per the difference between OMB Circular A-94's Nominal and Real 3 -Year Treasury Interest Rates; costs are discounted per OMB A-94's 3 -year Nominal Rate on Treasury Notes and Bonds 16

This approximate $16 million investment can be offset with a benefits realization of over This approximate $16 million investment can be offset with a benefits realization of over $36 million over the same 3 -year period 4 Return on Investment (ROI): 232% Return on Investment (ROI)* 4 Cumulative Net Present Value (NPV): $20. 2 million Total Annual Benefit (Present Value) $36, 238, 906 Total Annual Cost (Present Value) $16, 027, 784 ROI 4 Payback is achieved in Year 1 4 In order to be consistent with the cost calculation methodology, the savings are shared across the agency in the same manner – 226% *ROI is calculated as a savings to investment ratio, which is consistent with OMB guidance for the Exhibit 300 i. e. , 20% to telework and 80% to agency initiatives such as annual infrastructure upgrades / maintenance and COOP compliance Benefits (Net Present Value) Total Annual Benefit (Present Value) FY 07 FY 08 FY 09 Total $11, 424, 322 $11, 151, 535 $13, 663, 048 36, 238, 906 Total Annual Cost (Present Value) $5, 433, 333 $5, 303, 598 $5, 290, 853 16, 027, 784 Net Present Value $5, 990, 989 $5, 847, 938 $8, 372, 195 20, 211, 122 Cumulative Net Present Value* $5, 990, 989 $11, 838, 927 $20, 211, 122 N/A *Payback is achieved in Year 1 (FY 07) when cumulative NPV reaches ~$6. 2 million 17

The total amount of financial benefits that could be realized from implementing the “basic” The total amount of financial benefits that could be realized from implementing the “basic” teleworker-at-home solution is derived from a number of sources Benefits (Present Value) Reduced Employee Absence Savings Real Estate Footprint Savings Employee Retention Savings Improved Employee Productivity Total FY 07 FY 08 FY 09 Total $3, 682, 483 $3, 594, 553 $3, 585, 916 10, 862, 952 $2, 538, 311 N/A $70, 000 $68, 329 $68, 164 206, 493 $7, 671, 840 $7, 488, 653 $7, 470, 658 22, 631, 151 11, 424, 322 11, 151, 535 13, 663, 048 $36, 238, 906 See Appendix A for details on how the value of benefits were calculated 4 Each type of savings and benefits are based on prior industry research which are referred to in Appendix A – The improved productivity calculation is based on a recent study that found teleworkers work on average 1 additional hour on days they telework – The increased employee productivity is the largest benefit since it accounts for 50 hours per year per teleworker, while the reduction of 3 missed work days per year per teleworker accounts for just 24 hrs per employee per yr 4 Several of these benefits, such as employee retention, correspond to more than one value factor VMM Value Factors Corresponding Telework Benefits Government Operational/Foundational Value Reduced Employee Absence Savings Government Financial Value Real Estate Footprint Savings Government Operational/Foundational Value Employee Retention Savings Direct User (Customer) Value Improved Employee Productivity 18

While an actual risk analysis was not performed, this sample BCA assumes that risk While an actual risk analysis was not performed, this sample BCA assumes that risk could have a more noticeable impact on the realization of financial benefits Narrative Risk Level Probability AL N 50% Medium 30% TIO O Low N 25% High Likelihood of Occurring Cost Impact Value Impact 25% -25% 15% -15% 5% -5% Causes Cost to Increase Causes Value to Decrease 4 VMM requires that the probability and impact of each risk factor on both cost and value be considered. This provides analysts with information necessary to determine the interaction between impact and probability and predict how that interaction will change the value and cost of the investment under consideration 4 Examples of risk that could affect the “teleworker-at-home” solution are: – Technology Issues (e. g. , connectivity, performance of legacy client-server applications remotely, and security) – Access to / availability of IT support – Difficulties working and communicating with co-workers in the office – Inflexible agency-based operating procedures – Too few at-home days utilized for program to be effective – Participants in telework program are not well suited for working at an alternative work site 4 In order to illustrate the impact of risk on cost and value, this BCA assumes that a detailed risk analysis has been performed with the following outcomes: – There is a 5% impact (increase) on the total costs: $16. 0 million $16. 8 million – There is a 15% impact (decrease) on total value: $36. 2 million $30. 8 million 19

Table Of Contents 4 Introduction 4 Methodology 4 Sample Telework Program Business Cases – Table Of Contents 4 Introduction 4 Methodology 4 Sample Telework Program Business Cases – BCA 1 – Home Office (In-Depth) – BCA 2 – Services (High-Level) – BCA 3 – Enterprise (High-Level) 4 Findings and Conclusions 4 Appendix A: Benefit Savings Calculations 4 Appendix B: Development of Telework Costs 4 Appendix C: Resources for Developing Telework-related Business Cases

Implementing an “Ideal” Telecommunication Services solution for 25, 000 employees at an agency with Implementing an “Ideal” Telecommunication Services solution for 25, 000 employees at an agency with 50, 000 staff can yield over $31 million of benefits in a 3 -year period VALUE Value Factors Government Operational/Foundational Value Government Financial Value Corresponding Benefits Reduced Employee Absence Savings Real Estate Footprint Savings Government Operational/Foundational Value Employee Retention Savings Direct User (Customer) Value Improved Employee Productivity Government Operational/Foundational Value Broadband Savings Key Metrics: Total Benefits Realized (Present Value): $31. 1 million RISK* Risk Inventory % - impact on costs Telecommunications Services Components in this BCA: • Residential Broadband Service • Calling Card (for long distance calls) % - impact on value (benefits) Risk Tolerance Boundary FY 07 Sub Total: $5. 3 million COST $15. 6 million: Total Lifecycle Cost FY 08 Sub Total: $5. 2 million FY 09 Sub Total: $5. 1 million *In this BCA, potential risks were identified but their impact on value and cost were not calculated 21

Cost analysis shows that approximately $15. 6 million over 3 years is required for Cost analysis shows that approximately $15. 6 million over 3 years is required for implementation of a “Basic” telecommunication services solution Annual Number of New Users Annual Per User Cost* Total Annual Cost (Inflated) Total Annual Cost (Present Value) FY 07 8, 334 $634 $5, 283, 756 FY 08 8, 333 $648 $5, 399, 351 $5, 156, 973 *Annual costs are inflated per the difference between OMB Circular A 94's Nominal and Real 3 -Year Treasury Interest Rates; costs are discounted per OMB A-94's Nominal 3 -Year Rate on Treasury Notes and Bonds 4 As detailed in the table at right, the per user cost of $634 is based on the agency providing a calling card and broadband access to each teleworker FY 09 8, 333 $677 $5, 639, 535 $5, 144, 580 Total 25, 000 N/A $16, 322, 642 $15, 585, 309 Annual Service Fees Calling Card Broadband Sub Total Per User $14 $620 $634 4 A calling card was selected as the best telecommunication option for several reasons – Provides practical, inexpensive way for agencies to pay for teleworkers’ long distance charges – Cell phones may be more appropriate for some teleworkers who work from multiple locations, but calling cards meet the needs of a typical home-based teleworker 4 Broadband access is widely viewed as critical to the success of telework – Provides faster data communication and enables timely transfer of larger data files – Provides for both data communications and voice communications, so teleworkers are able to conduct telephone calls while transferring data – Allows use of collaboration tools, video conferencing, etc. , which can be difficult if not impossible to use over dial-up 22

Value analysis shows that the $15. 6 million investment can be offset by over Value analysis shows that the $15. 6 million investment can be offset by over $31 million in benefits from a variety of sources Benefits (Present Value) FY 07 FY 08 Reduced Employee Absence Savings $1, 841, 168 $1, 797, 205 Real Estate Footprint Savings N/A Employee Retention Savings $35, 000 $34, 164 Improved Employee Productivity $3, 835, 767 $3, 744, 177 Broadband Savings $4, 397, 414 $4, 292, 414 Total 10, 109, 349 9, 867, 960 See Appendix A for details on how the value of benefits were calculated FY 09 $1, 792, 886 $1, 269, 106 $34, 082 $3, 735, 180 $4, 282, 099 11, 113, 354 Total 5, 431, 260 1, 269, 106 103, 246 11, 315, 123 12, 971, 927 $31, 090, 663 4 Nearly $13 million of benefit in time savings related to broadband, which nearly pays for the investment itself – Estimates are based on technical performance superiority of broadband, as compared to dial-up 4 Over $101 million in financial benefits can be earned by this investment – four-fifths of which is assumed to be shared agency-wide – 20 percent to telework – 80 percent to agency initiatives, such as infrastructure upgrades / maintenance and COOP compliance 4 The potential benefits of this investment all map to one or more of VMM’s value factors, including – Government Operational/Foundational Value – Government Financial Value – Direct User (Customer) Value 23

There a variety of risks to be considered which could impact the “telecommunications services” There a variety of risks to be considered which could impact the “telecommunications services” investment Potential Risks Potential Mitigation Strategies 4 Technology Issues (e. g. , connectivity, performance of legacy client-server applications remotely, security, data security) 4 Access to / availability of IT support 4 Operational impacts 4 Difficulty working/communicating with office workers 4 Inflexible agency-based operating procedures 4 Too few telework days used for program to be effective 4 Supervisor resistance to telework 4 Appropriate selection of participants for telework 4 Inadequate preparation 4 Creation of burden on non-participating employees 4 Staff culture / existing expectations 4 Resistance by organizational support functions (e. g. , HR, IT) 4 Historical resistance by smaller Federal agencies 4 Difficulty in measuring results 4 Senior management leadership 4 Comprehensive security planning 4 Telework-specific training 4 Organize Telework Advisory Group or Program Management Office 4 Assessing the impact Telework has on timekeeping, compensation, and other issues 4 Preparing a written Telework agreement for employees and managers 4 Regularly re-evaluating and modifying the program, when necessary, to meet changing circumstances 4 Designation of appropriate telework coordinator 24

Table Of Contents 4 Introduction 4 Methodology 4 Sample Telework Program Business Cases – Table Of Contents 4 Introduction 4 Methodology 4 Sample Telework Program Business Cases – BCA 1 – Home Office (In-Depth) – BCA 2 – Services (High-Level) – BCA 3 – Enterprise (High-Level) 4 Findings and Conclusions 4 Appendix A: Benefit Savings Calculations 4 Appendix B: Development of Telework Costs 4 Appendix C: Resources for Developing Telework-related Business Cases

Implementing an “Ideal” Enterprise solution for 5, 000 employees at an agency with 10, Implementing an “Ideal” Enterprise solution for 5, 000 employees at an agency with 10, 000 staff results in $3. 4 million of benefits over a 3 -year period based on this study’s analysis Value Factors Corresponding Benefits VALUE Government Operational/Foundational Value Government Financial Value Government Operational/Foundational Value Reduced Employee Absence Savings Real Estate Footprint Savings Employee Retention Savings Direct User (Customer) Value Improved Employee Productivity Key Metrics: Total Benefits Realized (Present Value): $3. 4 million RISK* Risk Inventory Enterprise Components in this BCA: • Web-based application (Multi-tier Unix-based architecture) % - impact on costs % - impact on value (benefits) Risk Tolerance Boundary FY 07 Sub Total: $219, 000 COST $219, 000: Total Lifecycle Cost FY 08 Sub Total: N/A FY 09 Sub Total: N/A *In this BCA, potential risks were identified but their impact on value and cost were not calculated 26

Cost analysis shows that $219, 000 over 12 months is required to provide an Cost analysis shows that $219, 000 over 12 months is required to provide an “Ideal” web-based application solution FY 07 Total Annual Number of New Users 5, 000 Annual Per User Cost* $10 N/A Total Per User Cost $50, 000 Labor Costs $168, 960 Total Annual Cost $218, 960 * Annual costs are not inflated since all BCA costs are provided in FY 07 dollars 4 Since the development is assumed to take place over a 12 -month period, all labor costs and hardware purchases are for FY 07 4 Because of the multiple uses of these investments, only a portion of the development costs were charged to the telework initiative – Since telework’s frequency per OPM is 1 day a week (or 20%), only 20% of the development costs were charged to the telework initiative – For example, 20 percent may be associated with telework – The remaining 80 percent of the expense can be shared by agency costs such as infrastructure and COOP compliance 4 Software and System Administration costs are not included in the total, because the costs can vary widely due to a number of factors Labor Calculation: 4. 00 FTEs per hour cost of typical contractor web app development $110 labor number of months required for 12. 00 implementation total number of labor hours for 4 FTEs for 12 month 7, 680. 00 implementation period $844, 800 Labor Sub Total less 80% charged to other agncy initiatives, e. g. COOP, ($675, 840) infrastructure $168, 960 Labor Total Annual Service Fees Web App Less 80% Software Annual Licenses Total Per User $52 ($42) TBD $10 4 Further detail on assumptions and industry guidelines regarding web application development solutions is provided in Appendix B 27

Value analysis shows that the $219, 000 investment can yield substantial financial benefits of Value analysis shows that the $219, 000 investment can yield substantial financial benefits of $3. 4 million Benefits (Present Value) FY 07 Reduced Employee Absence Savings $1, 104, 744 Real Estate Footprint Savings N/A Employee Retention Savings $7, 000 Improved Employee Productivity $2, 301, 552 Total 3, 413, 297 See Appendix A for details on how the value of benefits were calculated Total 1, 104, 744 0 7, 000 2, 301, 552 $3, 413, 297 4 Each type of savings and benefits are based on prior industry research which are referred to in Appendix A – The improved productivity calculation is based on a recent study that found teleworkers work on average 1 additional hour on days they telework – The increased employee productivity is the largest benefit since it accounts for 50 hours per year per teleworker, while the reduction of 3 missed work days per year per teleworker accounts for just 24 hrs per employee per yr 4 In order to be consistent with the cost calculation methodology, the savings are shared across the agency in the same manner – For example, 20 percent may be associated with telework – The remaining 80 percent of the expense can be shared by agency costs such as infrastructure and COOP compliance 4 The potential benefits of the enterprise investment all map to one or more of VMM’s value factors, including – Government Operational/Foundational Value – Government Financial Value – Direct User (Customer) Value 28

There are variety of risks that could reduce the overall value of the “Enterprise” There are variety of risks that could reduce the overall value of the “Enterprise” investment Potential Risks 4 Technology Issues (e. g. , connectivity, performance of legacy client-server applications accessed remotely, security, and data security) 4 Access to / availability of IT support 4 Efficacy of training 4 Operational impacts 4 Difficulty working and communicating with office workers 4 Inflexible agency-based operating procedures 4 Too few telework days utilized for program to be effective 4 Supervisor resistance to telework program 4 Appropriate selection of participants for telework 4 Timely coordination with unions 4 Creation of burden on non-participating employees 4 Staff culture / existing expectations 4 Resistance by organizational support functions (e. g. , HR, IT) 4 Difficulty in measuring results Potential Mitigation Strategies 4 Senior management leadership 4 Broadband residential services 4 Comprehensive security planning 4 Telework-specific training 4 Organize Telework Advisory Group or Program Management Office 4 Assessing the impact telework has on timekeeping, compensation, and other issues 4 Developing a plan to address the equipment needs of your organization telework program 4 Preparing a written Telework agreement for employees and managers 4 Regularly re-evaluating and modifying the program, when necessary, to meet changing circumstances 4 Willingness of agency to participate 4 Designation of appropriate telework coordinator 4 Coordination with local unions (when applicable) 4 Increased IT support and allocation of resources 29

Table Of Contents 4 Introduction 4 Methodology 4 Sample Telework Program Business Cases – Table Of Contents 4 Introduction 4 Methodology 4 Sample Telework Program Business Cases – BCA 1 – Home Office (In-Depth) – BCA 2 – Services (High-Level) – BCA 3 – Enterprise (High-Level) 4 Findings and Conclusions 4 Appendix A: Benefit Savings Calculations 4 Appendix B: Development of Telework Costs 4 Appendix C: Resources for Developing Telework-related Business Cases

By clearly articulating the financial and non-financial benefits of telework, government leaders can make By clearly articulating the financial and non-financial benefits of telework, government leaders can make an effective business case for enhancing the infrastructure and services that support telework Telework Business Cases* Total Investment Benefits (Millions)** NPV ROI Teleworker-at-Home Solution / 100 K staff $16. 0 $36. 2 $20. 2 ~225% Telecommunication Services / 50 K staff $15. 6 $31. 1 $15. 1 ~200% Enterprise / 10 K staff $0. 22 $3. 4 $3. 2 4 Substantial financial benefits can be realized by implementing an effective telework program (see table) – Reduced absenteeism costs – Reduced real estate costs – Reduced recruitment and retention costs – Improved staff productivity ~1500% 4 Telework IT enhancements do not just benefit teleworkers, they provide IT benefits to all staff – Improves contingency support – Increases organization flexibility and ability to adjust IT infrastructure and applications to meet changes in IT needs – Improves communication between staff and people in other organizations – Easier to use applications with a common interface – Automation of administrative processes 4 Other non-financial benefits of telework – Compliance with federal mandates – Increased workforce diversity – Reduced traffic congestion and pollution 31

Table Of Contents 4 Introduction 4 Methodology 4 Sample Telework Program Business Cases – Table Of Contents 4 Introduction 4 Methodology 4 Sample Telework Program Business Cases – BCA 1 – Home Office (In-Depth) – BCA 2 – Services (High-Level) – BCA 3 – Enterprise (High-Level) 4 Findings and Conclusions 4 Appendix A: Benefit Savings Calculations 4 Appendix B: Development of Telework Costs 4 Appendix C: Resources for Developing Telework-related Business Cases

Appendix A: Benefit Savings Calculations BCA 1: Telework programs can save organizations 63% of Appendix A: Benefit Savings Calculations BCA 1: Telework programs can save organizations 63% of their absenteeism costs 3 24 $46. 03 $1, 104. 74 8, 333 $9, 205, 839 ($7, 364, 671) $1, 841, 168 $5, 523, 505 # sick days / snow days saved # hrs saved composite telework hourly rate person annual savings # of teleworkers annually added annual savings less 80% annual telework-specific savings total (3 -yr) telework-specific savings 4 In a study released in 1999, the International Telework Association and Council (ITAC) concluded that healthy employees often miss work due to family or personal obligations that can only be met during the business day – Teleworkers are still able to get some work done, even on days when they have appointments to attend – Employers can save 63% of the cost of absenteeism per teleworking employee, or $2086 per employee per year. Source: Exploring Telework as a Business Continuity Strategy, 2005 Worldat. Work 4 This calculation assumes that 3 sick days / snow days are saved annually per teleworker 4 In order to be consistent with the cost calculation methodology, the savings are shared across the agency in the same manner – i. e. , 20% to telework and 80% to agency initiatives such as annual infrastructure upgrades / maintenance and COOP compliance 33

Appendix A: Benefit Savings Calculations BCA 1: Substantial real estate savings can be gained Appendix A: Benefit Savings Calculations BCA 1: Substantial real estate savings can be gained through telework and hoteling programs 4 For the purposes of this example, it is assumed that in Year 3 (FY 09), the agency’s lease is up for renewal – Because half of its staff now teleworks at least once a week, the agency can reduce its person (and hence overall) square footage allocation by 10% $34 230 10% 23 8, 333 $6, 516, 406 ($5, 213, 123) $1, 303, 283 Rentable square feet person rate for Washington, DC Class B office space Suggested rentable square feet person, per GSA Office of Governmentwide Policy's "Office Space Use" update % person reduction in rentable square feet provided reduced rentable square feet person # of teleworkers annually added annual savings less 80% annual telework-specific savings total (realized in Year 3) telework-specific savings 4 The cost per rentable square foot of Class B office space in Washington DC is $34 per year – Federal office space typically is classified as Class B – Class B office space definition: good location, professionally managed, fairly high-quality construction and tenancy; generally show very little functional obsolescence and deterioration – Source: Society of Industrial and Office Realtors (SIOR) 2005 Comparative Statistics of Industrial and Office Real Estate Markets 4 To be consistent with the cost calculation methodology, the savings are shared across the agency in the same manner – i. e. , 20% to telework and 80% to agency initiatives such as annual infrastructure upgrades/maintenance and COOP 34

Appendix A: Benefit Savings Calculations BCA 1: Telework has proven to be a valuable Appendix A: Benefit Savings Calculations BCA 1: Telework has proven to be a valuable employee recruitment and retention tool, saving employers staffing costs $7, 000 25 $175, 000 ($140, 000) cost to recruit one employee # employees retained annually due to telework annual savings less 80% $35, 000 annual telework-specific savings $105, 000 total (3 -yr) telework-specific savings 4 According to a 2003 telework study by the Equal Employment Opportunity Commission (EEOC), their total cost of recruiting one employee is $7000 – While this figure would certainly vary from agency to agency, this study assumes that the variance would be minor – Source: OIG-01 -13 -AMR Assessment of Reducing Infrastructure Costs Through Increased Use of Telework FINAL 4 In order to be consistent with the cost calculation methodology, the savings are shared across the agency in the same manner – i. e. , 20% to telework and 80% to agency initiatives such as annual infrastructure upgrades / maintenance and COOP compliance 35

Appendix A: Benefit Savings Calculations BCA 1: Studies have shown teleworkers are more productive Appendix A: Benefit Savings Calculations BCA 1: Studies have shown teleworkers are more productive than office workers 1. 00 50 $46. 03 $2, 302 8, 333 $19, 178, 832 ($15, 343, 065) $3, 835, 767 $11, 507, 300 # additional hours worked on telework days total # telework days person per year* composite Telework hourly rate person annual savings # of teleworkers annually added annual benefit less 80% annual telework-specific benefit total (3 -yr) telework-specific savings 4 In a recent study of its extensive telework program, AT&T found that teleworkers report about one additional productive hour in each workday spent at home (about a 12. 5% increase, approximately) – Source: Lessons Learned From The Network-Centric Organization: 2004 AT&T Employee Telework Results 4 This calculation assumes that each participating employee teleworks one day per week annually, not including two weeks of paid vacation 4 In order to be consistent with the cost calculation methodology, the savings are shared across the agency in the same manner – i. e. , 20% to telework and 80% to agency initiatives such as annual infrastructure upgrades / maintenance and COOP compliance 36

Appendix A: Benefit Savings Calculations BCA 2: Reduced Employee Absence Savings Calculations 3 24 Appendix A: Benefit Savings Calculations BCA 2: Reduced Employee Absence Savings Calculations 3 24 $46. 03 $1, 104. 74 8, 333 $9, 205, 839 ($7, 364, 671) $1, 841, 168 $5, 523, 505 # sick days / snow days saved # hrs saved composite telework hourly rate person annual savings # of teleworkers annually added annual savings less 80% annual telework-specific savings total (3 -yr) telework-specific savings 4 In a study released in 1999, the International Telework Association and Council (ITAC) concluded that healthy employees often miss work due to family and personal obligations that can only be met during the business day – Teleworkers are still able to get some work done, even on days when they have appointments to attend – Employers can save 63% of the cost of absenteeism per teleworking employee, or $2086 per employee per year. Source: Exploring Telework as a Business Continuity Strategy, 2005 Worldat. Work 4 This calculation assumes that 3 sick days / snow days are saved annually per teleworker 4 In order to be consistent with the cost calculation methodology, the savings are shared across the agency in the same manner – i. e. , 20% to telework and 80% to agency initiatives such as annual infrastructure upgrades / maintenance and COOP compliance 37

Appendix A: Benefit Savings Calculations BCA 2: Real Estate Footprint Savings Calculations 4 For Appendix A: Benefit Savings Calculations BCA 2: Real Estate Footprint Savings Calculations 4 For the purposes of this example, it is assumed that in Year 3 (FY 09), the agency’s lease is up for renewal – Because half of its staff now teleworks at least once a week, the agency can reduce its person (and hence overall) square footage allocation by 10% $34 230 10% 23 8, 333 $6, 516, 406 ($5, 213, 123) $1, 303, 283 Rentable square feet person rate for Washington, DC Class B office space Suggested rentable square feet person, per GSA Office of Governmentwide Policy's "Office Space Use" update % person reduction in rentable square feet provided reduced rentable square feet person # of teleworkers annually added annual savings less 80% annual telework-specific savings total (realized in Year 3) telework-specific savings 4 The cost per rentable square foot of Class B office space in Washington DC is $34 per year – Federal office space typically is classified as Class B – Class B office space definition: good location, professionally managed, fairly high-quality construction and tenancy; generally show very little functional obsolescence and deterioration – Source: Society of Industrial and Office Realtors (SIOR) 2005 Comparative Statistics of Industrial and Office Real Estate Markets 4 To be consistent with the cost calculation methodology, the savings are shared across the agency in the same manner – i. e. , 20% to telework and 80% to agency initiatives such as annual infrastructure upgrades/maintenance and COOP 38

Appendix A: Benefit Savings Calculations BCA 2: Employee Retention Savings Calculations $7, 000 25 Appendix A: Benefit Savings Calculations BCA 2: Employee Retention Savings Calculations $7, 000 25 $175, 000 ($140, 000) cost to recruit one employee # employees retained annually due to telework annual savings less 80% $35, 000 annual telework-specific savings $105, 000 total (3 -yr) telework-specific savings 4 According to a 2003 telework study by the Equal Employment Opportunity Commission (EEOC), their total cost of recruiting one employee is $7000 – While this figure would certainly vary from agency to agency, this study assumes that the variance would be minor – Source: OIG-01 -13 -AMR Assessment of Reducing Infrastructure Costs Through Increased Use of Telework FINAL 4 In order to be consistent with the cost calculation methodology, the savings are shared across the agency in the same manner – i. e. , 20% to telework and 80% to agency initiatives such as annual infrastructure upgrades / maintenance and COOP compliance 39

Appendix A: Benefit Savings Calculations BCA 2: Improved Employee Productivity Calculations 1. 00 50 Appendix A: Benefit Savings Calculations BCA 2: Improved Employee Productivity Calculations 1. 00 50 $46. 03 $2, 302 8, 333 $19, 178, 832 ($15, 343, 065) $3, 835, 767 $11, 507, 300 # additional hours worked on telework days total # telework days person per year* composite Telework hourly rate person annual savings # of teleworkers annually added annual benefit less 80% annual telework-specific benefit total (3 -yr) telework-specific savings 4 In a recent study of its extensive telework program, AT&T found that teleworkers report about one additional productive hour in each workday spent at home (about a 12. 5% increase, approximately) – Source: Lessons Learned From The Network-Centric Organization: 2004 AT&T Employee Telework Results 4 This calculation assumes that each participating employee teleworks one day per week annually, not including two weeks of paid vacation 4 In order to be consistent with the cost calculation methodology, the savings are shared across the agency in the same manner – i. e. , 20% to telework and 80% to agency initiatives such as annual infrastructure upgrades / maintenance and COOP compliance 40

Appendix A: Benefit Savings Calculations BCA 2: Because staff spend less time waiting for Appendix A: Benefit Savings Calculations BCA 2: Because staff spend less time waiting for data transmissions when they are provided broadband services, staff are more productive 4 These savings compare the technical performance of broadband Internet access to dialup Internet access 4 broadband transfer time for 1000 kilobytes (minutes) average message size (kilobytes) average # messages per day average total size of daily messages (kilobytes) estimated daily time spent on broadband downloads composite telework hourly rate The following assumptions about estimated daily cost of broadband downloads daily email traffic are based on a typical federal email account dial-up transfer time for 1000 kilobytes (minutes) – average message size of 60 average message size (kilobytes) kilobytes average # messages per day – average of 25 messages per day average total size of daily messages (kilobytes) estimated daily time spent on dial-up downloads – average total size of 1500 composite telework hourly rate kilobytes (1. 5 megabytes) per estimated daily cost of dial-up downloads day estimated daily cost savings due to broadband (per person) # of teleworkers annually added # of work days in year estimated daily cost savings due to broadband (total) 0. 20 60 25 1, 500 0. 25 $46. 03 $11. 51 2. 70 60 25 1, 500 3. 38 $46. 03 $13. 62 $2. 11 8, 333 250 $4, 397, 414. 09 41

Appendix A: Benefit Savings Calculations BCA 3: Reduced Employee Absence Savings Calculations 3 24 Appendix A: Benefit Savings Calculations BCA 3: Reduced Employee Absence Savings Calculations 3 24 $46. 03 $1, 104. 74 8, 333 $9, 205, 839 ($7, 364, 671) $1, 841, 168 $5, 523, 505 # sick days / snow days saved # hrs saved composite telework hourly rate person annual savings # of teleworkers annually added annual savings less 80% annual telework-specific savings total (3 -yr) telework-specific savings 4 In a study released in 1999, the International Telework Association and Council (ITAC) concluded that healthy employees often miss work due to family and personal obligations that can only be met during the business day – Teleworkers are still able to get some work done, even on days when they have appointments to attend – Employers can save 63% of the cost of absenteeism per teleworking employee, or $2086 per employee per year. Source: Exploring Telework as a Business Continuity Strategy, 2005 Worldat. Work 4 This calculation assumes that 3 sick days / snow days are saved annually per teleworker 4 In order to be consistent with the cost calculation methodology, the savings are shared across the agency in the same manner – i. e. , 20% to telework and 80% to agency initiatives such as annual infrastructure upgrades / maintenance and COOP compliance 42

Appendix A: Benefit Savings Calculations BCA 3: Real Estate Footprint Savings Calculations 4 For Appendix A: Benefit Savings Calculations BCA 3: Real Estate Footprint Savings Calculations 4 For the purposes of this example, it is assumed that in Year 3 (FY 09), the agency’s lease is up for renewal – Because half of its staff now teleworks at least once a week, the agency can reduce its person (and hence overall) square footage allocation by 10% $34 230 10% 23 8, 333 $6, 516, 406 ($5, 213, 123) $1, 303, 283 Rentable square feet person rate for Washington, DC Class B office space Suggested rentable square feet person, per GSA Office of Governmentwide Policy's "Office Space Use" update % person reduction in rentable square feet provided reduced rentable square feet person # of teleworkers annually added annual savings less 80% annual telework-specific savings total (realized in Year 3) telework-specific savings 4 The cost per rentable square foot of Class B office space in Washington DC is $34 per year – Federal office space typically is classified as Class B – Class B office space definition: good location, professionally managed, fairly high-quality construction and tenancy; generally show very little functional obsolescence and deterioration – Source: Society of Industrial and Office Realtors (SIOR) 2005 Comparative Statistics of Industrial and Office Real Estate Markets 4 To be consistent with the cost calculation methodology, the savings are shared across the agency in the same manner – i. e. , 20% to telework and 80% to agency initiatives such as annual infrastructure upgrades/maintenance and COOP 43

Appendix A: Benefit Savings Calculations BCA 3: Employee Retention Savings Calculations $7, 000 25 Appendix A: Benefit Savings Calculations BCA 3: Employee Retention Savings Calculations $7, 000 25 $175, 000 ($140, 000) cost to recruit one employee # employees retained annually due to telework annual savings less 80% $35, 000 annual telework-specific savings $105, 000 total (3 -yr) telework-specific savings 4 According to a 2003 telework study by the Equal Employment Opportunity Commission (EEOC), their total cost of recruiting one employee is $7000 – While this figure would certainly vary from agency to agency, this study assumes that the variance would be minor – Source: OIG-01 -13 -AMR Assessment of Reducing Infrastructure Costs Through Increased Use of Telework FINAL 4 In order to be consistent with the cost calculation methodology, the savings are shared across the agency in the same manner – i. e. , 20% to telework and 80% to agency initiatives such as annual infrastructure upgrades / maintenance and COOP compliance 44

Appendix A: Benefit Savings Calculations BCA 3: Improved Employee Productivity Calculations 1. 00 50 Appendix A: Benefit Savings Calculations BCA 3: Improved Employee Productivity Calculations 1. 00 50 $46. 03 $2, 302 8, 333 $19, 178, 832 ($15, 343, 065) $3, 835, 767 $11, 507, 300 # additional hours worked on telework days total # telework days person per year* composite Telework hourly rate person annual savings # of teleworkers annually added annual benefit less 80% annual telework-specific benefit total (3 -yr) telework-specific savings 4 In a recent study of its extensive telework program, AT&T found that teleworkers report about one additional productive hour in each workday spent at home (about a 12. 5% increase, approximately) – Source: Lessons Learned From The Network-Centric Organization: 2004 AT&T Employee Telework Results 4 This calculation assumes that each participating employee teleworks one day per week annually, not including two weeks of paid vacation 4 In order to be consistent with the cost calculation methodology, the savings are shared across the agency in the same manner – i. e. , 20% to telework and 80% to agency initiatives such as annual infrastructure upgrades / maintenance and COOP compliance 45

Table Of Contents 4 Introduction 4 Methodology 4 Sample Telework Program Business Cases – Table Of Contents 4 Introduction 4 Methodology 4 Sample Telework Program Business Cases – BCA 1 – Home Office (In-Depth) – BCA 2 – Services (High-Level) – BCA 3 – Enterprise (High-Level) 4 Findings and Conclusions 4 Appendix A: Benefit Savings Calculations 4 Appendix B: Development of Telework Costs – Per Teleworker Cost Build-Up Methodology – “Basic” and “Ideal” Costs – Scenarios 4 Appendix C: Resources for Developing Telework-related Business Cases

Appendix B: Development of Telework Costs A comprehensive set of standard cost elements was Appendix B: Development of Telework Costs A comprehensive set of standard cost elements was developed for estimating the costs of telework at 18 federal organizations 4 In line with established cost estimation methodologies, the Booz Allen team made assumptions and estimates to compensate for several data limitations – Lower-level organizational information was used for the cost estimates when overall organization’s information was not available – these estimates apply to the lower-level 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 4 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 unit costs used in this report are assumed to be in FY 2005 dollars – All cost and benefits estimates in each of the three sample business cases analyses are provided in FY 07 dollars 4 The cost elements were grouped into the three major categories: teleworker home office, services, and enterprise costs 47

Appendix B: Development of Telework Costs The assumptions used to make the cost estimates Appendix B: Development of Telework Costs The assumptions used to make the cost estimates were based on standard industry estimates of costs and equipment lifecycles 4 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 4 Each annualized per teleworker 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 4 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 48

Appendix B: Development of Telework Costs Appropriate methodologies were developed in order to estimate Appendix B: Development of Telework Costs Appropriate methodologies were developed in order to estimate the per teleworker costs for enterprise components 4 The voice conferencing per teleworker estimate assumes that a teleworker uses an additional two hours a month of teleconferencing services as a result of their telework 4 The enterprise connectivity per teleworker estimate assumes that each agency’s Internet connection is a DS 3, which has an annual recurring cost of $8, 650 (per GSA’s Washington Interagency Telecommunications System pricing) 4 The server cost per teleworker estimate assumes that one server can support 6, 000 staff 4 The help desk support per teleworker 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) 49

Appendix B: Development of Telework Costs Access to broadband is important for teleworkers due Appendix B: Development of Telework Costs Access to broadband is important for teleworkers due to the increasing size of data files and the development of new applications that take advantage of telecommunications infrastructure 4 Broadband access is much faster and more efficient than dial-up and is becoming increasingly available to residential users 4 Emails with attachments are frequently larger than a Megabyte, particularly if they contain graphical content, resulting in lengthy download times for teleworkers with dial-up access 4 Broadband circuits have the capacity to support new telecommunication capabilities such as Vo. IP, video streaming, and collaboration, which are inaccessible over dial -up access due to limited bandwidth Comparison of Cable/DSL to Dial-Up Data Transfer * 53 kbps dial-up line 768 kbps cable/DSL Size of File Transfer Time (Min) Transfer Time Size of File (Min) 100 kbytes 0. 3 100 kbytes 0. 1 500 kbytes 1. 3 500 kbytes 0. 1 1 Mbyte 2. 7 1 Mbyte 0. 2 5 Mbytes 13. 2 5 Mbytes 1. 0 10 Mbytes 26. 4 10 Mbytes 1. 9 * Data transfer under ideal conditions, protocol overhead and other impairments can more than double transfer times 4 Study found most organizations do not reimburse staff for broadband access. If the government would contract directly with carriers for broadband service it would provide more efficient billing and providing teleworkers business class service 50

Appendix B: Development of Telework Costs Per Teleworker Cost Build-Up Methodology: Enterprise Connectivity 4 Appendix B: Development of Telework Costs Per Teleworker Cost Build-Up Methodology: Enterprise Connectivity 4 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 4 See sample calculation below; this calculation resulted in a person cost of approximately $1 for each organization Data used in Sample Calculation DS 3 in kilobytes per second (kbps) 44736 kbps WITS DS 3 Installation Cost $5, 300. 00 WITS DS 3 Recurring Cost $8, 650. 00 Sample Calculation Bandwidth per Twer (in kb per second - kbps) 5 Concurrent Twers Assumed 63. 04 315. 2 Concurrent / Aggregate Bandwidth (in kbps) (20% x 1576 Teleworkers) x 20% = 63. 04 Concurrent Twers 5 kbps x 63. 04 Concurrent TWers = 315. 20 kbps % of Current Bandwidth 0. 00704578 315. 20 kbps / 44736 (DS 3 in kbps) =. 007% of Current Bandwidth Costs (WITS / FTS) $8, 650. 00 Per GSA’s Washington Interagency Telecommunications System (WITS) Pricing Total Cost (Current BW Costs x % of Current BW) $60. 95 . 007% Bandwidth Use x $8, 650 = $60. 95 Total per Person Cost Annualized Cost $731. 35 $60. 95 x 12 months = Annualized Total per Person Cost Annualized Cost per Person ~$1. 00 Annualized Cost / Total # of Twers *1 day per week of Telework = 20% 51

Appendix B: Development of Telework Costs Per Teleworker Cost Build-Up Methodology: Voice Conferencing 4 Appendix B: Development of Telework Costs Per Teleworker Cost Build-Up Methodology: Voice Conferencing 4 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 Organization # 5 Assumed per Minute Rate $0. 13 (Per Vendor Quote) Assumed Ave. Conf. Call Duration (minutes) 60 Ave # of Conf. Calls Due to TW 2 Ave. Duration of Conf. Calls Due to TW (in minutes) 120 60 Minutes x 2 Hrs = 120 Minutes Total # of TWers at Org 1, 576 Source* Monthly Cost $24, 585. 60 $. 08 x 120 Minutes x 1576 TWers = $15, 219. 60 Annualized Cost $295, 027. 20 $15, 219 x 12 Months = $181, 555. 20 Per User Cost $187. 20 $181, 555 / 1576 TWers = $115. 20 Organization # 9 Assumed per Minute Rate $0. 13 (Per Vendor Quote) Assumed Ave. Conf. Call Duration (minutes) 60 Ave # of Conf. Calls Due to TW 2 Ave. Duration of Conf. Calls Due to TW (in minutes) 120 60 Minutes x 2 Hrs = 120 Minutes Total # of TWers at Org 18, 604 Source* Monthly Cost $290, 222. 40 $. 08 x 120 Minutes x 18, 604 TWers = $178, 598. 40 Annualized Cost $3, 482, 668. 80 $1798, 598. 40 x 12 Months = $2, 143, 180. 80 Per User Cost $187. 20 $2, 143, 180. 80 / 18, 604 TWers = $115. 20 *Source: The Office of Personnel Management’s (OPM) OPM’s 2005 Report “The Status of Telework in the Federal Government 52

Appendix B: Development of Telework Costs Per Teleworker Cost Build-Up Methodology: Standard and Enhanced Appendix B: Development of Telework Costs Per Teleworker Cost Build-Up Methodology: Standard and Enhanced Help Desk Support 4 Standard Help Desk Support: The $100 per teleworker help desk support cost is based on the average annual per teleworker cost of a contractor-operated help desk that supports 15, 000 staff at a large cabinet-level department Estimated TW Help Desk Costs $100. 00 assumed average annual Help Desk cost per user 20. 00% increase in HD costs due to TW* $20. 00 $100 x 20% - $20 (annual per user increase cost due to TW) *1 day per week of Telework = 20% 4 Enhanced Help Desk Support Costs: Per the basis of estimate above, a help desk provided solely for teleworkers would cost $100 per teleworker on an annual basis Enhanced TW Help Desk Costs $100. 00 assumed average annual Help Desk cost per user 53

Appendix B: Development of Telework Costs Per Teleworker Cost Build-Up Methodology: “Basic” Web Application Appendix B: Development of Telework Costs Per Teleworker Cost Build-Up Methodology: “Basic” Web Application Development Cost 4 Basic Web-Based Application Development Solution: Total Cost of $256, 500 – Two-tier Microsoft-based architecture (less scaleable, more affordable) – 4 yr lifecycle – Tier 1: web front end = 2 servers at $20, 000 each $40, 000 1 load balancer $25, 000 Software license cost not included since it can vary widely due multiple vendor solutions available and due to an application’s specific requirements, e. g. business rules, data manipulation – Tier 2: web app = Network switch $25, 000 2 servers at $50, 000 assumed) $100, 000 – Annualized cost of $64, 125 ($256, 500 / 4) – Annual 15% hardware maintenance $28, 500; Annual 20% software maintenance $38, 000 – Supports up to 200 concurrent teleworkers which is scaleable to 5000 teleworkers who access it once a week on average – Per teleworker cost of $13 (not including software and labor costs) 54

Appendix B: Development of Telework Costs Per Teleworker Cost Build-Up Methodology: “Basic” Web Application Appendix B: Development of Telework Costs Per Teleworker Cost Build-Up Methodology: “Basic” Web Application Development Cost (cont. ) 4 Labor costs are not included here since they vary widely due to the scale and scope of development work, however some guidelines are below: – 2 -8 staff per development is range, with 3 -5 being the median – $110 per hour is typical outsource cost for web development work – Timeframe: small application = 2 -3 months; large application = 6 months – 1 year – System Administrator is needed to manage each application 55

Appendix B: Development of Telework Costs Per Teleworker Cost Build-Up Methodology: “Ideal” Web Application Appendix B: Development of Telework Costs Per Teleworker Cost Build-Up Methodology: “Ideal” Web Application Development Cost 4 Ideal Web-Based Application Development Solution: Total Cost of $526, 500 – Build 1 component (that uses a 3 -tiered component-based architecture) that can used by multiple apps and can serve multiple requests simultaneously much more cost effective – Multi-tier Unix-based architecture (more scaleable and robust) – 4 year lifecycle – Tier 1: web front end = 2 servers at $20, 000 each $40, 000 1 load balancer system $25, 000 Software license cost not included since it can vary widely due multiple vendor solutions available and due to an application’s specific requirements, e. g. business rules, data manipulation – Tier 2: middle tier = 2 servers at $100, 000 each $200, 000 – Tier 3: web application = Network switch $25, 000 2 servers at $50, 000 $100, 000 56

Appendix B: Development of Telework Costs Per Teleworker Cost Build-Up Methodology: “Ideal” Web Application Appendix B: Development of Telework Costs Per Teleworker Cost Build-Up Methodology: “Ideal” Web Application Development Cost 4 Ideal Web-Based Application Development Solution (cont. ): Total Cost of $526, 500 – Annualized cost of $131, 625 ($526, 500 / 4 ) – Annual 15% hardware maintenance $58, 500; Annual 20% software maintenance $78, 000 – Supports up to 200 concurrent teleworkers which is scaleable to 5000 teleworkers who access it once a week on average – Per teleworker cost of $26 (not including software and labor costs) – This per teleworker cost must be doubled to $52 to account for redundancy (again, this does not include software and labor costs) 4 Labor costs are not included here since they vary widely due to the scale and scope of development work, however some guidelines are below: – 2 -8 staff per development is range, with 3 -5 being the median – $110 per hour is typical outsource cost for web development work – Timeframe: small application = 2 -3 months; large application = 6 months – 1 year – System Administrator is needed to manage each application 57

Appendix B: Development of Telework Costs Per Teleworker Cost Build-Up Methodology: Collaboration Resources, i. Appendix B: Development of Telework Costs Per Teleworker Cost Build-Up Methodology: Collaboration Resources, i. e. , Live Communication Server 2005 Costs 4 Centrally managed and secured resources such as instant managing, document sharing, and virtual meeting tools are made available to teleworkers 4 Microsoft Live Communication Server (LCS) 2005: Total Cost of $251, 000 – This sample solution assumes a teleworker base of 20, 000 – 3. 5 yr lifecycle – Annualized cost of ($251, 000 / 3. 5) $72, 000 – 2 load balancers (for redundancy) at $25, 000 $50, 000 subtotal – Array of 4 servers at $30, 000 each $120, 000 subtotal – $3150 LCS licensing cost per server $12, 600 (does not include federal government discount, which could result in significant savings) – Annual 15% hardware maintenance $28, 000 – Annual 20% software maintenance $37, 000 – Supports 4000 concurrent teleworkers, which is scaleable to 20, 000 teleworkers who access it once a week on average – Client Access License (CAL) if $31 but Microsoft does not charge this amount if the customer has valid MS Exchange licenses (which we assume each organization has) – Per teleworker cost of $4 58

Appendix B: Development of Telework Costs Per Teleworker Cost Build-Up Methodology: Remote Email Access Appendix B: Development of Telework Costs Per Teleworker Cost Build-Up Methodology: Remote Email Access Costs 4 Microsoft Outlook Web Access (OWA) Solution: Total Cost of $233, 000 – This sample solution assumes a teleworker base of 20, 000 – 3. 5 yr lifecycle – Annualized cost of $67, 000 ($232, 500 / 3. 5) – 2 load balancers (for redundancy) at $25, 000 $50, 000 – Array of 4 ISA servers at $30, 000 each $120, 000 – $2000 - $4000 ISA total servers licensing cost (varies) $3000 assumed – Annual 15% hardware maintenance $34, 000 – Annual 20% software maintenance $26, 000 – Supports 4000 concurrent teleworkers, which is scaleable to 20, 000 teleworkers who access it once a week on average – Per teleworker cost of $3 4 It is estimated that, during traffic peaks, 20%* of the teleworker base is actively using remote email 4 The peak traffic is then multiplied by 20%, based on the assumption that staff telework one day a week 59

Appendix B: Development of Telework Costs Per Teleworker Cost Build-Up Methodology: VPN Costs 4 Appendix B: Development of Telework Costs Per Teleworker Cost Build-Up Methodology: VPN Costs 4 Standard VPN Solution: Total Cost of $25, 000 – 3 yr Lifecycle – Annualized Cost of $8300 ($25, 000 / 3) – Cisco VPN concentrator – Includes end teleworker licenses – Supports 1500 concurrent teleworkers, which is scaleable to 37, 500 teleworkers – Per teleworker cost of $6 4 Clientless SSL VPN Solution: Total Cost of $350, 000 – 3 yr Lifecycle – Annualized Cost of $117, 000 ($350, 000 / 3) – includes hardware and software and maintenance) – supports 5000 concurrent teleworkers, which is scaleable to a teleworker base of 125, 000 teleworkers – Per teleworker cost of $1 4 It is estimated that, during traffic peaks, 20% of the teleworker base is actively using VPN 4 The peak traffic is then multiplied by 20%, based on the assumption that staff telework one day a week 60

Appendix B: Development of Telework Costs Per Teleworker Cost Build-Up Methodology: “Limited” vs. “Full Appendix B: Development of Telework Costs Per Teleworker Cost Build-Up Methodology: “Limited” vs. “Full Costs 4 To account for the fact that in each scenario, the current solution provides limited versions of the components we identified, we have reduced the per teleworker costs to appropriate percentages Component Full (100%) Limited Percentage Per Teleworker Cost PDA $288 $29 10% PDA Access $651 $65 10% Mobile Phone $144 $14 10% 4 Explanation of 10% Mobile Phone Access - provided for executive staff only Mobile Phone Access $651 $65 10% 4 Explanation of 25% Peripherals – assumes printer only Peripherals $238 $60 25% Web Interfaces $13 N/A 4 Explanation of 10% PDA Access – provided for executive staff only 4 Explanation of 10% Mobile Phone - provided for executive staff only 4 Explanation of Web Interfaces – different architecture, redundant system $52 61

Table Of Contents 4 Introduction 4 Methodology 4 Sample Telework Program Business Cases – Table Of Contents 4 Introduction 4 Methodology 4 Sample Telework Program Business Cases – BCA 1 – Home Office (In-Depth) – BCA 2 – Services (High-Level) – BCA 3 – Enterprise (High-Level) 4 Findings and Conclusions 4 Appendix A: Benefit Savings Calculations 4 Appendix B: Development of Telework Costs – Per Teleworker Cost Build-Up Methodology – “Basic” and “Ideal” Costs – Scenarios 4 Appendix C: Resources for Developing Telework-related Business Cases

Appendix B: Development of Telework Costs Basic and Ideal Costs – Home Office The Appendix B: Development of Telework Costs Basic and Ideal Costs – Home Office The Annual Cost Per Teleworker Per Alternate Site Component Including Maintenance Costs Components Description PC Laptop PC & Docking Station - Provides basic computer capabilities to teleworkers, including mobility and access to enterprise software; Assumes use of same PC for office and home Printer / Copier / Fax - Provides common office functionality away from office to perform job functions (assumes “All-in-One” device) Peripheral Support Network Interface Mobile Telephone Security Resources $2, 072 $238 Broadband Router - Provides connectivity interface for broadband Internet access, which is required for accessing enterprise network $68 Mobile Telephone - Provides mobile voice communication allowing co-workers and customers to easily contact the teleworker (OPTION 1) $144* $307 $42 Firewall Solution - Enterprise hardware and/or software solution provides secure connectivity services, application policy enforcement, and attack protection Authentication Device - Devices that provide extra secure layer of teleworker authentication beyond teleworker id / password policies (e. g. secure hardware tokens) Advanced Authentication Device - Devices that provide high layers of teleworker authentication and encryption for secure and classified access (e. g. , fingerprint readers, biometrics) Collaboration Web Cam - Integration of video streaming with enterprise collaboration tools allows for virtual meetings with co-workers and customers Tools PDA Devices Basic Ideal Solution solution PDA Devices - Messaging devices (e. g. , Blackberry, Treo) allowing mobile voice and data communication with co-workers and customers (OPTION 2) $30 $90 $288* *Only one of the 2 options needs to be provided for remote telephone communications equipment 63

Appendix B: Development of Telework Costs Basic and Ideal Costs – Services The Annual Appendix B: Development of Telework Costs Basic and Ideal Costs – Services The Annual Cost Per Teleworker Per Services Component Including Maintenance Costs Components Description Basic Ideal Solution solution Enterprise Connectivity – Network connectivity to support teleworker expansion $1 Data from enterprise to Internet (e. g. , DS 3, OC-3) Communications $1 3 OPTIONS (Ideal solution assumes enterprise has redundant network connectivity for backup connectivity and disaster recovery (including wireless, satellite, etc. ) Home Office Connectivity – Broadband access connectivity from teleworker home $620 office to Internet for enterprise access (e. g. , DSL, cable) (Ideal solution assumes that teleworker access costs are covered by government) Voice Conferencing - Audio bridge services available to teleworkers for multi-party $187 Voice voice calls with co-workers and customers Communications Mobile Telephone Access - Usage costs for mobile voice services covered by $651* Government Calling Card - Cost allowance provided to teleworkers for long distance voice $14* charges Telephone Line - Additional land line to enable separate voice communication $494* from home office Help Desk Support - Use of existing resources to provide hardware / application $20 $100 Help Desk support and troubleshooting services to enterprise and teleworkers Support (Ideal solution assumes enhanced help desk support for teleworkers to maintain SLAs and KPIs) Technical Training - Information such as telework technology policies, IT $300 Technical troubleshooting techniques, and technical capabilities of home office provided to Training teleworkers and managers of teleworkers PDA Access - Usage costs for mobile voice / messaging services covered by $651 PDA Access government *Only one of the 3 options needs to be provided for telephone communications access 64

Appendix B: Development of Telework Costs Basic and Ideal Costs - Enterprise The Annual Appendix B: Development of Telework Costs Basic and Ideal Costs - Enterprise The Annual Cost Per Teleworker Per Enterprise Component Including Maintenance Costs Components Description Basic Ideal Solution solution Secure Network VPN / Firewall Solution – Infrastructure (hardware / software) provides secure remote access for teleworker connectivity to enterprise network (includes enterprise network Access $6 $1 $3 $3 interface and software for teleworker clients) (Ideal solution assumes clientless, browser-based solutions (e. g. , SSL VPN) that reduce administrative efforts and expand range of accessing devices) Application / Remote Email Access – Centrally managed solution provides for secure remote access Administrative to enterprise email system (e. g. , Outlook Web Access, Lotus i. Notes) Terminal Emulation System – Centrally managed solution (e. g. , Citrix) that provides Access $433 teleworker secure remote access to non-web enterprise applications and data without the need for separately installed client applications (only thin client software required) (Ideal solution assumes fully redundant enterprise system for backup / disaster recovery) Web Interface - Multi-tier architecture that provides capability to remotely access $13* enterprise web applications and limited administrative functions (e. g. , time cards, expense reports) (Ideal solution assumes fully redundant system allowing remote access to additional admin functions such as travel planning, training, support services, etc. ) Collaboration Resources - Centrally managed and secured resources such as instant managing, document sharing, and virtual meeting tools are available to teleworkers Resources $52* $4 *Web Interface total does not include labor costs or software licensing costs. Please see Appendix for more detail. 65

Table Of Contents 4 Introduction 4 Methodology 4 Sample Telework Program Business Cases – Table Of Contents 4 Introduction 4 Methodology 4 Sample Telework Program Business Cases – BCA 1 – Home Office (In-Depth) – BCA 2 – Services (High-Level) – BCA 3 – Enterprise (High-Level) 4 Findings and Conclusions 4 Appendix A: Benefit Savings Calculations 4 Appendix B: Development of Telework Costs – Per Teleworker Cost Build-Up Methodology – “Basic” and “Ideal” Costs – Scenarios 4 Appendix C: Resources for Developing Telework-related Business Cases

Appendix B: Development of Telework Costs The organizations that participated in the study were Appendix B: Development of Telework Costs The organizations that participated in the study were grouped into 5 scenarios based on how much additional infrastructure was required to provide the basic and ideal telework IT environment 4 Scenario A organizations provide basic telework infrastructure including home office support, services, and enterprise access, but additional IT infrastructure is required to bring them up to the ideal environment 4 Scenario B organizations provide some basic telework infrastructure including some home office support and services and full enterprise access. However additional IT infrastructure is required to provide all basic and ideal telework technologies to teleworkers 4 Scenario C organizations provide some basic telework infrastructure including some home office support, services, and enterprise access. However additional IT infrastructure is required to provide all basic and ideal telework technologies to teleworkers 4 Scenario D organizations provide a few basic telework infrastructure components and services for the home office but limited if any enterprise access. Substantial IT infrastructure improvements are required to provide basic and ideal telework technologies to teleworkers 4 Scenario E organizations provide few if any basic telework infrastructure, so significant IT infrastructure improvements will be required to provide basic and ideal telework technologies to teleworkers 67

Appendix B: Development of Telework Costs Network infrastructures and the ability to scale resources Appendix B: Development of Telework Costs Network infrastructures and the ability to scale resources and support for expanded telework programs vary across the federal government Ideal Ideal Basic Basic Critical Home Office, Services, and Enterprise components available to support teleworking Minimal Services and Enterprise components available to support teleworking ; No Home Office resources or support available Scenario E Per User Cost Scenario A Scenario B Scenario C Scenario D Scenario A Scenario B Scenario C Scenario D Scenario E Per User Cost Per User Cost LEVEL OF ADDITIONAL HOME OFFICE, SERVICES, AND ENTERPRISE COMPONENTS REQUIRED All necessary Home Office, Services, and Enterprise components are provided to support teleworking, including some enhanced capabilities User Cost Basic* $0 $2, 171 – $2, 952 $2, 244 – $3, 025 $2, 323 – $3, 104 $3, 040 – $3, 821 Ideal** $512*** $1, 420 *Cost varies depending on which voice communication option is chosen **Cost of upgrading from basic solution to ideal solution ***Cost of upgrading from current to ideal solution 68

Table Of Contents 4 Introduction 4 Methodology 4 Sample Telework Program Business Cases – Table Of Contents 4 Introduction 4 Methodology 4 Sample Telework Program Business Cases – BCA 1 – Home Office (In-Depth) – BCA 2 – Services (High-Level) – BCA 3 – Enterprise (High-Level) 4 Findings and Conclusions 4 Appendix A: Benefit Savings Calculations 4 Appendix B: Development of Telework Costs – Per Teleworker Cost Build-Up Methodology – “Basic” and “Ideal” Costs – Scenarios 4 Appendix C: Resources for Developing Telework-related Business Cases

Appendix C: Resources for Developing Telework-related Business Cases Government decision makers need information for Appendix C: Resources for Developing Telework-related Business Cases 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 4 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) VMM Key Considerations 4 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 4 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 70

Appendix C: Resources for Developing Telework-related Business Cases An enterprise-level capital planning process will Appendix C: Resources for Developing Telework-related Business Cases An enterprise-level capital planning process will help enhance telework program efficiencies, benefits, and overall strategic value Direct Financial Benefits ü ü Enterprise Modernization Multi-use Tools and Capabilities Telework Program Shared Costs, Risks, and Benefits with Other Enterprise Initiatives Additional Benefits Disaster Preparedness & Continuity of Operations Improved employee availability Opportunities for real estate savings Increased recruitment and retention potential Potential for increased employee productivity while teleworking and during office closures Indirect Financial and Other Benefits ü ü Enhanced organizational process efficiencies ü Accessible, modernized applications that allow staff to perform their work regardless of location ü Adaptable applications that support changing business needs of organizations ü Legislative Compliance and alignment with ongoing Congressional interest ü ü ü Coordinated standards for technology configuration Continuity of Operations (COOP) readiness for public health, weather, and other emergencies Reduction of traffic congestion and pollution Compliance with OPM and GSA guidance Enhanced public image (“employer of choice”) Increased work opportunities for people with disabilities 71

Appendix C: Resources for Developing Telework-related Business Cases The sample BCAs provided in this Appendix C: Resources for Developing Telework-related Business Cases The sample BCAs provided in this document can be customized to fit agencies’ changing business requirements and staff sizes 4 Adjust the benefits calculation assumptions to fit your agency’s particular operating environment, for example: – Increase the number of employees retained annually due to telework, – Decrease the percent reduction in real estate footprint 4 Add or subtract costs of components from sample BCAs as appropriate, by: – Adding applicable unit costs to cost estimate from the pages that follow – Increasing or decreasing the investment window, e. g. 1 year, 5 years 4 Customize the risk analysis as appropriate – More potential risks could be identified – Probability and impact of occurrence vary from agency to agency 72

Appendix C: Resources for Developing Telework-related Business Cases In the course of this government-wide Appendix C: Resources for Developing Telework-related Business Cases In the course of this government-wide study, we have developed a comprehensive and current collection of the costs associated with a telework program 4 These costs can be leveraged when developing estimates for telework-related BCAs 4 The following three pages provide unit costs for each of the components that typically make up a telework program – These costs are grouped into three major categories: teleworker-at-home, services and enterprise 4 The Appendix provides additional detail on costs for: – – – – Enterprise connectivity Voice conferencing Help Desk Web application development Collaboration resources Remote email access VPN Home Office Services Enterprise 73

Appendix C: Resources for Developing Telework-related Business Cases The cost of equipment to support Appendix C: Resources for Developing Telework-related Business Cases The cost of equipment to support a teleworker in the home office varies from $2, 072 for a laptop to $42 for authentication equipment Component Laptop & Docking Station Description / Purpose / Assumptions Annualized Unit Cost (per user) Provides mobility and access to enterprise software; Assumes use of separate office and home computers, new laptop without application or OS software; 3 year refresh cycle $2, 072 Printer / Copier / Fax Provides common office functionality away from office; Assumes new integrated device with 3. 5 year refresh cycle $238 Broadband Router Provides connectivity interface for broadband Internet access but does not include Internet service; Assumes new router with 4 year refresh cycle $68 Web Cam Allows for virtual meetings via video streaming and collaboration tools; Assumes new web cam with 3. 5 year refresh cycle $90 Mobile Telephone Provides mobile voice communication; Assumes new phone with 2 year refresh cycle; connectivity fee not included (refer to “Services” section) $144 PDA (Blackberry, Treo) Messaging devices for mobile communication; Assumes new device with 2 year refresh cycle; connectivity fee not included (refer to “Services” section) $288 PC Software Operating system, application, and security software required for new laptops (e. g. , Windows XP, MS Office Suite, Anti-virus, Spyware, etc. ); Assumes new user license and 3 year refresh cycle $628 Authentication Devices that provide additional identification of the user beyond the typical user id and password (e. g. , secure tokens; fingerprint readers); This report uses the RSA Secur. ID device because this device is often used in the federal government. Assumes a new device with a 4 year life cycle $42 Firewall Solution Enterprise hardware / software solution provides secure connectivity services, application policy enforcement, and attack protection; Assumes new appliance with 3. 5 year refresh cycle. $307 74

Appendix C: Resources for Developing Telework-related Business Cases Services include the cost of enterprise Appendix C: Resources for Developing Telework-related Business Cases Services include the cost of enterprise connectivity and support services such as help desk and training Component Description / Purpose / Assumptions Enterprise Connectivity Percentage of network connectivity from enterprise to Internet used by teleworkers Annualized Unit Cost (per user) $1 Teleworker Connectivity Network connectivity from teleworker home office to Internet for enterprise access (e. g. , Dial-Up, DSL, cable) $620 Voice Conferencing Audio bridge services provided by external carrier for multi-party voice calls $187 Calling Card Cost allowance provided to teleworkers for long distance voice charges $14 Managed VPN Secure network connectivity from teleworker home office to enterprise; VPN service managed by external carrier $80 Mobile Telephone Access Usage costs for mobile voice services (i. e. , cell phone plan) $651 PDA Access Usage costs for mobile voice / messaging services $651 Telephone Line Additional land line to enable separate voice communication from home office; Allows dial-up users to maintain simultaneous network connectivity $494 Help Desk Support Hardware / application support and troubleshooting services to teleworkers $20 Technical Training Information such as telework technology policies and procedures, IT troubleshooting techniques, and technical capabilities of home office $300 75

Appendix C: Resources for Developing Telework-related Business Cases The enterprise resources that most directly Appendix C: Resources for Developing Telework-related Business Cases The enterprise resources that most directly support the teleworker are access and security facilities, such as terminal/access servers and virtual private network systems Component Description / Purpose / Assumptions Annualized Unit Cost (per user) Remote Access Server Provides enterprise access point for teleworkers utilizing dial-up network connectivity; Assumes new server with 4 year refresh cycle $2 VPN System Provides secure access point for teleworker connectivity to enterprise network; Includes end user licenses; Assumes new concentrator with 3 year refresh cycle $6 Enterprise Systems* Hardware and software required to support enterprise applications accessed by teleworkers; Assumes that there are no significant changes to existing enterprise applications to support telework $0 Terminal Emulation System Provides teleworker with remote access to enterprise applications and data (i. e. , Citrix); Client software for teleworker PC is included in cost; Assumes new software with 3 year refresh cycle $433 *Negligible additional cost due to telework because the enterprise systems are already in place to support each organization's existing operations 76

Appendix C: Resources for Developing Telework-related Business Cases A composite General Schedule profile for Appendix C: Resources for Developing Telework-related Business Cases A composite General Schedule profile for teleworkers was developed in order to more accurately calculate the potential worker productivity gains Level* GS-7 GS-9 GS-11 GS-12 GS-13 Total % DC Hourly Plus Loaded Hourly Composite Weight Rate Fringe** Overhead*** Rate 5. 00% $19. 91 $6. 54 $3. 17 $29. 62 $1. 48 20. 00% $24. 36 $8. 00 $3. 88 $36. 25 $7. 25 30. 00% $29. 47 $9. 68 $4. 70 $43. 85 $13. 15 40. 00% $35. 32 $11. 60 $5. 63 $52. 55 $21. 02 5. 00% $42. 00 $13. 80 $6. 70 $62. 49 $3. 12 100. 00% N/A N/A $46. 03 4 Step 5 is assumed for all GS levels Fringe Benefits 32. 85% OMB Circular A-76 Attch C (B. f. 1. ) Overhead 12. 00% OMB Circular A-76 4 The % breakouts are based in part on the real GS distribution across government and in part on the survey data collected in the course of this study which indicates that very senior and junior employees are less likely to telework. 4 Employees in lower GS levels (7 and below) may not be afforded the opportunity to telework due to their junior status and/or short tenure, while employees in higher GS levels (13 and above) may not be allowed to or may choose not to telework due to managerial duties and/or office-based work demands 77

Appendix C: Resources for Developing Telework-related Business Cases In addition to OMB’s 19 risk Appendix C: Resources for Developing Telework-related Business Cases In addition to OMB’s 19 risk categories, there a number of telework-specific risks that should be considered when developing a telework-related BCA Telework Risks Mitigation Strategies 4 Technology Issues (e. g. , connectivity, performance of legacy client-server applications remotely, security, data security) 4 Space availability (at telecenters) in an emergency 4 Access to / availability of quality equipment 4 Access to / availability of IT support 4 Efficacy of training 4 Operational impacts 4 Reactions of co-workers 4 Inflexible agency-based operating procedures 4 Too few at-home days authorized for program to be effective 4 Supervisor behavior 4 Appropriate selection of participants for telework 4 Timely coordination with unions 4 Inadequate preparation 4 Coerced management participation 4 Automated monitoring of employee performance (e. g. , monitoring an employee’s key strokes and time on/off a computer via electronic devices) 4 Creation of burden on non-participating employees 4 Potential for low utilization rate of telecenters 4 Staff culture / existing expectations 4 Resistance by organizational support functions (e. g. , HR, IT) 4 Historical resistance by smaller Federal agencies 4 Difficulty in measuring results 4 Senior management leadership 4 Long-term IT and capital planning for telework 4 Broadband residential services 4 Comprehensive security planning 4 Telework-specific training 4 Organize Telework Advisory Group or Program Management Office 4 Assessing the impact Telework has on timekeeping, compensation, and other issues 4 Developing a plan to address the equipment needs of your organization Telework program 4 Preparing a written Telework agreement for employees and managers 4 Regularly re-evaluating and modifying the program, when necessary, to meet changing circumstances 4 Willingness of agency to participate 4 Designation of appropriate telework coordinator 4 Coordination with local unions (when applicable) 4 Increased IT support and allocation of resources 78