After a series of embarrassing finance hearings where agencies complained about the city's billing model, Jacksonville's CIO has opted for transparency.
As incoming CIO of Jacksonville, Fla., in 2012, Usha Mohan immediately faced issues surrounding how to bill the city's IT customers. Though cost allocation is never popular, Mohan said she decided to switch gears after a series of embarrassing finance hearings where agencies complained about the city's billing model, which was long on bundled costs and short on specifics.
"These publicly embarrassing moments spurred us to take steps to create the new, more transparent, billing model," Mohan said. As did Mayor Alvin Brown’s emphasis on increasing efficiency and accountability in government operations.
Jacksonville's old billing method lumped costs into nine line items, with more than 90 percent of those costs pooled, said Michael Young, enterprise architect for the city's Information Technologies Division.
The city works on a "chargeback" model -- with the IT budget made up for by charging customers back for products and services they consume. Many local governments like Jacksonville face issues surrounding chargeback, Young said. That's why he's glad the city did the work to make its billing more fair and transparent.
Under the new billing model, which the division developed in-house, pooled costs make up less than one-fourth of an agency's bill, and all other costs are agency-specific and shown in more than 60 line items. "It's like getting a Direct TV or a Comcast bill you can explain," Young said.
The change means increased fairness, insight into usage and opportunities for agencies to control their variable costs, Mohan said.
It took the division a little more than a year to develop the new cost allocation model and system. The model, which includes line items, as well as actual and projected expenses, was built in Excel, but converted to SQL tables to make it more sturdy, Mohan said.
With the groundwork laid, the division is now working on making billing more accurate by further decreasing the percentage of pooled costs, and on creating a user interface so finance staff can update the model each budgetary season.
The model's accompanying user-facing customer billing system reads like a catalog of IT products, services and costs; it also automates billing and allows agencies to analyze their expenses like phones, Centrex lines and cable TV. This information is also used to sell division services to outside entities, Mohan said, as it has done with some nonprofits using city building space and one state agency.
When in April 2013 the new billing model was ready for use, one important customer lobbied against its implementation since it would raise its costs, Mohan said. As an answer to this, the city held off for one more year and instead provided parallel billing to all agencies as a way to introduce the new billing model.
The delay turned out to be positive, Young said, because it allowed agencies to have an apples-to-apples comparison of the new and old models.
As for the agencies set to experience cost increases: "Initially they were unhappy, but now they're accepting it," Mohan said. "Now they have transparency."
This increased transparency has also helped the division to understand its inventory and the total cost of its systems, ensuring they are cost-efficient and can be benchmarked with others in the industry. In this way, the division can make better decisions about whether to outsource, Mohan said, as it recently did in waiting to move its email to Microsoft Office 365 due to the projected cost increase.
And, agencies themselves are more apt to help IT track its inventory, like cell phones, to save themselves money, Young said.
For the Jacksonville Public Library, which has more computers than any other city agency, the old method of allocating costs under nine line items -- one of which was PCs -- proved, well, costly. "We were covering [other agencies'] load in some respects," said Mark Merritt, deputy director of administration and finance for the library.
Whereas before the division was charging agencies about $3,000 per PC per year, it now charges around $200 because all the other IT services are pulled out of that cost, Young said.
The library was a key supporter of the new billing model and just last month it began paying less with the new model now in place. A chief reason the model makes sense, Merritt said, is the movement in IT away from hardware costs, like computers, to other costs like maintaining software and servers, providing security and delivering the Internet.
"By changing that from a hardware to a systems cost model, you better reflect actual IT work and actual IT charges," Merritt said.
The new model allows billing by many cost drivers, using the most logical one for each line item, Mohan said. Cell phones are broken down by the cost of minutes, data plan and texting, and base cost of the phone, she said.
The process of figuring out how to fairly charge agencies for items was a collaborative process among the city's agencies. This took time, though, since some services are based on number of devices or users, while others are fixed and don't fluctuate. Time, then, is one challenge of the new billing model, and has to be balanced with the need for accuracy and transparency, Mohan said.
Time is also required on the agency side to use the billing information to make decisions. Even so, some agencies may ignore their IT bills as they are inevitable, ongoing and require no action, Merritt said. But he hopes the new billing model draws attention from leadership regarding where the money is going so that informed changes can be made.
"You need to know the details in order to control it," he said, adding that the library can now see how much a single cable hookup costs and decide whether to scale the service up or down. But the real benefactor, he said, is IT itself.
"City IT does a fantastic job of helping us out," he said. "They deserve a lot of credit for what they do, and I think a new billing model goes a long way toward that -- it shows us what they do and what it's worth."
Mohan too said that the Jacksonville City Council is recognizing more of the division's contributions since the new billing model has been in place. Even during recent blanket budget cuts, council members chose not to cut a network and server refresh, Mohan said.
"That really surprised me," she said. "Finally, it got through to them we couldn't cut that."