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EXHIBIT
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IT Operations Support Application and Development Business Integration Distributed Development Implementation Mainframe Development Facilities Administration Infrastructure Support Office of the CIO System Management and Operations Total 0 0 0 0 0 1,416 0 0 2,181 3,597
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2005 Q2 (000's)
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IT Service Support Change Management 2,145 0 1,438 687 20 0 581 0 1,419 4,145 569 0 378 191 0 0 0 0 324 893 Configuration Management 238 0 0 238 0 0 0 0 91 330 Incident Management 0 0 0 0 0 0 581 0 372 953 Problem Management 629 0 410 199 20 0 0 0 481 1,110 Release Management 709 0 650 59 0 0 0 0 151 860 IT Strategic Processes 349 268 45 0 36 0 16 284 469 1,118
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IT Service Delivery 202 144 40 0 18 0 8 0 1,307 1,517
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EXHIBIT
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understanding capacity
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are not willing to pay for additional capacity that was purchased in anticipation of growth or becomes idle due to demand changes.2 Why should internal customers behave any differently They too are willing to pay for what they use but are not willing to pay for what they don t use. However, many IT organizations implicitly and actually require their internal customers to pay for idle capacity due to their cost allocation policies. Capacity analysis integrated with ABC costing methodologies serves to identify capacity cost issues and provides insight for these kinds of management decisions. The first step in establishing an integrated capacity analysis quantitatively identifies how capacity is used or not used. The three major capacity categories are productive, non-productive, and idle. The total capacity is time, seven days a week/24 hours a day. Aside from some Star Trek type of disruption of the space-time continuum, this is fixed. External requirements, the policies, contracts, maintenance requirements, and actual usage all serve to define how capacity is allocated to these categories and their substates or subcategories. Subcategories within each major category serve to further refine the analysis. These can be further subdivided as necessary for specific operating environments (see Exhibit 4.16). Idle capacity includes capacity that is off limits due to regulatory, contractual, or policy restrictions. Another subcategory includes capacity that is not usable perhaps due to obsolescence. The last subcategory includes capacity that is idle but potentially usable. Productive capacity is capacity actually used for its intended purpose or for product or process development. Non-productive capacity includes all other capacity such as capacity used for maintenance, training, setup, and rework to name a few. Planned or unplanned outages would likely fall into one of these capacity states such as maintenance. Non-productive capacity also includes one other subcategory that is especially important in IT environments. This is buffer capacity or capacity that while not used, is required to accommodate peak requirements, process balancing, or reserved for specific customers. After building a time-based model of capacity, it is easily translated to other measures such as equivalent units. Other measures retain the same definitions. Retaining the same definitions enables easy communication between measure usages of the model. Another important measure is cost. Using the same time-based model, cost is traced to the states appropriate for that type of cost. For example,
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Rated Capacity
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chapter 4
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Summary Model
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the sum of it can be greater than its parts
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Industry-Specific Model Not Marketable
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Strategy-Specific Model Excess Not Usable Management Policy
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Idle
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Marketable
Idle But Usable Process Balance
Standby
Variability Scrap
Waste Nonproductive Maintenance Rated Capacity Setups
Rework Yield Loss Scheduled Unscheduled Time Volume Change-Over
Process Development
Productive
Product Development
Good Products
EXHIBIT
A Basic Time-based Capacity Model
Source: CAM-I
depreciation or equipment rental applies to all capacity states whether idle, productive, or non-productive. Maintenance costs would be applied to the maintenance subcategory. The end result is a cost map overlay using the same category and subcategory definitions. The cost map is another tool that provides information for management decisions. CIOs and IT organizations can use this cost information to determine the cost to provide services to customers. They can easily trace productive capacity to services and customers. They can also easily trace most of nonproductive capacity. Even buffer capacity cost is easily traced because it is dedicated to specific services and/or customers.