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UW Technology Working Group Report To Table of Contents I. Executive Summary............................................................................................ 1 II. Context.............................................................................................................. 9 III. Scope .............................................................................................................. 11 IV. Approach ......................................................................................................... 13 V. Financial Status................................................................................................ 14 VI. Summary of Root Causes.................................................................................. 16 A. Institution-wide Events and Practices………………………………………………………………………… 16 B. UW Technology Events and Practices………………………………………………………………………… 18 VII. Implications and Risks for the Future................................................................ 20 VIII. Summary of Peer Institution Practices .............................................................. 22 A. Organizational Models…………………………………………………………………………………………….…. 22 B. Financial Models……………………………….…………………………………………………………………….…. 23 IX. Recommendations ........................................................................................... 26 A. Stabilize and Sustain UW Technology………………………………………………………………………….26 B. Develop a Financial Model for UW Technology………………….…………..…………………….…….29 C. Strengthen Institutional Oversight…………………………………….………………………………………..30 D. Resources Necessary for Implementation……………………………………………………………………33 X. Next Steps ....................................................................................................... 34 UW TECHNOLOGY WORKING GROUP – REPORT TO PRESIDENT MARK EMMERT - 09-10-08 I. EXECUTIVE SUMMARY To immediately stabilize the UW Technology organization, President Emmert appointed Kelli CONTEXT Trosvig as Interim Chief Operating Officer and Bill The Office of UW Technology has a long record of Ferris as Interim Chief Financial Officer, reporting to achievement that has positioned the UW as a V’Ella Warren. recognized leader in the use of technology for The former Vice President for UW Technology, Ron learning, discovery and engagement. As a result of Johnson, no longer has oversight or management serious financial difficulties, the UW Technology has responsibility for the UW Technology organization recently undergone a significant reduction in staff. and has transitioned to the role of Chief Technology In response, President Mark Emmert established a Officer, reporting to President Emmert. Working Group to identify and understand the underlying financial and organizational issues. SCOPE AND APPROACH Leading the Working Group was Senior Vice Two central units provide support for information President for Finance and Facilities, V’Ella Warren. technology at the University of Washington: the Ms. Warren was joined in this effort by: Office of Information Management (OIM) and UW John Coulter, Former Associate Vice President of Technology. UW Technology provides Medical Affairs and Executive Director for communications, information technology and Health Sciences Administration infrastructure solutions and services to the campus. It is organized into five units: UW Technology Paul Jenny, Vice Provost for Planning & Services, Network Systems, UWTV, Learning & Budgeting Scholarly Technologies, and Staff Services. The scope of this report is focused on the operations and Edward Lazowska, Bill and Melinda Gates Chair, information technology services as delivered by the Computer Science & Engineering UW Technology. OIM was not included in the Mary Lidstrom, Vice Provost for Research Working Group’s charge, nor is it reviewed within the scope of this report. David Szatmary, Vice Provost for Educational Outreach Through a combination of internal and external The Working Group was charged with four goals: interviews, literature reviews, and data analysis, the sub-teams developed an understanding of UW 1) Identify the magnitude and root causes of and Technology organization and financials. The solutions for the current financial situation, resultant synthesis is summarized in this report with eliminate any ongoing deficit and address the recommendations for improvement. impact of the cumulative deficit; FINANCIAL STATUS 2) Stabilize UW Technology by clarifying current As of June 30, 2008 the accumulated deficit capabilities, developing strategies to stabilize attributed to UW Technology is $38.6 million, net of operations, engaging staff to recommit their accrued expenses and receivables and excluding efforts, and communicating with the University restricted funds1. The estimated deficit spending of Washington (UW) community on service rate after staff reductions is $600,000 a month or implications; $7.2 million annually. The projected deficit for fiscal 3) Develop a long-term operational and financial year 2009, including expenditures resulting from the model for the operation; and recent staff reductions (e.g. annual leave payouts), will be largely offset by an accumulated surplus in 4) Assess the University’s oversight structure for royalty accounts. fiscal management, especially for self-sustaining units. Three sub-teams were organized to address these goals and develop recommendations for the Working Group to submit to President Emmert. 1 Restricted funds include: grants, contracts, Office of the Chief Information Security Officer, and state appropriations for Gigapop. 1 UW TECHNOLOGY WORKING GROUP – REPORT TO PRESIDENT MARK EMMERT - 09-10-08 The total annual budget for UW Technology is $56.5 A. Institution-wide events and practices million, with $24 million (42%) from GOF/DOF2, $28.7 million (51%) from self-sustaining revenue, Clear roles and responsibilities for financial and $3.8 million (7%) in restricted funds. oversight are not defined at the institutional level for self-sustaining activities. Several The accumulated deficit attributed to UW hundred unique self-sustaining activities, Technology consists of five categories: including auxiliary operations, cost centers, and 1) Recharge Centers ($24.0M) deficits are recharge centers, generate approximately $500 attributable to past reporting periods and may million in revenue annually for UW. Units report not be recoverable, and includes infrastructure activity to various individuals for various costs that are transferred monthly from UWTV purposes (i.e., rate proposal purposes, external and Network Services to the Technology debt, etc.) without a comprehensive top down Recharge Center. review of the unit and without a clear escalation process to report issues. While most units 2) Unit Operations ($4.0M) deficits represents accept the implied responsibility for effective both GOF/DOF and self-sustaining budget financial management, the University has not expenditures that were not attributable to created explicit language to define the roles and recharge activities. responsibilities for financial oversight nor has it 3) Investments into campus strategies ($6.0M), developed an explicit policy for resolving deficit includes deficits related to investments, in E- issues. commerce and streaming media, that were not Vice Provosts, Vice Presidents, Deans and appropriate to allocate to a recharge center. Chancellors with responsibility for the financial 4) Accumulation of expenses in central Business & management of a unit are not provided Finance ($4.6M) includes amounts attributable adequate and ongoing training and awareness to the whole UW Technology organization and to support this role. When Vice Provosts, Vice includes items such as Nebula support, Presidents, Deans and Chancellors assume their institutional memberships and an aggregation of leadership roles at the University, it is implied GOF/DOF deficit balances at the close of the that they have financial responsibility for their 2005-07 biennium. units. University and unit finances are addressed in only one of a series of brief 5) There are three royalty accounts that orientation sessions. In-depth training is not accumulate revenue of $200-300K/year due to provided on how to effectively manage complex licensing agreements for software developed by institutional funding models or how to identify UW for Unisys (mainframe software). The potential operating or financial risks. accumulated balance may be used to offset projected current year over-expenditures. Campus administrative financial systems do not provide adequate management and SUMMARY OF ROOT CAUSES financial reporting capabilities for the multiple UW Technology has provided, and continues to revenue sources of most units, including their provide, the University with reliable, high quality self-sustaining activities. Current institutional information and communications technology and financial systems (i.e., Financial Accounting infrastructure. The staff consists of dedicated System (FAS), and Budget System) are not professionals with strong technical expertise who designed to support and integrate the multiple have helped to position the UW to be a premier revenue sources of most units, including research university. Even with a strong organization, activities funded with self-sustaining, grant- there are a number of root causes attributable to based and donor revenues. A complex coding both campus-wide events and practices, and to system in FAS fails to sufficiently define self- practices in UW Technology that have led to the sustaining activities
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