MEMORANDUM. Discussion. GO COMMITTEE #4 April 27, April 25, TO: Government Operations and Fiscal Policy Committee :~~;::::::::::::=

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1 GO COMMITTEE #4 April 27, 2018 MEMORANDUM April 25, 2018 TO: Government Operations and Fiscal Policy Committee :~~;::::::::::::= FROM: SUBJECT: PURPOSE: Dr. Costis Toregas, Council IT Adviser NDA: Device Client Management (DCM) Review and recommend action on the FYI 9 Operating Budget for the DCM NDA Expected to attend: Sonny Segal, Chiefinformation Officer, DTS Dieter Klinger, Chief Operating Officer, DTS Matt Schaeffer, Office of Management and Budget Staff recommendation: 1. The Committee should affirm their continued support for 4- rather than 6-year replacement cycles for desktop computers and encourage the restoration of full funding that would reverse this trend when financial conditions permit. 2. The Committee should engage all departments with active cloud migration strategies in a summer worksession. The agenda should include the exploration of on-premise cost reductions by identifying tasks no longer necessary to be carried out, as well as possible price reductions that might accrue through collaborative procurement actions for cloud solutions across departments. If successful, the same approach could be explored across agencies through the Interagency Technology Policy and Coordination Committee. 3. Staff recommends the adoption of the Executive's recommended FY19 budget for Device Client Management for $7,206,200. Discussion The Device Client Management (DCM) program is part of the Non-Departmental Accounts budget; it is charged with maintaining a modern and cost-effective computing environment in the County by funding Help Desk support and by managing, maintaining, and replacing PCs on employees' desks. It targets the annual replacement of approximately one-fourth of all managed PCs. Recently, the target of one-fourth

2 has been relaxed because of fiscal pressures. The primary strategy of executing this mandate is through a contract with an outside vendor; currently, that contract is held by L3 Communications. The FY! 9 recommendations for DCM are on 1-2. The budget request of$7,206,200 represents an 8.6% decrease from the FY18 level of$7,886,200. A shift from buying one-time software licenses for all County desktop computers to buying annual "subscriptions" for Office 365, the new, cloud-based offering of Microsoft, occurred in FY! 7. It provides several (up to 15) additional versions of Office 365 for every County employee on multiple devices such as tablets, laptops and smart phones, thereby boosting employee productivity (both during and outside office hours). In addition, encrypting all s and unlimited archiving of s are new and welcome benefits of the migration to Office 365. In FY! 8, the Committee added $100,000 to the DCM budget through the Reconciliation process to support the expansion of the Homework Gap program through the provision of additional tablets and/or computers (see question 5 below for updates). To gauge progress made in this important program and ensure that the FY19 DCM program can address current challenges, Council Staff posed a series of questions. These questions, DTS answers and, where relevant, Council Staff comments are provided below. I. The support services contract for Help Desk and other services expired in What is the current situation? And were there material changes in costs or in service levels uegotiated with the current vendor? Please relate your answer to the question raised under the Help Desk performance targets in the DTS budget. Following the release of a Request for Proposal (RFP), the Device Client Management (DCM) contract was competitively awarded in August, 2014 and provides for an initial 3-year term, with three (3) I-year extension options. Therefore, the contract can be renewed through August DTS anticipates that we will issue a renewal RFP before the end of The contract includes several negotiated Service Level Agreements (SLAs) which the County regularly monitors via a real-time online management dashboard and supplemental management reports. The most significant change in the current DCM contract vis-a-vis prior contracts is that all County users (and their associated devices) receive services under the contract, rather than just users with a DCM provided primary seat computer (as was the case in prior contracts). This enhanced level of service has been critical in facilitating the successful enterprise rollout of Office 365 and in resolving Cyber Security incidents in a timely manner. 2. Provide a listing of all licenses for cloud-based services and their cost for cloud-based services for the Enterprise? Where costs are difficult to derive, provide best estimates; in any case, list licenses. The DCM NDAfunding includes the following cloud-based services: $1,962,000 11,700 licenses - Office 365 $100, licenses- RemedyForce (HelpDesk) 2

3 Council Staff comment The move to the cloud is one that other progressive counties are replicating; however, attention must be given to ensure that stranded costs of old technology support are not still absorbed by the budget. Given the size of cloud migration that now occupies more than 27% of the DCM budget, it is important to provide for and account for all related costs that support this migration. For example, in prior years, instead of cloud licenses, the County actually had software copies to distribute and maintain. Distribution, upkeep, and support costs for almost 12,000 units are significant. Reductions of equivalent magnitude should begin to be seen in the DTS budget. The Committee may wish to review overall cloud migration strategy costs (across all department budgets) as part of the summer work program. 3. Has the migration to the cloud changed the mix of hardware which DTS provides to the MCG employee's desktop? Yes, as a result of increased Cloud adoption (such as Office 365), more departments are opting to upgrade to laptops or tablets for their PC replacements rather than a traditional PC Additionally, more users are opting for dual monitors to be able to access multiple applications at the same time. 4. During the FY18 Savings Plan, the DCM budget was reduced by $1 million to accommodate the financial difficulty at the time. An additional $800,000 reduction currently being proposed would reduce the number of PC replacements in FY19 to what level? The number of PC replacements in FYI 9 would be reduced to approximately 770 due to the additional $800,000 reduction currently proposed. This figure assumes that additional users opt for laptops rather than desktops during the PC replacement process. As the entire PC replacement cost in FY18 was $1. 7 million (see table below; please provide updated FY19 numbers for each category), the proposed reduction would bring the replacement pool to $900,000, or at $1,100/unit, reduce the number of units that can be replaced to about 800 this coming year. This would stretch the replacement cycle to almost 12 years. Such a level cannot be sustained in a progressive enterprise. FYJ 8 Ai:mroved FY18 with Savings FY19 Pro72.osed DCM BudPet Plan DCM Bud<Tet Services $3,021,383 $3,021,383 $3,141,383 PC Reolacements $1,697,827 $697,827 $897,827 Software Licenses $2,878,300 $2,878,300 $2,878,300 Enterprise Server $288,690 $288,690 $288,690 Reolacements Total $7,886,200 $6,886,200 $7,206,200 3

4 a) Is the $800,000 proposed reduction taken solely from PC replacements, or some other line of the DCM budget? The $800,000 proposed reduction is proposed to be taken solely from PC replacements. b) What is the current policy for PC replacements? And does the proposed FY19 budget suggest a change for the Committee to consider? The current policy is a 6-year replacement cycle, fiscal conditions permitting. The proposed budget will increase the number of "at risk" PCs when Microsoft is scheduled to end support and stop providing security related patches for the Windows 7 Operating System in January, Council Staff comment There are approximately 9,300 devices covered under the DCM NDA. If the Executive replaces 770 in 2019, this represents an annualized replacement policy of 12 years. This is obviously nonsustainable as technology, security, and user capabilities change dramatically every 2-3 years. The policy of 4-year replacement cycles is one that should be endorsed and followed to keep County employees adequately resourced in this information age. Understandably, the current financial crisis is forcing the Executive to propose undesirable choices to the Council. The Committee should request that the proposed DCM budget level of replacements should be restored to a 4-year replacement cycle as soon as practical. 5. List the number of equipment by type that has been provided for the Homework Gap program (laptops, tablets, Chrome books, others) and identify the equipment numbers and cost of continuing to provide them in the FY19 proposed budget. Equipment Provided: 136 HP Chromebook laptops to HOC Residents at 7 locations 30 HP Chromebook laptops made available for in-library use at Germantown, Plum Gar, Upper County, Long Branch and White Oak community recreation centers 20 Lenovo ThinkPad laptops made available for Excel Beyond the Bell NASA STEM Rocketry classes and the Homework Club at Argyle and Lee Middle Schools 12 Dell Latitude laptops with Adobe Creative Cloud editing software made available for in-library use and to support Gandhi Media Brigade youth editing classes at Aspen Hill, Rockville, Kensington and Praisner Public Libraries. Cost to continue program: $9,000 to continue to license Adobe Creative Cloud software ($750 per license x 12 computers) $162,000 to purchase an additional 260 computers for HOC residents. 4

5 FY18 Approved 632, Increase Cost: Annualization of FY18 Personnel Costs 15,975 Increase Cost: CoStar Licensing Cost 2,720 Decrease Cost: Management Audit (50,000) 601, ~ Consolidated Retiree Health Benefit Trust - College This NDA provides consolidated funding for Montgomery College's contribution to the Retiree Health Benefits Trust. FY1 ~ ~pprov~d. Increase Cost: County Contribution Based on Actuarial Valuation 2,552, ,000 2,845,000 ~ Consolidated Retiree Health Benefit Trust - MCPS This NDA provides consolidated funding for Montgomery County Public Schools' contribution to the Retiree Health Benefits Trust. Increase Cost County Contribution Based on Actuarial Valuation 74,192,000 5,213,000 79,405,000 0,00 ~ County Associations This NDA funds Montgomery County membership dues to the National Association of Counties (NACo) and lhe Maryland Association of Counties (MACo). FY18 Approved 74,728 74,728 0,00 ~ Device Client Management The Device Client Management (DCM) program is based on a best practices approach to maintaining a modem and cost effective computing enviromnent in the County. The program reduces the Total Cost of Ownership (TCO) of personal computers (PCs) and laptops through standardization, asset management, and maintenance services. DCM includes the centralized management, support, and maintenance of PCs and targets the annual replacement of approximately one-fourlh of managed PCs. The program also includes PC-related training and software. This NDA includes funding for Help Desk support, management, maintenance, and replacement of PCs. FY18 Ape_roved!~':~~ <??st S_Y:>te_~~ ~~ter ~onfiguration Man~~~r (SCCM) Remediation Acceleration [Secu~] 7,886, ,000 Non-Departmental Accounts Other County Government Functions 67-15

6 Reduce: Delay Scheduled Computer Replacements (800,000) 7,206,200 cf' Future Federal/State/Other Grants This NDA enables the County to implement new grant-funded programs up to $200,000 each and provides funds for grant continuations and enhancements without having to process individual supplemental appropriations through the County Council. Upon approval by the County Executive, funds in this program are transferred to the receiving department's grant account. FY18 Approved 20,000,000 20,000,000 ~ Grants To Municipalities in Lieu Of Shares Tax This NDA funds payments required in accordance with State law. The 1968 Session of the General Assembly revised the tax structure to include a County income tax. As part of this restructuring, the shared tax on banks and financial institutions was eliminated, and a provision was adopted which requires counties to pay annually to municipalities the amount ($28,020) which had been received by the municipalities in FY68. FY18 Approved 28,020 28,020 ~ Group Insurance Retirees Group insurance is provided to an estimated 7,002 retired County employees and survivors, as well as retirees of participating outside agencies. Employees hired before January 1, 1987, are eligible upon retirement to pay 20 percent of the premium for health and life insurance for the same number of years ( after retirement) that they were eligible to participate in the group insurance plan as an active employee. The County government pays the remaining 80 percent of the premium. Thereafter, these retirees pay 100 percent of the premium. Employees hired before January I, 1987, are also offered the option at retirement to convert from the 20/80 arrangement to a lifetime cost sharing option. Employees hired after January 1, 1987, are eligible upon retirement for a lifetime cost sharing option under which the County pays 70 percent of the premium and the retiree pays 30 percent of the premium for life for retirees who were eligible to participate in the County group insurance plan for 15 or more years as active employees. Minimum participation eligibility of five years as an active employee is necessary to be eligible for the lifetime plan. The County will pay 50 percent of the premium for retirees with five years of participation as an active employee. The County contribution to the payment of the premium increases by two percent for each additional year of participation up to the 70 percent maximum. On March 5, 2002, the County Council approved a one-time opportunity for retirees still under the 20/80 arrangement with an expiration date to elect the lifetime cost sharing arrangement. The new percentage paid by the County for those electing this arrangement ranges from 50 percent to 68 percent, depending upon years of active eligibility under the plan and years since retirement The cost sharing election process has been completed The budget does not include employer contributions from participating outside agencies Other County Government Functions FY19 Operating Budget and Public Services Program FY19-24