[11] in magellan
Re: Discovery Team Leaders Report--VDIN Rate Review
daemon@ATHENA.MIT.EDU (Patrick W. Fitzgerald)
Tue Jan 12 09:09:34 1999
Date: Tue, 12 Jan 1999 09:06:00 -0800
To: magellan@MIT.EDU
From: "Patrick W. Fitzgerald" <pwf@MIT.EDU>
Cc: lliu@MIT.EDU, ganderso@MIT.EDU
<bold>Project Name
</bold>
Voice Data and Image Networking (VDIN) Rate Review
<bold>Project Leaders
</bold>
Leslie Liu, Information Systems
Patrick Fitzgerald, Office of Sponsored Programs
<bold>Report Date
</bold>
January 12, 1999
<bold>Accomplishments for the Past Period
</bold>
This is the first report of the VDIN Rate Review project and will
summarize the team's accomplishments from its inaugural meeting on
October 20, 1998 to the present.
The charge of the VDIN team is to develop a new pricing model for voice
and data services delivered by Information Systems (IS) to the MIT
campus. The major objectives of the project are to implement a pricing
scheme that is simpler to understand and easier to administer than the
existing model and aligns rates more closely with the cost of the service
provided. The new rate model should also be adjusted periodically to
reflect changes in technology and cost.
The project was initiated by team sponsors Jim Bruce and Dennis Baron and
was announced on November 20 in a communication by Jim Bruce to the MIT
campus. A web page (http://web.mit.edu/is/np/projects/rates/) was
established to provide information on the project, including a list of
team members and the team charter. A listserv address
(vdinrates@mit.edu) was set up for communication with the VDIN team.
For the first two months of the project, the VDIN team has been engaged
in the Startup and Research phases. These phases related primarily to
planning, fact-finding and data gathering.
The startup phase included the development of the project work plan, team
charter, communication plan, and the assignment of roles and
responsibilities to team members.
During the research phase, the project consultant,
PricewaterhouseCoopers, has been analyzing IS accounting records to make
a comparison of cost and revenue for each VDIN line of business. While
there are a myriad of rates that are assessed for VDIN services, IS cost
accounting practices commingle costs rather than differentiate them by
specific lines of business. This has blurred the picture with respect to
the surplus or deficit generated by each service offering. This analysis
will be a critical factor in determining the future rate model since the
rate for each service offering will be based on its cost.
Feedback is being solicited by various customers and stakeholders across
the campus. Several meetings have been held, or scheduled, with various
constituencies including bulk billing customers in departments, labs and
centers (DLC), the Administrative Advisory Committee (AAC), the Assistant
Dean's Group, and representatives from various central administrative
areas including the Controllers Office, Office of Sponsored Programs,
Internal Audit and the Property Office. Consultations have also been
held with IS Team Leaders and other knowledgeable personnel within the
organization.
Other universities are being surveyed in an effort to ascertain "Best
Practices." Surveys were sent to schools in the Boston Consortium, the
Ivy Plus Group and Common Solutions. Site visits were made to Harvard
University and Tufts University and telephone interviews were conducted
with the University of Kentucky and the Georgia Institute of Technology.
Web sites for the University of Minnesota and UC San Diego have also been
an excellent source of ideas for the VDIN team.
<bold>Goals for the coming period
</bold>
It is anticipated that the rate review project will be completed within
the next three months. The final two phases will involve analysis of the
information gathered and the development of recommendations. A one day
retreat of the VDIN team will be held on Thursday, January 14 to give
team members the opportunity to discuss the feedback we have received and
to focus on determining viable options for the new rate model. It is
anticipated that the review team will develop a preliminary rate model
and a set of recommendations by mid-February. The following month will
be devoted to summarizing the findings and recommendations in a written
report, obtaining approval from Senior Administration and reviewing the
recommendations with the MIT community.
<bold>Issues
</bold>
The main issues that have been identified by customers relate to the
cost/price of VDIN services, who should pay for the data network (i.e.
Institute versus departments, labs and centers), the complexity of the
current pricing structure, the lack of information on cost/rates, and
service issues (e.g. long turnaround time for new network drops and IP
addresses).
Other significant issues relate to the proliferation of private networks
on the MIT campus, increased funding needs for network upgrades, audit
issues related to compliance with federal cost accounting regulations and
a recommendation to change the method used to assign the cost of toll
calls.
<bold>Key Learnings
</bold>
One key learning has been the degree of difficulty involved in matching
the revenues and expense for each VDIN service offering and the fact that
many (most) rates are not based on current cost information. The
imprecision of the cost accounting makes it impossible to monitor the
accuracy of individual rates and to adjust them when necessary. This has
made it clear to the team that a new rate structure must be accompanied
by a new cost accounting structure.
Another key learning is the fact that DLC's are motivated to implement
their own data networks as a response to service issues as much as cost.
The perceived lack of responsiveness by IS and the desire of a department
to control its own destiny has resulted in the creation of private nets.
The potential problems created by the operation of private networks,
including the risk to the MIT network that these private nets pose, are
key issues that must be addressed by MIT Senior Administration.
Finally, the lack of information that DLC's have with regard to the
services being provided and the costs associated with these services has
fostered a significant degree of distrust on the part of the user
community. An ongoing dialogue between IS and the DLC's would help to
improve this situation.
<bold>Team Dynamics
</bold>
The team consists of four members from the IS organization (Leslie Liu,
Christine Cavanna, Bob Mahoney and Kristen Nesselrod), one member each
from the Controller's Office (Paul Arsenault) and the Office of Sponsored
Programs (Patrick Fitzgerald), and a consultant from
PricewaterhouseCoopers (Judy Hilliard).
The team has a standing two hour meeting each week in addition to
meetings that are scheduled with customers and stakeholders. The team
members also carry on frequent discussions via e-mail. All if this
communication results in frequent interaction and dialogue among the team
members. Because each member was chosen for hisor her expertise in a
particular area, the members listen well and often defer to the team
member with the most knowledge in a given area. All of the team members
freely participate and have been extremely receptive to the assignment of
roles and responsibilities. The team is marked by a sense of cohesiveness
and mutual respect; this has created a positive team dynamic and an
atmosphere that is conducive to a thoughtful exchange of ideas.
<bold>Additional Comments
</bold>
Because of the relatively short time frame that was established for the
VDIN Rate Review team to complete it's work, the project did not go
through formal Discovery process.
Patrick Fitzgerald
January 12, 1999
Patrick Fitzgerald
Director of Cost Analysis
Massachusetts Institute of Technology
Telephone (617) 253-2762
Fax (617) 253-3688
