ADMINISTRATIVE REPORT

Date: May 21, 2002
Author/Local: M. Crocker/7647

RTS No. 02453

CC File No. 1151

Council: May 28, 2002

TO: Vancouver City Council

FROM: Director of Information Technology

SUBJECT: Information Technology Infrastructure - 2002 Expansion and Replacement Program

RECOMMENDATION

THAT Council approve the 2002 Information Technology Infrastructure Expansion and Replacement Program consisting of three one-year programs:

a. Expansion and upgrade of networking and telecommunications infrastructure, at an estimated capital cost of $670,000 and additional annual operating costs of $100,000;
b. Various upgrades to the Police systems infrastructure, including servers, databases, security, data access and systems support, at an estimated capital cost of $220,000 and additional annual operating costs of $10,000;

c. Acquisition of security tools to ensure that the City's information systems are protected against attack, at an estimated capital cost of $100,000 and estimated annual operating costs of $15,000;

and one three-year program:

d. Refreshment of out-dated desktop computing infrastructure, including replacement of obsolete microcomputers and operating systems and deployment of a standardized office productivity suite across the organization, at an estimated three-year capital cost of $12,050,000 and additional annual operating costs of $350,000 in 2003 and $425,000 in 2004 and subsequent years.

Total capital costs of $13,040,000 will be funded from the Information Technology Long Term Financing Plan. Additional annual operating costs of $475,000 in 2003 rising to $550,000 in 2004 and subsequent years will be funded through an increase in the operating budget.

GENERAL MANAGER'S COMMENTS

The General Manager of Corporate Services RECOMMENDS approval of the foregoing, noting that these are essential costs of doing business in 2002. The City's ability to deliver its mandated services depends now more than ever on the accessibility, availability and integrity of its information systems. This program ensures that they continue to meet the need.

COUNCIL POLICY

On December 8, 1994, Council, while considering the "Next Steps to Better City Government" reports, which included the Information Systems Plan Report, directed:

- THAT staff prepare a detailed infrastructure and software implementation plan and budget for consideration in the 1997 - 1999 Capital Budget.

On July 23, 1996, Council approved a "Long Term Financing Strategy - Information Technology Replacement Program", that recommended, amongst other things:

- THAT Council approve the financing strategy as outlined in this report to provide a sustaining source of funds for information technology implementation and renewal.

PURPOSE

The purpose of this report is to seek approval to continue the build-out and replacement of the City's information technology, communications and systems infrastructure.

Council approved the third Technology Infrastructure Expansion and Replacement Program on April 6, 2000. Highlights of the achievements of that program are described in the next section of this report. This fourth report, for 2002, includes:

· Replacement of obsolete microcomputers, implementation of a new standard desktop operating system, and adoption of a standard suite of desktop productivity software across the whole organization;
· Continued expansion and upgrade of network and telecommunications facilities, following the strategy described to Council on March 30, 2000 and confirmed on June 5, 2001, when Council approved award of contracts for telecommunications services;
· Various upgrades to Police systems' infrastructure which recognize that department's need, driven by unique security constraints, to maintain some infrastructure independently of the infrastructure it shares with the City, and acquisition of security-related software to further protect City systems.

BACKGROUND

Information Technology Infrastructure Replacement
To provide context for this report, Appendix A estimates the total annual spending on information technology in the City organization. To support and maintain the City's investment in information technology and realize the value from its information systems, the City:

· Spends $22 million annually on staff, services like maintenance, leases, telephones and software licensing, and related minor equipment acquisitions. These costs are strictly operational, do not include any provision for replacement or upgrade, and are funded through the operating budget;
· Spends an average $4 million annually to replace obsolete information technology infrastructure or to upgrade it to meet increasing demands. This is treated as a capital cost which is funded through the Information Technology Long-Term Financing Plan. It is approved annually by Council, and is the subject of this report;
· Spends an estimated average of $6 million annually to replace obsolete line-of-business systems. Funding for this comes from several sources, but primarily the Information Technology Long-Term Financing Plan. All such expenditures are subject to Council approval.

These costs are less than or comparable to those reported by other large cities (listed at the end of Appendix A), although such comparisons should be interpreted cautiously because of the different services offered, different reporting structures and accounting practices.

Previous Replacement Programs
The last full replacement program was approved by Council in 2000. Two interim microcomputer replacement requests were made to Council in 2001. The status of items reported in those programs is summarized in the following table:

Program Year	Item	Approved Budget	Actual Costs	Status
1998	Upgrade City E-Mail Software	$450,000	$357,000	Approximately 3,200 users of e-mail have been upgraded to Exchange/Outlook 98
1999/2000	Networking & Telecommunications	$657,000	$504,000	Telecommunications services contracts awarded. Telecommunications services to 38 sites, various network servers and server operating systems upgraded.
1999/2000	Replacement of Obsolete Microcomputers	$1,630,000	$1,687,000	Approximately 800 microcomputers replaced.
1999/2000	Telephone System Upgrade	$495,000	$266,000	Backup power supply replaced; City Hall telephone common equipment upgraded; other items outstanding.
2001	Replacement of Obsolete Microcomputers	$760,000	$770,000	400 microcomputers replaced
2001	Replacement of Obsolete VPL Microcomputers	$475,000	$475,000	273 microcomputers replaced

Any funds approved by Council but unspent at the end of the program remain in the Long Term Financing Plan.

DISCUSSION

The 2002 Program
The 2002 program is summarized in the following table. Each sub-program is classified as one of:
· Ongoing: Consists of numerous small items which can be expected to continue at similar levels from year to year;

· One-time: A project expected to be completed within the current year, or a one-time acquisition (although it will still need replacing at the end of its life cycle);
· Multi-year: A project that will take more than a single year to complete, for which additional funding approval will be sought in subsequent years.

Capital costs and ongoing operational costs are also identified.

Sub-Program	Description	Projected Capital Cost1	Projected Annual Cost Increase
Networking and Telecommunications2 (ongoing)	Upgrade existing or extend new network communications services, and replace, upgrade and consolidate local networking facilities;	$670,000	$100,000
Police System Upgrades (one-time)	Various upgrades to the Police systems infrastructure, including servers, databases, security, voice-mail upgrade, data access and systems support.	$220,000	$10,000
Security Infrastructure (one-time)	Software tools for vulnerability testing and intrusion detection.	$100,000	$15,000
Desktop Computing Infrastructure Refresh (multi-year)	Replace obsolete microcomputers, replace outdated desktop operating system, implement a standardized desktop application suite and supporting desktop management infrastructure;	$12,050,000	$425,000
	TOTAL	$13,040,000	$550,000

¹ Capital costs include acquisition, implementation and one-time staff training.
² On June 5, 2001, Council approved an award of contract for telecommunication services. Although that report anticipated the costs described here, Council was not asked to approve funding at that time.
Brief descriptions of each of these infrastructure sub-programs, with an explanation of what they will help the City achieve, follow. More detailed descriptions are included in Appendix B.

Networking and Telecommunications ($670,000)
The City's telecommunications network has two components: the Local Area Networks (LANs) which provide intra-workgroup file storage and print services, and the inter-workgroup metropolitan area network (VanLink) which provides local workgroups wherever they are located with connectivity to information and communications systems across the organization.

A total of around 2 Terabytes (2,000,000,000,000 characters) of information - reports, presentations, spreadsheets, databases, CAD drawings and programs - is stored on 50 LAN servers throughout the organization. These servers are in turn connected to individual desktop microcomputers to provide staff access to the information. The servers become obsolete over 3 - 6 years. They start to fail more often, and they need to be upgraded with additional storage and memory to meet growth demands. They become increasingly difficult and expensive to upgrade as they age. 25 of the 50 City LAN servers are 5 years old or older. Also, the software that runs them needs to be upgraded periodically. Finally, the associated high-speed switches and local cabling infrastructure also need occasional expansion and replacement. Projected costs for 2002 replacement and upgrade of the LAN infrastructure are $200,000.

VanLink connects around 100 work sites together, providing staff at those sites with access to e-mail, the core financial and human resource systems, Internet/intranet and line-of-business systems. On June 5, 2001, Council approved an award of contracts for telecommunications services valued at up to $2M over 5 years, and endorsed a strategy to upgrade telecommunications services to a number of work sites over three years. 38 sites have been upgraded, including 15 libraries, 13 Park Board facilities, 6 fire halls, 2 Engineering Works Yards, City Archives and the City Pound; several others are in progress. The plan calls for upgrading a further 37 sites in 2002, at an estimated one-time cost (net of recoveries from Industry Canada for the branch libraries) of $470,000 and additional recurring operating costs of $100,000 annually for telecommunications services.

Police Systems Infrastructure Upgrade ($220,000)
A number of components of the Police Department's systems infrastructure need to be modernized. Although the department shares some network infrastructure with the City, and microcomputer replacement has always been funded through the corporate infrastructure replacement program, much of the department's infrastructure is, primarily for security reasons, independent. For example, the department has its own e-mail and database systems, has unique internal security mechanisms and independent telephone systems, and backs up

its own data. Aging equipment, natural growth, and an increasing dependence on gathering and manipulating information have created a need to update this infrastructure and make it more robust.

Security ($100,000)
The City's core security infrastructure is comprised of a firewall which protects us from the Internet, an anti-virus solution which protects us from a variety of malicious code that can be introduced from both internal and external sources, and password protection on all restricted-access systems. This infrastructure needs to be reviewed to identify any vulnerabilities, and a software "penetration testing" tool needs to be acquired to assist this review. In order to maintain a secure state and to have the necessary information to trace an attack and if necessary provide admissible evidence of an attack, it is becoming standard practice to implement an Intruder Detection System (IDS). The equipment and software it is proposed to acquire will provide a minimal level of intrusion monitoring while staff conduct a more detailed review and needs assessment. Additional operating costs, estimated at $15,000 annually, are for hardware and software maintenance.

Desktop Computing Infrastructure Refresh ($12,050,000 over 3 years)
The City has around 4,900 microcomputers. 400 were replaced early in 2001 and Vancouver Public Library replaced 273 later in 2001. In both cases, the driving force was the need to deploy new systems that were dependent on current technology. With the exception of these computers, the fleet is 2 to 5 years old. About 50% will be either 4 or 5 years old in 2002 and so due for replacement according to the City's 4-year replacement lifecycle. The balance are scheduled for replacement in 2003/2004.

This program proposes to replace approximately 4,200 obsolete microcomputers and 1,000 monitors at a cost of $8,680,000, and to deploy a new desktop operating system and a standardized suite of office productivity software across the entire microcomputer fleet.

The City will take this opportunity to review its desktop hardware standard. The provincial government has established standard desktop computer configurations which are equally appropriate for the City. Through a public process it has approved three manufacturers' (Compaq, IBM and Seanix) products as meeting specifications. It lists these products on its website, with models and pricing updated quarterly, as Master Standing Offers (MSOs). The City will issue a Request for Proposals RFP) for these MSO-listed models only, inviting proponents to quote additionally on laptops, monitors, peripheral equipment and installation services, to identify value-added services they will provide, and to propose a partnership arrangement with the not-for-profit sector which will result in the surplus microcomputers benefiting the local community. This approach leverages the province's standardization and evaluation work while satisfying the City's additional requirements.

The new operating system (Microsoft Windows XP), at a cost of $720,000, will be the first across-the-board upgrade since Windows 95/98 was deployed in 1997/8. Windows 98 is no longer available as an installation option, support for it is formally being dropped in June, 2002, and software companies are focussing their development efforts on the newer Windows operating systems, of which Windows XP is the most current. Windows XP will offer better stability and has features which permit improved manageability. This is a significant benefit, because the costs of managing (configuring, maintaining, supporting) the corporate desktop are generally considered to exceed the cost of the hardware by a factor of 4:1.

The deployment of a standardized office productivity suite (Microsoft Office XP), at a cost of $2,450,000, is a confirmation in the City of what has become a worldwide standard. It will save staff time and energy currently spent converting documents from one format to another, a process which is fraught with problems in complex documents. It also marks the City's recognition that provision of an office productivity suite has to be funded corporately, which is why it is being included for the first time in this infrastructure program.

There are no additional annual operating costs associated with the microcomputer replacements. Appendix B describes an additional operating cost, increasing to $420,000 annually by the end of the program, of licensing Microsoft Office and keeping it current.

This is a major refresh of the City's desktop computing infrastructure. After necessary preparatory work in the first half of 2002, the bulk of the program will be completed by December, 2003, with some clean-up extending into 2004. Council is being asked to approve funding for the complete 3-year program, as costs are reasonably predictable and changes in approach unlikely. Staff would report back to Council during the program if there were material changes.

FINANCIAL IMPLICATIONS

Funding for the initiatives described in this report will come from the Information Technology Long-Term Financing Plan, in which a total of $16.3M has been budgeted for Information Technology infrastructure replacement and upgrade over the 2001 - 2004 period. In 2001, Council approved $2.7M in expenditures, itemized below, from this budget:

Date of Report	Subject of Replacement/Upgrade	Expenditures ($,000s)	LTFP Budget ($,000s)
2001 - 2004 Long-Term Financing Plan Budget			16,300
March 6, 2001	Replacement of 400 obsolete City and Police microcomputers	760
October 16, 2001	Replacement/Upgrade of VPL Integrated Library System	1,506
October 29, 2001	Replacement of 250 obsolete VPL microcomputers	475
May 14, 2002	Improvement to Information Technology Business Continuity Capabilities	495
Total Committed from 2002 - 2004 Budget in 2001			(3,236)
Expenditures Proposed in this report			(13,040)
Balance for Infrastructure Expansion & Replacement 2003 - 2004			24

CONCLUSION

The City has replaced a number of its core information systems, and is implementing systems which support different ways of working and new ways of delivering services to the public. These systems demand a technology infrastructure that extends to all parts of the organization, regardless of location. It needs to be robust, dependable and fast, and it needs to be adequately supported.

This report is the fourth report of an ongoing program in which the technology infrastructure is recognized as a corporate utility, its maintenance as a corporate responsibility. While the details and emphasis may change from year to year, continuing maintenance and upgrade of this infrastructure is essential as the City looks increasingly to technology to facilitate the delivery of its services.

- - - - -

The following table estimates current annual expenditures on information technology in the City. It should be emphasized that these are estimates; the use of information technology is so pervasive in the City that it is difficult both to define both what costs to include and to accumulate those costs with much precision. Other cities confirm this challenge. The notes following the table summarize what costs are included:

		Costs ($,000)
		Operating			Capital
Service Group	No. Of I/T Staff	Staff & Related1	Equipment & Services2	Telephone3	Infrastructure Replacement & Upgrade4	Line-of-Business Systems5
Community Svcs.	10	850	200	130		700
City Mgr.	1	100	100	10		150
Corporate Svcs. (Corporate I/T)	21 73	1,950 6,000	1,000 2,700	80 750	3,500	2,750
Fire & Rescue Services	3	200	60	200		900
Engineering Services	19	1,500	700	330		300
Board of Parks & Recreation	5	300	260	580		100
Police Services6	13	900	1,000	410		1,000
Vancouver Public Library	13	800	300	130	850	300
Totals	158	12,600	6,320	2,620	4,300	6,200
Total Operating/Capital		21,640			10,550
TOTAL		32,190

1 Staff-related costs, like salaries, benefits, office supplies & services, training, contracting and consulting.
2 Hardware maintenance, software leases, peripheral equipment, software & upgrades, telecommunications costs.
3 Telephone operating costs, including Centrex services, phone usage, line & trunk charges, PBX-related costs, cell phone, voice-mail & automated call distribution systems.
4 Replacement & upgrade of telecommunications infrastructure, file/print servers, microcomputers, corporate mainframe & database servers, e-mail systems, Internet/intranet servers, voice systems.
5 Upgrades to line-of-business systems. Infrequent and capital-intensive, these costs have been annualized by averaging historical expenditures and projected expenditures of approved systems over the expected lifetimes of the systems.

To assess where the City of Vancouver's spending on information technology stands in relation to that of other cities of comparable size, the table below lists costs quoted by other cities. It should be noted that these costs should be treated with some caution, as quite subtle differences in definition, in interpretation, and in the range of services provided make direct comparisons challenging:

City	Popn.	IT Staff	Services included/excluded	Costs
US city	570,000	n/a	Excludes utilities. Rough estimate only.	$54M US
Calgary	970,000	344	Includes transit. Excludes police & library.	$83M
Winnipeg	685,000	240	Excludes libraries, transit & utilities.	$37M
Edmonton	960,000	242	Excludes police & libraries, telephone costs.	$33M
Vancouver	570,000	158	Includes all departments, police, library & park boards.	$32M

Networking and Communications ($670,000)
The VanLink Telecommunications Network ($470,000):

In March, 2000, the replacement program report to Council described an approach to building out the City's metropolitan area network over time to meet increasing demands. In May, 2001, Council approved awards of contracts to two suppliers, Telus and Sprint, to provide telecommunications goods and services. By December, 2001, contracts had been signed with both these suppliers.

Funding was available from the 1999/2000 replacement program, and no additional funding requested at that time, although the report anticipated that an additional funding request of $345,000 would be made in the 2001 and 2002 infrastructure replacement programs.

Telecommunications services to 38 sites have been upgraded, and several more are in progress. Most of the expectations described in the earlier reports are being met. Actual costs are exceeding projected costs in two areas; wireless installations are turning out to be more expensive than anticipated, and a requirement has been identified for additional project management resources.

An additional 37 sites are scheduled for telecommunications upgrades in 2002.

Upgrading these telecommunications services provides for faster, better access by staff at remote sites to centrally-located information and information systems. It supports better customer service and offers opportunities for new services in the community .

Local Area Networks ($200,000):

In 2002/2003, an approach will be recommended that will see a migration from the current localized storage architecture, in which day-to-day working files are stored on Local Area Network servers, to an enterprise data storage architecture, in which data is stored on a few large centrally-located servers.

In anticipation of this, which will involve changing operating systems and acquiring new hardware, only essential upgrades will be performed in 2002. Those will typically be increases in storage capacity and memory to meet natural growth demands, and replacements only for those servers that can not be upgraded.

One-time funding requested: $670,000

Annual operating costs:

Telecommunications services and hardware maintenance: $100,000

Police System Upgrades

The Police department needs to strengthen several areas of its information systems:

· Servers and networks;
· Security;
· Voice-mail;
· Data Accessibility;
· Systems Support.

Servers and Networks:

The department's computer network and database software must be upgraded to meet day-to-day requirements. For example, network management software does not permit automated installation of applications on end users' machines: each of the 700 computers within the organization must be visited and applications installed manually, a complex and costly undertaking.

The database software used for department-wide applications is outdated and requires an upgrade.

There is no backup email or database server. Loss of either of the main servers would cripple the department's ability to perform day-to-day work. Servers in the main computer room are susceptible to damage through earthquake, and need to be mounted in a more secure manner.

Security:

Web cameras are a technically efficient and cost-effective way of monitoring building security and are planned for deployment in key areas within police facilities.

The current method of providing access to departmental databases and email for remote users, such as the Missing Women's Task Force, is inefficient and lacking in communications security. Equipment proposed will provide high grade end-to-end encrypted channels for remote users. This equipment can also be used to provide redundant links between police facilities over insecure networks.

Voice-mail

The Police voice-mail system provides PIN-number-based voice mail boxes as an effective means of communicating with officers who do not have a dedicated desk and telephone. In particular, it is used to "de-notify" them when a scheduled court attendance is no longer required or has been cancelled. The system is customized to provide this functionality. Because of its age, support is no longer available and the hardware andapplication software must be upgraded.

Estimated costs of these program components are summarized in the following table:

Program Component	Estimated Costs
Infrastructure upgrade	$ 80,000
Security	$ 40,000
Voice-mail upgrade	$30,000
Data Accessibility	$ 60,000
Systems Support	$ 10,000
Project Total (2002 - 2004)	$ 220,000

The funding requested will modernize the police department's information technology infrastructure, secure the network and facilities, ensure efficient and effective police operations, and enable quick recovery from catastrophic or lesser unplanned events.

While policing is a community-based activity, it depends on gathering and efficient manipulation of information. Computing is key to this activity, and a minimal standard of information technology must be met in order to achieve corporate objectives.

One-time funding requested: $220,000

Annual operating costs (equipment maintenance and software licensing): $10,000

Security Infrastructure

The City's security infrastructure is due to be reviewed and upgraded. Our existing security infrastructure is primarily comprised of a firewall which protects us from the Internet, an anti-virus solution which protects us from a variety of malicious code that can be introduced from both internal and external sources, and password protection. In order to maintain a secure state and to have the necessary information to trace an attack and if necessary provide admissible evidence of an attack, the City needs to implement an Intruder Detection System (IDS). This proposal is for a scaled down version of an IDS which will serve until the next budget year when a more comprehensive, robust and long-term system should be implemented. Also included in this request is a penetration testing tool which will assist in the identification of technological vulnerabilities within the City.
Intruder Detection System ($40,000)

The purpose of an IDS is to track down insiders or intruders who have gained access into the network, catch them in the act, get the evidence needed for further action and discipline them or take them to court. It also provides a means to track how an intruder or an employee was able to circumvent the security of the system. This can assist in improving the existing security controls within the organization. These functions are not performed by a firewall or by anti-virus software. Conversely, an IDS does not replace a firewall or anti-virus package. An IDS will provide information on not only intentional misuse of resources but also unintentional misuse. With over 65% of attacks on organizations originating from inside it is important not only to have a firewall and an anti-virus strategy but also to have a "burglar alarm" on the inside to prevent theft, destruction and/or alteration of information.

Penetration Testing Tool ($60,000)

Penetration testing is essentially computer hacking covered by a pre-coordinated set of rules under which the test will be conducted, a pre-established boundary within which the test will be contained, and appropriate authorization to proceed with the test. This can be accomplished using an approved set of tools and/or by using the tools available to the hackers. At the City of Vancouver we will be using both types to tools for testing. This request is for automated testing software which looks for known vulnerabilities within the system. These can include software vulnerabilities, weak passwords on user IDs, including the administrator user IDs and a variety of other means for a hacker to gain unauthorized access to the City's network and data. It should not be assumed that this tool will identify all vulnerabilities as no single tool can provide an accurate account of the vulnerabilities in a system. A variety of tools and techniques are required to complete an accurate and effective test of any given system. Penetration testing software will assist IT Security in locating vulnerabilities before they are exploited by a hacker or by an insider. This will prevent the potential embarrassment and loss of public confidence that inevitably follows a security breech.

One-time funding requested: $100,000

Annual operating costs (equipment maintenance and software licensing): $15,000

Microcomputer Replacement

The Hardware:

The City has around 4,900 microcomputers in total, so an average of 1,200 need to be replaced annually, given a 4-year useful life. According to a recent survey, fewer than 10% of organizations comparable in size to the City keep microcomputers for as long as 4 years -the median replacement cycle is around 3 years. The City replaced relatively few microcomputers in 2001, and consequently has around 1,500 that are already 4 years old andscheduled for replacement.

The Operating System:

The predominant operating system on City microcomputers is Microsoft's Windows 98, which has been the City standard since 1998. It is now at the end of its life, having been superceded by Windows NT, Windows 2000, Windows ME, and most recently Windows XP. It is no longer possible to buy microcomputers pre-loaded with Windows 98, and formal support from Microsoft will expire in 2002.

The Desktop Application Suite:

Wordperfect was established as the City's word processing standard in 1994. Since that time there have been at least five new releases. At the same time, desktop software application suites, which include at least word processing, spreadsheet, e-mail and presentations functionality, have become the personal productivity vehicle of choice for most organizations, with Microsoft's Office becoming the de facto standard. The City has adapted to these changes inconsistently, with staff across the organization using different software at different release levels.

The Costs of Technological Obsolescence and Incompatibility:

Maintaining a fleet of nearly 5,000 desktop microcomputers is expensive. Some of the costs - the initial hardware and software acquisitions, for example - are hard costs. Support costs -the resources needed to fix the things that break and to help staff use the technology productively - are softer but quantifiable. The biggest single cost, but the hardest to quantify, is probably the cost of lost productivity in the end-user community as staff grapple with the challenges (and opportunities) that this technology offers. A much-quoted report by Gartner Group, an independent technology advisory company, estimated that the initial hardware and software acquisition costs are only 21% of an organization's total cost of microcomputer ownership; support adds 21%, administration 13%, and end-user operations the remaining 45%.

In the City, the predominance of desktop equipment that is approaching technological obsolescence and the plurality of standards generate frequent problems that result in lost productivity and increased support and operational costs:

· Old equipment is slow and demanding of memory and disk upgrades;
· Document exchange and sharing is made challenging by software incompatibility;
· Computers are cascaded within a workgroup in an effort to match equipment to needs;
· Most computers crash occasionally, some frequently;
· New software often takes considerable time and energy to install on older computers under older operating systems;

. · Integration with new releases of other City software is negatively impacted when the desktop productivity software is obsolete.

Recommended Approach:

This is an opportune time to do a complete refresh of the City's desktop microcomputer inventory. Starting in 2002 and continuing through to early 2004, the recommended approach is to:

· Replace almost the complete inventory of microcomputers, approximately 4,200 machines, most of which will be 4 years old or older when replaced. Microcomputers will be replaced department by department. As new equipment is installed, old equipment that still has some useful life will be redeployed to replace obsolete equipment in other departments;
· Configure the new microcomputers with the Windows XP operating system. Windows XP is the most current version of Windows; it offers benefits like better stability, better multimedia support for applications like on-line training and video-broadcasting , and many additional features. Windows XP can be expected to serve as the City's standard for the next 4 or 5 years;
· Support and manage these computers through an infrastructure based on Microsoft's Active Directory, combined with desktop policies that are implemented through the Windows XP operating system. This provides a greater degree of control over the corporate desktop, which will help relieve some of the existing user frustrations and contain support costs;
· License and deploy the Microsoft Office XP Suite to all desktops. Office XP is the most current version of Microsoft's suite of desktop productivity software, and it commands a huge market share. About half the organization is already using Microsoft Word; the other half is using Wordperfect. Some conversion of existing documents, like form letters and other template-based correspondence, and some retraining will be necessary.

Estimated project costs are summarized in the following table:

Program Component	Estimated Costs
Hardware Replacement	$8,050,000
Office XP	$2,450,000
Active Directory	$220,000
Installation & training	$950,000
Contingency (testing, project management, etc.)	$380,000
Project Total (2002 - 2004)	$12,050,000

In this table:

"Hardware Replacement" includes hardware and software acquisition. Equipment will be purchased outright under the Provincial Government Master Standing Offer (MSO) from one of the approved suppliers. Consideration has been given to leasing this equipment, and to including other support services with such a lease. On a 4-year replacement cycle, leasing at current low interest rates offers a financial advantage of about 1.5% over outright purchase. Leasing does not offer much flexibility because ownership of the equipment reverts to the lessor at the end of the term. There are risks associated with making commitments 4 years into the future, like uncertainties in the availability of funding, technology changes, and staff resources. The potential financial penalties for failing to live up to the terms of the lease contract outweigh the small financial advantage of leasing, and outright purchasing is recommended. The bundling of other services with a lease arrangement did not offer financial benefits. Consideration has also been given to moving to a 3-year replacement cycle, which alleviates the higher support and maintenance cost burden of nearly-obsolete 4-year old equipment . Leasing becomes more attractive because of the higher residual value of 3-year old equipment, but the 4-year replacement cycle is still more cost-effective on an annualized basis.

"Installation and training" includes the contractor costs associated with pre-configuring the replacement microcomputers, installing the necessary software, redeploying existing equipment within the organization and training for staff in new features and capabilities.

"Office XP" includes licensing and deploying the Microsoft Office XP Suite across the organization and migrating from existing applications like Wordperfect and Lotus 1-2-3 to the equivalent Office applications, Microsoft Word and Excel. The City currently spends an estimated $150,000 annually acquiring and upgrading desktop productivity software whose functionality is provided in this suite. These costs are extraordinarily low by industry standards, which is the reason the City has so many generations of software in use and the document interchange problems that go along with that. Even after the City has standardized on Office XP, experience indicates that it will become obsolete within 4 years. The City can standardize on that version and then refresh it completely after 4 years, or it can pay annually for the licensing right to keep at the most current release. As the annualized costs of the two are comparable, the latter approach is preferred. Costs are estimated at $450,000 annually, which represents an annual increase of around $300,000.

"Active Directory" includes licensing, designing, testing and deploying an electronic directory which is a central repository of information about users and their equipment, associates desktop policies with them by individual or by group, and authenticates their identity. This directory will subsequently be integrated with other directories of staff and resources in the City, although that is not included in the scope of this project.

"Contingency" includes an allowance for upgrading or modifying applications wherenecessary to run under the new operating environment, consulting resources, and project administration.

This is a major project, representing the most fundamental change in the City's desktop computing environment in 5 years. It embodies widely recognized best practices in microcomputer lifecycle management, and will generate a number of benefits, including:

· A more stable and functional operating system, which should lead to fewer system failures and easier performance of many tasks;
· Organizational efficiencies around document processing and exchange, resulting from better integration between commonly-used software like e-mail, word processing, spreadsheets and the core financial and human resource systems, and a consistent, industry-standard desktop;
· Better support, security and control of the desktop through more centralized administration.

However, the primary business driver is that the alternative of doing nothing is untenable. As general-purpose technology becomes obsolete, it becomes increasingly problematic. New software often will not run on old hardware or under old operating systems. When it does run, software conflicts and higher processing demands lead to increasing instability. Replacement parts become either unavailable or exorbitantly expensive.

This "window of currency" is around 4 years, and the City's desktop computing infrastructure is leaving it. It is time for a refresh, and the approach described is the most cost-effective way of doing that.

Funding requested for 2002 - 2004: $12,050,000

Annual operating costs:

Hardware support, maintenance and upgrades are included in the warranty and in the existing operating budget

Additional software costs for standardized desktop software suite $425,000

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(c) 1998 City of Vancouver