ICT Asset Management Plan 2019/2020...ICT Asset Management Plan 2019/20 8 Life Cycle Ratio The life cycle indicator is a further view of Depreciation compared to Renewal expenditure.

ICT Asset Management Plan 2019/2020

** This document is a modified version of the Nams Plus template. The information contained in this document is obtained

from Nams Plus 3 web based program using data from Cassowary Coast Regional Council.


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Table of Contents

1. Asset Management Plan Context .................................................................................................... 3

2. Asset Class ....................................................................................................................................... 4

3. Indicators ......................................................................................................................................... 5

3.1. General .................................................................................................................................... 5

3.2. Financial .................................................................................................................................. 6

3.3. Condition ................................................................................................................................. 8

4. Financial Expenditure .................................................................................................................... 11

4.1. Total Costs ............................................................................................................................. 11

4.2. Renewal Expenditure ............................................................................................................ 12

5. Basis of Plan .................................................................................................................................. 12

6. Demand Forecast .......................................................................................................................... 12

7. Future Projection .......................................................................................................................... 13

8. Risk ................................................................................................................................................ 15

9. Next Steps ..................................................................................................................................... 16

10. Plan maturity ................................................................................................................................. 16

11. Technology Changes ...................................................................................................................... 17

12. Conclusion ..................................................................................................................................... 18

Appendix A. Asset Data ..................................................................................................................... 20

A.1. Asset List ............................................................................................................................... 20

A.2. Data used .............................................................................................................................. 20

A.3. Basis of Valuation .................................................................................................................. 21

Appendix B. Financial Information .................................................................................................... 22

B.1. Financial Summary ................................................................................................................ 22

B.2. Financial Statements and Projections ................................................................................... 22

B.3. Funding Strategy ................................................................................................................... 24

Appendix C. Demand Factors ............................................................................................................ 25

C.1. Customer Levels of Service ................................................................................................... 25

C.2. Legislation ............................................................................................................................. 27


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1. Asset Management Plan Context

ICT assets function differently from other major asset categories such as water, buildings or vehicles.

It is customary practice to group ICT assets round user tasks such as desktop telephones or printers.

Another grouping is security and non-security assets. Security assets control access to confidential,

sensitive or personal information. They function like a pass card to a hotel room. Hackers continuously

find ways through security and manufacturers plug security holes as regularly. When a manufacturer

ends support they stop plugging the holes that hackers continue to find. The longer an asset is used

beyond support the greater the risk of a security breach.

We could define the usable life of an ICT asset against economic criteria. A printer might function as

it did when acquired. Manufacturers continually develop new technologies to reduce the running

costs of their printers. At a certain point, the cheaper cost per page will mean that Council can save

money by replacing the printer even though it has not failed.

Manufacturers will make 2 or more generational changes to physical assets during their lifecycle. Each

generational change brings new or improved functionality to processing speeds and memory

addressing. Software vendors revise their applications and operating systems to take advantage of the

new features. New monitors are generally landscape and high resolution. Application providers have

upgraded their software to match landscape monitors. Someone using a low resolution square screen

would see a much reduced picture which is less sharp and this can give rise to user fatigue.

Another factor is application vendors such as TechnologyOne(T1) changing their platform solely to a

cloud based subscription service and not providing patches for existing local installations.

The definition of an ICT asset being at its end of life needs to be considered against several factors

including:

Security

Interoperability

User fatigue

Economy

Obsolescence

Change of platform

The ICT Asset Management Plan provides the financial and asset information only. It should be read

in conjunction with:

CCRC Asset Management Policy

CCRC Asset Management Strategy

CCRC What is Asset Management

CCRC Asset Management Definitions

CCRC Asset Management Portfolio

CCRC Non-Current Assets Disposal Policy

The objective of this Asset Management Plan is to provide an abridged view of the ICT Asset Status.


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2. Asset Class

This plan covers the ICT asset class.

Table 1 below shows the value of the assets by sub-class in Information Services:

Table 1: ICT Asset Values in 000’s

Class Quantity

Current Rep

Cost WDV

Accumulated

Depreciation

Annual

Depreciation

($'000) ($'000) ($'000) ($'000)

Audio/Visual Systems 2 14$ 11$ 3$ 2$

Desktop computers 223 271$ 112$ 159$ 54$

Fibre network 6 62$ 41$ 21$ 2$

Laptop computers 106 164$ 65$ 99$ 41$

Mobiles 224 78$ 32$ 46$ 26$

Monitors 222 69$ 31$ 37$ 14$

Printers MDF and Scanners 45 82$ 29$ 53$ 16$

Servers 18 174$ 27$ 147$ 35$

Storage 16 263$ 101$ 162$ 53$

Switches 120 148$ 90$ 58$ 30$

Tablets 95 57$ 20$ 37$ 19$

UPS 14 33$ 10$ 23$ 7$

Web Development - - - - -

Wireless Access 41 88$ 3$ 84$ 13$

Workstations 14 50$ 21$ 29$ 12$

Enterprise Resource Planning (ERP) 1 2,140$ 708$ 1,432$ 214$

1,147 3,691$ 1,301$ 2,390$ 537$


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3. Indicators

3.1. General

There are two aspects that indicate how Council is performing in managing the ICT network. The first

is the financial aspect and the second is the condition aspect. The age profile in 3.3 Condition shows

that 33% of ICT assets, or 18% by value, are two to three times past their design life. If an asset design

life is five years, three times design life means the asset is up to 15 years old. The current 10-year

financial plan includes a phased renewal of these assets over four to five years.

It should also be noted that this plan is based on a physical inventory of assets in use and the physical

inventory differs significantly from the assets recorded in TechnologyOne. For example, the

TechnologyOne asset was recorded on 14/11/2013 and 4.4 years of depreciation was recorded at the

same effective date. There is no other depreciation until 28/02/2017 when system generated

depreciation commenced. If the current depreciation amounts continue to the end of the asset life,

the total depreciation would be $2,368k against an asset value of $2,140k. Therefore, depreciation

appears to be overstated by about 1 years' worth. The physical assets will need reconciling with the

financial records to get an accurate base for the Asset Management Plan.

Figure 1 Comparison of 10 year profiles below compares the current incumbent asset plan lodged in

the system with the proposed asset plan based on the physical asset inventory. The current incumbent

Asset Management Plan (2018-19) was significantly understated across all sub-classes. Furthermore,

the current incumbent plan did not reconcile to the physical assets as so the asset values and renewals

were understated.

Figure 1 Comparison of 10 year profiles

-

$200k

$400k

$600k

$800k

$1,000k

$1,200k

$1,400k

$1,600k

$1,800k

1 2 3 4 5 6 7 8 9 10

Plan Years

Comparison of 10 year profiles

Current incumbent Asset Management Plan (2018-19) Proposed plan 2019


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3.2. Financial

The financial indicators provide a view on how CCRC is performing in the financial management of the

assets. They show that the ICT Asset Management is sustainable at the proposed budget levels.

Note that the NAMS model uses a simple flat rate depreciation based on the current depreciation

recorded in the ledgers. The current depreciation reflects assets that are in life only. As this plan

proposes to replace obsolete assets, the depreciation over the first few years of the plan will increase.

With no other changes, the depreciation would then stabilise round the program of recurring renewal.

However this plan includes asset spend to extend the life of the largest asset, T1, by 7 years before it

moves to an on demand subscription service. These spends will result in revaluation of the T1 asset

with accompanying changes in depreciation to the new end of life. Thereafter T1 asset renewal spend

will be replaced by operational expense reflecting the on demand consumption. The ratios below are

based on the assumed future state model.

As the ICT asset base is further audited and updated this plan can be updated with more accurate

information particularly for the variations in depreciation over time.

Financial Sustainability Ratio

This ratio tells Council whether it can afford to own the assets they currently have over the long term.

The figures include renewals and operating costs. If the average annual budget is less than the

required annual average renewal expenditure then Council is not able to maintain all the assets.

Options would be:

1. To remove non-vital assets from the asset base.

2. Allocate more budget so Council can maintain vital assets.

Vital assets would include assets relating to security, safety, complying with legislation or critical to

delivering the strategic goals.

Values are average annual amounts for a 10-year planning

period.

𝑃𝑙𝑎𝑛𝑛𝑒𝑑 𝑇𝑜𝑡𝑎𝑙 𝐵𝑢𝑑𝑔𝑒𝑡

𝑅𝑒𝑞𝑢𝑖𝑟𝑒𝑑 𝑇𝑜𝑡𝑎𝑙 𝐸𝑥𝑝𝑒𝑛𝑑𝑖𝑡𝑢𝑟𝑒=

$1,832𝑘

$1,847𝑘= 99%

ICT Value = 100%

Good = 90%

Acceptable = 80% to 90%

These values include all expenditure

The ICT Financial Sustainability Ratio demonstrates Council’s commitment to fund renewal in the ICT

asset class. The small shortfall in required expenditure has potential to be alleviated as selected ICT

assets move to a subscription basis and is not considered a significant risk at the moment.

80%

90%

100%99

Financial Sustainability Ratio


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Renewal Sustainability Ratio

This ratio tells Council the extent to which it is renewing assets against the requirement over the long

term to maintain the assets base in the correct condition. A sustained renewal rate below 100% would

mean that assets are degrading and not being replaced. This can lead to:

A diminished asset base

An increase in unplanned maintenance costs to fix assets when they fail.

Increased risk for safety or security.

Inability to deliver the required service level.

The required expenditure is obtained from technical analysis and planned expenditure is the budget

from the Long Term Financial Plan.


period.

𝑃𝑙𝑎𝑛𝑛𝑒𝑑 𝑅𝑒𝑛𝑒𝑤𝑎𝑙 𝐸𝑥𝑝𝑒𝑛𝑑𝑖𝑡𝑢𝑟𝑒

𝑅𝑒𝑞𝑢𝑖𝑟𝑒𝑑 𝑅𝑒𝑛𝑒𝑤𝑎𝑙 𝐸𝑥𝑝𝑒𝑛𝑑𝑖𝑡𝑢𝑟𝑒=

$923𝑘

$938𝑘= 98%

ICT Value = 100%

Good = 90%


Asset Consumption Ratio

The Asset Consumption Ratio provides an indication whether renewals are keeping pace with

consumption. Consumption is assumed to equal the annual depreciation of the asset as this has been

calculated to bring the asset value to zero when it is no longer useful as an asset. There are many

factors affecting the required expenditure on asset renewal such as damage or a change in

requirement or a change in legislation. There is a significant number of ICT assets that are well over

their design life as shown in section 3.3 Condition 'Figure 2 ICT Asset Aged Profile' and this ratio reflects

bringing them back into alignment to make them fit for purpose. IS plan to phase the renewal over

three to four years.

Annual depreciation is estimated from the physical asset inventory and not taken from the T1 system.


period with depreciation based on the assumed future state.

𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑅𝑒𝑛𝑒𝑤𝑎𝑙 𝐵𝑢𝑑𝑔𝑒𝑡

𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐴𝑛𝑛𝑢𝑎𝑙 𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛=

$923𝑘

$860𝑘= 107%

Good = 90%


80%

90%

100%107

Asset Consumption Ratio

80%

90%

100%98

Renewal Sustainability Ratio


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Life Cycle Ratio

The life cycle indicator is a further view of Depreciation compared to Renewal expenditure. If assets

renewal is keeping pace with consumption the ratio would be 100%. A ratio of less than 100% shows

a degrading asset base which is the case in prior years for ICT assets. As Information Services is bringing

this asset base back into alignment, renewals are greater than consumption giving the ratio greater

than 100%.

($000s) Life Cycle Cost Life Cycle Expenditure

Operations 909 909

Maintenance

Renewal 923

Depreciation 860

Total 1,769 1,832 Table 2: Life Cycle Expenditure and Cost


period.

𝐿𝑖𝑓𝑒 𝐶𝑦𝑐𝑙𝑒 𝐸𝑥𝑝𝑒𝑛𝑑𝑖𝑡𝑢𝑟𝑒

𝐿𝑖𝑓𝑒 𝐶𝑦𝑐𝑙𝑒 𝐶𝑜𝑠𝑡𝑠=

$1,832𝑘

$1,769𝑘= 104%

Good = 90%


A life cycle ratio above 100% would imply a growth in asset base however, in this plan, it is a recovery

of the asset base to the level needed to service Council's needs.

𝐿𝑖𝑓𝑒 𝐶𝑦𝑐𝑙𝑒 𝐺𝑟𝑜𝑤𝑡ℎ = 𝐿𝑖𝑓𝑒 𝐶𝑦𝑐𝑙𝑒 𝐸𝑥𝑝𝑒𝑛𝑑𝑖𝑡𝑢𝑟𝑒 − 𝐿𝑖𝑓𝑒 𝐶𝑦𝑐𝑙𝑒 𝐶𝑜𝑠𝑡𝑠

$1,832𝑘 − $1,769𝑘 = $63𝑘

This represents the average annual cost of rebalancing ICT assets.

3.3. Condition

Council generally estimates how long an asset will be useful before having to replace it. Therefore,

age is the common way of expressing asset life across all the different factors discussed in section 1

Asset Management Plan Context. This in part because technology improves and develops continuously

and in part because the moveable assets have a limited life. Once they fail they are completely

unusable and generally need replacing.

Enterprise systems have regular patches and maintenance updates which maintains their

functionality. They will be replaced when the functionality prevents the organisation from achieving

strategic goals.

80%

90%

100%104

Life Cycle Ratio


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Other assets such as servers and storage arrays need to have their operating systems kept up to date

to reduce their vulnerability to security breaches. Assets with operating systems that suppliers no

longer support have an elevated vulnerability to security breaches. Council has a number of assets

that are well over their design life as shown in 'Figure 2 ICT Asset Aged Profile' and 'Figure 3 Percentage

number and value of assets past design life' below. Ages are categorised by multiple of design life

because the design lives vary across asset sub-class.

Figure 2 ICT Asset Aged Profile

Figure 3 Percentage number and value of assets past design life


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15% of ICT assets by value are beyond their design life. Some as much as 4 times. Old Servers, storage,

switches and wireless network have the highest risk for Council with a security breach as their

vulnerability increases with age.

One of the aims of this asset management plan is to ensure no assets beyond their design life present

an unacceptable risk to Council. IS will achieve this over the next three to four years by bringing all

operating systems to the current version, replacing operating systems that suppliers are no longer

support and replace assets for which there are no upgrade options.

Another disadvantage of using obsolete assets is that new assets which will interface to the old assets

have to be configured to be backward compatible. This usually results in the performance and

capability of the new asset being constrained meaning that Council does not get full value of the

renewal investment.

Whilst retaining assets as long as possible saves Council money in one spending class, there are hidden

costs such as productivity which are likely to wipe out any savings. There are also further health risks

related to fatigue for the users.

IS will also investigate options to use subscription or cloud services as part of the business assessment

when renewing assets.


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4. Financial Expenditure

4.1. Total Costs

The Figure 4 Total ICT Asset Costs below shows the total costs of owning and managing ICT assets. This plan involves a renewal profile to bring the asset base back within the design life age profile. Therefore, there is no new Capital / Upgrade plan. Also, the disposal value of ICT assets tends to be very low as much is sold for scrap value, therefore the Disposal is assumed at nil value.

This renewal plan includes annual costs to extend T1 Ci (Connected Intelligence) useful life by 7 years. The benefit will be to allow the existing asset to operate alongside the next generation of T1, Ci Anywhere. T1 will cease to provide patches and support for their onsite version so Council must plan for this transition. It will also avoid a repeat of the $2.1M, or current day equivalent, investment to upgrade the onsite version in 2023.

Figure 4 Total ICT Asset Costs

The table below shows the data used in Figure 4 Total ICT Asset Costs.

Table 3 Total asset costs

Year 2019 2020 2021 2022 2023 2024 2025 2026 2027 202810 Year

Total

Operations $ 909 $ 909 $ 909 $ 909 $ 909 $ 909 $ 909 $ 909 $ 909 $ 909 9,087$

Capital Renewal $ 865 $ 1,151 $ 915 $ 745 $ 764 $ 1,026 $ 1,357 $1,022 $ 764 $ 625 9,234$

Total Expenditure $ 1,774 $ 2,060 $1,823 $1,654 $1,673 $ 1,935 $ 2,266 $1,931 $1,673 $1,534 18,321$

Budget Expenditure $ 1,774 $ 2,060 $1,823 $1,654 $1,673 $ 1,935 $ 2,266 $1,931 $1,673 $1,534 $ 18,321

Variance $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

All dollar values in ($'000)'s


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Due to the relatively small asset base in the ICT class and the significant cost of the individual assets

within the class renewal expenditure has significant peaks and troughs over time.

4.2. Renewal Expenditure

Figure 5 Renewals Projected vs Planned Costs shows the renewal requirement compared to planned

renewals. Whilst the ratios are based on annual averages for the first 10 years the actual annual costs

vary considerably.

Figure 5 Renewals Projected vs Planned Costs

In the next 10-year period Council is fully funding its renewals for the ICT class. This aligns with the

financial stability ratio in section 3.2 Financial on page 6.

5. Basis of Plan

Certain factors combine to provide input to the standard of asset that Council provides. The way

Council manages its ICT assets is influenced by Customer Service Levels, Technical Service Levels,

Legislative Requirements and Other Factors. Details of these factors can be found in 'Appendix C

Demand Factors' on page 25 or in Council’s ‘What is Asset Management” document.

6. Demand Forecast

Cassowary Coast population and economy are quite static showing neither significant growth nor decline. Managers in Council are not planning for any increases that would materially affect the ICT asset base.


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An increase in facilities available for public use could place a further demand on ICT services, however, managers are not planning these at the moment and they are therefore not included in this plan.

Other factors that will influence the demand forecast are future work practices such as moving from paper based job management to electronic records delivered to mobile devices such as rugged tablets. There is not enough information to form an opinion for this plan.

ICT assets comprise 0.1% of Council's total asset value.

7. Future Projection

The future projection includes migrating candidate assets to subscription services as they reach the

end of their useful lives or when economically advantageous. IS will prepare options to replace

physical assets with subscription of cloud services. This will change the future renewal projections and

will take time and effort to assess and plan. The changes are likely to be implemented over the period

2020 to 2024.

Candidate assets include:

Servers

Storage

Citrix

Enterprise systems such as TechnologyOne

And associated services

Moving assets to a subscription service will require significant planning to select the most beneficial

options for Council. There is likely to be a large amount of effort in re-engineering the business to

make the most of a move to subscription services. The most significant transformation would to T1's

cloud service. IS would need to remediate data storage and cleanse data before any moves. Remaining

systems would need reconfiguring so that the new subscription services run seamlessly alongside

inhouse services.

As Council moves assets that support ICT services to commoditised cloud-based subscription services,

roles will transform to managing contracts and supplier relationships. Council will be operating in a

federation of cloud-based suppliers and will need to develop new skills to work in that environment.

Council will also have to ensure that the new activities do no replace the old activities but that effort

to manage the new activities is much reduced from the existing levels. IS can then direct that effort

towards delivering higher value services to internal and to external customers.

Benefits and cost savings include:

Reduced risk of vulnerability as suppliers will manage patches and updates.

IS people will have space to focus on higher value activities to improve service quality and

asset management

Variable demand response if Council needs to increase or reduce capacity in a service.

Reduced risk of downtime

Access to development and Test environments that are easily turned off when not in use.

Rapid prototyping to develop proofs of concept with little upfront commitment.

Supporting special events that require large ICT capabilities.

Supporting business change programs that require new systems to be rapidly deployed.

Disaster Recovery (DR) environments that are rarely activated.


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Figure 6 Migration to subscription services' shows an example of the shift from asset expenditure to

operational costs starting in 2020/21. The example assumes a smooth transition of the candidate

assets to subscription service and a 30% reduction in costs over the renewal life. The candidate assets

would all move to subscription service at the end of 2024 /25 financial year. The assumptions would

need further work and the costs of preparing to migrate are not included in this example.

Each proposition to migrate to a subscription would be subject to in-depth investigations to assess the

risks and benefits when seeking business approval.

Figure 6 Migration to subscription services

The above assumes a simple pay-as-you-go consumption model similar to buying a train ticket or

renting a hire car. The actual accounting treatment of the subscription service will need to be

determined based on the specific form of contract.

The general basis of a cloud supply is that the supplier does not confer any right of asset ownership

to the consumer for software licences or physical assets. Fundamentally, providers want the ability to

balance load across their assets by using the server that best meets their needs at a specific time. This

means that it would be almost impossible to identify a specific asset associated with service supply to

a nominated customer. Therefore, a cloud service would fail to meet one of the fundamental tests to

be capitalised on the balance sheet, namely acquiring legal title to hardware or software assets or

legal rights to a particular asset.

-

500

1,000

1,500

2,000

2,500

-

500

1,000

1,500

2,000

2,500

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038

$0

00

Year

ICT Profile after migrating to subscription services assuming 30% saving on candidate

renewalsOperations Renewals Previous Profile


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Given the above, IS do not consider that the changes to AASB 9 Financial Instruments or AASB 16

Leases would require the subscription services to be capitalised. AASB 116 Property, Plant and

Equipment and AASB 138 Intangible Assets are unlikely to apply either.

Whatever the accounting practice, the ultimate goal is for Council to pay less cash for their individual

ICT services.

8. Risk

Risks are identified in IS risk management plan. The significant risks regarding this Asset Management

Plan are:

1. Technology Investment

2. TechnologyOne

3. Underspecified core assets

4. System vulnerability

5. Resource Erosion

6. Acceptance of moving from CAPEX to OPEX

Technology Investment

Investment in technology is not usually directly linked to driving service delivery. As such it can be a

target for budget cuts. Council has not renewed assets in the past with the consequence that some

core systems are increasingly vulnerable. Some of this renewal catch-up could be perceived as

providing Council manages and officers with shiny new toys. Therefore, Council needs develop clear

criteria for replacing assets. The criteria will include security, user fatigue, functionality and

economics. Council will need to communications carefully to ensure people understand what is being

replaced and why. Bringing these systems back to an acceptable level of security places a demand on

the existing resource and will result in added cost to Council.

TechnologyOne version upgrades

Failure of TechnologyOne to deliver

TechnologyOne does not have a track record of delivery in full and on time. This plan needs to

recognise potential delays and changes to functionality by allowing time and money over and above

the schedule to remediate any issues with T1

Underspecified Core Assets

As assets are being assessed for renewal, there are instances of the original asset being significantly

under-specified. When the correct specification is costed this can increase renewal costs by a factor

of 2 to 3 times. Basing budget assumptions on a like for like replacement carries the risk that the actual

renewal, when correctly specified, will cost considerably more. This in turn impacts budget estimates

and cash flow forecasting.

System Vulnerability

As assets age enough beyond their design life, they will reach a point where suppliers will no longer

support them. They will also be further removed from being able to operate with newer technologies.


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Data#3 conducted a vulnerability assessment in 2018 and identified a range of vulnerabilities across

servers, storage and applications. The vulnerability assessment will be a significant factor in prioritising

candidates for subscription services.

Operating systems that cease to be supported have a heightened vulnerability to intrusion malicious

programs. Council must reduce this risk by making sure the existing systems are renewed before they

become vulnerable.

Resource Erosion

With the local economy and population being relatively flat Council is likely to suffer an erosion of

resources because payroll awards and suppliers price increases could outstrip income. This will result

in a shortage of funds for renewals.

This risk can be offset to some extend by shifting from a fixed ICT infrastructure to scalable

subscription-based ICT services. This will even out the peaks and troughs of different asset renewal

cycles particularly when their renewal dates coincide.

Acceptance of moving from CAPEX to OPEX

Culture and practice within Council has evolved round owning and managing assets. The move to

subscription-based ICT services will give the appearance that IS is increasing operating costs

disproportionately to other departments. There is a risk that Council decides to swap asset renewals

for increased but predictable operating costs and then constrains ICT operating costs. The outcome

would be that IS services would fall below the level expected by internal customers. If this happened

with services to external customers, Council could suffer reputational damage.

9. Next Steps

The next steps are summarised in Council’s Asset Management Definitions Documents where they are

common across all asset classes. The next steps specific to ICT are listed in 'Table 4 Improvement Plan'

below.

Task Responsibility Timeline

Fix security risks in priority as detailed in Data#3

Vulnerability Assessment Report

Administrator

Network

Systems

2019-2020

Undertake ICT Stock take 2018-19 Administrator

IT Support

2018-19

Adoption of Information Transformation 2019 -

2023 Positioning Paper

Manager

Information

Services

2018-19

Cleanse asset data and move to a coherent data

set correctly integrated to the financial ledgers

Administrator

IT Support

2018-19


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Task Responsibility Timeline

Audit specifications of all core assets and update

with current performance requirements

Administrator

IT Support

2019-2020

Update renewal costs against revised

specifications for core assets

Administrator

IT Support

2019-2020

Revise renewal cost budget for next 10 years Manager

Information

Services

2019-2020

Develop functional and non-functional

requirements for each type of subscription

services

Manager

Information

Services

2019-2020

Prioritise assets for migration to subscription

services

Manager

Information

Services

2019-2020

Identify vendors and arrange for demonstrations Manager

Information

Services

2019-2020

Table 4 Improvement Plan

Plan maturity

This Asset Management Plan is in its initial stages. The current incumbent Asset Management Plan

(2018-19) does not reconcile to the physical inventory check. Therefore, there are assets for which

the depreciation records would need to be checked to assure the probity. A sampling exercise to check

whether the assets were fit for purpose found a high proportion of the sample were below the

required specification even when they were installed. This means that Council will need to renew

those assets with the current specification which will increase the cost of renewals estimated in this

plan.

10. Technology Changes

Technology changes on a short time frame with generational change every five years at the moment.

The rate of change is likely to increase. Key disruptive technology influencers for Council include:

• Internet of Things

• Automation

• Artificial Intelligence

Internet of Things (IOT) brings ever increasing connectivity to everyday objects. Whilst this has many

benefits in speeding communications, it also brings challenges. Increased connectivity means

increased opportunities for security breaches. IOT create and share lots of data which users need to

move and store.


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Artificial Intelligence is likely to play a part in deciding what to do with captured data.

IOT could reduce costs of tracking assets and monitoring their performance. Combined with Artificial

Intelligence (AI) this could reduce unplanned maintenance costs and lead to other savings in other

asset management areas.

Automation combined with IOT and AI could bring significant savings in operating expenditures across

Council. Machines can execute the many jobs that require humans to follow procedures. Once mature.

AI could provide the judgement and intuition that a supervisor applies today.

Technology change has potential to help Council deliver basic services and allow people to

concentrate on the more complex services. Whilst the technologies have yet to mature, the ever faster

rate of change may make some opportunities available over the 10 year life of this asset management

plan.

11. Conclusion

ICT Asset Management Planning is all about enabling people, from Council staff to the community we

serve. In common with other service organisations, almost every role in Council depends on the ICT

assets to perform their tasks. The ICT assets have evolved considerably from their first inceptions. For

example, the mobile phone has transformed from a peer-to-peer audio device to a powerful multi-

function mobile computer. It provides calendar functions, navigation, job tasking and timekeeping

amongst its many capabilities. These capabilities will continue to grow.

Reliance on ICT assets has grown exponentially over the past decade. Time between major changes

gets shorter. There are increasing numbers of ways that technologies interact. Many technologies

have comparatively short lives before being superseded by the next generation or new invention.

Most technologies will go through two to three generations within their lifecycles. Forecasters need

to account for demand growth as well as delivery models. Predicting when an investment will become

redundant becomes increasingly hard with rapidly emerging disruptive technologies. As technologies

become more interconnected Councils reliance on them to deliver services increases. Forecasting

asset renewals accurately against this background becomes a challenge.

These evolving technologies are also driving new service models. The choices for delivering ICT

services now include attractive subscription options. Large commercial service providers can hire

expensive specialists and defray their costs over many customers. Smaller ICT providers cannot afford

to employ many specialists. Subscription services are attractive because of their consistent quality and

on-demand supply. The service provider takes away the management effort of security, disaster

recover, business continuity and configuring development environments. This leaves the local ICT

organisation capacity to monitor and to improve services, so they match their internal and external

customers' needs. However, it adds the challenge of changing the service costs from capital to

operating and having to apply different accounting standards and planned cash requirements.

Planners need to address these issues urgently.


19

This asset management plan is designed to make the most efficient and effective use of the existing

assets whilst moving to the most economic and effective delivery model. In doing that it will:

Take advantage of disruptive technologies, balancing risk and benefit, when replace obsolete

assets

Consider seriously using subscription services to replace fixed assets whenever possible and

beneficial.

Reduce the percentage number of assets passed their useful life from 33% to zero.

This asset management plan will need regular reviews reflecting the rapidly changing nature of

technology solutions and the continued rise of disruptive technologies. Whilst responsibility for

delivering ICT solutions rests with IS, other departments in Council share the organisational

responsibility for prioritising investment and maintenance of the ICT assets that underpin and enable

almost every function within Council.

Anthony Wilson Manager Information Services


20

Appendix A. Asset Data

A.1. Asset List

See the category listing in 'Table 1: ICT Asset Values in 000’s in section 2 Asset Class above

A.2. Data used

Table 5 Data used in this Asset Management Plan

2019

ICTAsset values at start of planning period Calc CRC from Asset Register

$3,691 (000) $0 (000) % of asset value

$3,691 (000) This is a check for you. 24.62%

$2,390 (000) 0.00%

$537 (000) 14.55%

Planned renewal budget (information only)

Planned Expenditures from LTFP You may use these values

calculated from your data

2019 values or overwrite the links.

Financial year ending 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028$000 $000 $000 $000 $000 $000 $000 $000 $000 $000

Expenditure Outlays included in Long Term Financial Plan (in current $ values)

Operations budget $909 $909 $909 $909 $909 $909 $909 $909 $909 $909Management budget $0 $0 $0 $0 $0 $0 $0 $0 $0 $0AM systems budget $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total operations $909 $909 $909 $909 $909 $909 $909 $909 $909 $909

Reactive maintenance budget $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Planned maintenance budget $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Specific maintenance items budget $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total maintenance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Planned renewal budget $865 $1,151 $915 $745 $764 $1,026 $1,357 $1,022 $764 $625

Planned upgrade/new budget $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Non-growth contributed asset value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Asset DisposalsEst Cost to dispose of assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Carrying value (DRC) of disposed assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Additional Expenditure Outlays Requirements (e.g from Infrastructure Risk Management Plan)

Additional Expenditure Outlays required 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 and not included above $000 $000 $000 $000 $000 $000 $000 $000 $000 $000

Operations $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Maintenance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Capital Renewal to be incorporated into Forms 2 & 2.1 (where Method 1 is used) OR Form 2B Defect Repairs (where Method 2 or 3 is used)

Capital Upgrade $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

User Comments #2

Forecasts for Capital Renewal using Methods 2 & 3 (Form 2A & 2B) & Capital Upgrade (Form 2C)

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Forecast Capital Renewal $000 $000 $000 $000 $000 $000 $000 $000 $000 $000

from Forms 2A & 2B $865 $1,151 $915 $745 $764 $1,026 $1,357 $1,022 $764 $625

Forecast Capital Upgrade

from Form 2C $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Annual depreciation expense

Operations

Maintenance

Capital

20 Year Expenditure Projections Note: Enter all values in current

Depreciable amount

Depreciated replacement cost

Current replacement cost

ICT_S2_V3 Asset Management Plan

Cassowary Coast RCNAMS.PLUS3 Asset Management

Additional operations costs

Additional maintenance

Additional depreciation

First year of expenditure projections

© Copyright. All rights reserved. The Institute of Public Works Engineering Australasia

(financial yr ending)

for New AssetsOperations and Maintenance Costs


21

A.3. Basis of Valuation

Table 6 Standard Lives, Costs and Contribution to Total Depreciation

Class

Useful

Lfe

Number

of assets

Current Rep

Cost

Annual

Depreciation

% contribution

to depreciation

($'000) ($'000)

Audio/Visual Systems 5 2 14$ 2$ 0.4%

Desktop computers 5 223 271$ 54$ 10.1%

Fibre network 25 6 62$ 2$ 0.5%

Laptop computers 4 106 164$ 41$ 7.6%

Mobiles 3 224 78$ 26$ 4.9%

Monitors 5 222 69$ 14$ 2.6%

Printers MDF and Scanners 5 45 82$ 16$ 3.1%

Servers 5 18 174$ 35$ 6.5%

Storage 5 16 263$ 53$ 9.8%

Switches 5 120 148$ 30$ 5.5%

Tablets 3 95 57$ 19$ 3.5%

UPS 5 14 33$ 7$ 1.2%

Web Development 7 - - - -

Wireless Access 7 41 88$ 13$ 2.3%

Workstations 4 14 50$ 12$ 2.3%

Enterprise Resource Planning (ERP) 7 1 2,140$ 214$ 39.8%

1,147 3,691$ 537$


22

Appendix B. Financial Information

B.1. Financial Summary

This section contains the financial requirements resulting from all the information presented in the

previous sections of this asset management plan. The financial projections will be improved as further

information becomes available on desired levels of service and current and projected future asset

performance.

B.2. Financial Statements and Projections

The financial projections are shown in 'Figure 4 Total ICT Asset Costs' in section 4.1 Total Costs above

for projected operating (operations and maintenance) and capital expenditure (renewal and

upgrade/expansion/new assets). Note that all costs are shown in real values.

Providing services in a sustainable manner will require matching of projected asset renewal and replacement expenditure to meet agreed service levels with the corresponding capital renewal program accommodated in the long-term financial plan.

A gap between projected asset renewal/replacement expenditure and amounts accommodated in the LTFP indicates that further work is required on reviewing service levels in the Asset Management Plan (including possibly revising the LTFP) before finalising the asset management plan to manage required service levels and funding to eliminate any funding gap.

We will manage the ‘gap’ by developing this asset management plan to provide guidance on future service levels and resources required to provide these services, and review future services, service levels and costs with the community.

Projected expenditures for long term financial plan are shown in Table 7 Projected Expenditures for Long Term Financial Plan . This shows the budget renewals and the Long Term Financial Plan are balanced as there are no gaps or surpluses.


23

Table 7 Projected Expenditures for Long Term Financial Plan

Table 8 Projected Expenditure shows the projected expenditures for the 10-year long term financial plan. Expenditure projections are in 2019 real values.

Table 8 Projected Expenditure

Year End

Jun 30

Projected

RenewalsLTFP Renewal

Renewal

Financing

Shortfall

Cumulative

Shortfall($'000)

($'000) ($'000) ($'000) ($'000)

2019 $865 $944 - - 2020 $1,151 $1,236 - - 2021 $915 $881 $1 $12022 $745 $809 - $12023 $764 $715 - $12024 $1,026 $1,002 - $12025 $1,357 $1,375 - $12026 $1,022 $997 - $12027 $764 $810 - $12028 $625 $660 - $12029 $699 $814 - $12030 $685 $836 - $12031 $487 $546 - $12032 $430 $405 - $12033 $417 $344 - $12034 $557 $745 - $12035 $799 $924 - $12036 $582 $533 - $12037 $312 $416 - $12038 $260 $336 - $1

Year Operations MaintenanceProjected Capital

Renewal

Capital Upgrade /

NewDisposals

($'000) ($'000) ($'000) ($'000) ($'000)

2,019 $ 909 $ - $ 865 $ - $ - 2,020 $ 909 $ - $ 1,151 $ - $ - 2,021 $ 909 $ - $ 915 $ - $ - 2,022 $ 909 $ - $ 745 $ - $ - 2,023 $ 909 $ - $ 764 $ - $ - 2,024 $ 909 $ - $ 1,026 $ - $ - 2,025 $ 909 $ - $ 1,357 $ - $ - 2,026 $ 909 $ - $ 1,022 $ - $ - 2,027 $ 909 $ - $ 764 $ - $ - 2,028 $ 909 $ - $ 625 $ - $ - 2,029 $ 1,359 $ - $ 699 $ - $ - 2,030 $ 1,359 $ - $ 685 $ - $ - 2,031 $ 1,359 $ - $ 487 $ - $ - 2,032 $ 1,259 $ - $ 430 $ - $ - 2,033 $ 1,359 $ - $ 417 $ - $ - 2,034 $ 1,359 $ - $ 557 $ - $ - 2,035 $ 1,359 $ - $ 799 $ - $ - 2,036 $ 1,259 $ - $ 582 $ - $ - 2,037 $ 1,359 $ - $ 312 $ - $ - 2,038 $ 1,359 $ - $ 260 $ - $ -


24

This plan involves a renewal profile to bring the asset base back within the design life age profile. Therefore, there is no Capital / Upgrade budget. Also, the disposal value of ICT assets tends to be very low as much is sold for scrap value, therefore the Disposal is assumed at nil value.

B.3. Funding Strategy

After reviewing service levels, as appropriate to ensure ongoing financial sustainability projected expenditures previously identified will be accommodated in the Council’s 10-year long term financial plan.

The depreciated replacement cost or Net Book Value will vary over the forecast period depending on

the rates of addition of new assets, disposal of old assets and consumption and renewal of existing

assets. Forecast of the assets’ depreciated replacement cost is shown in Figure 7 Projected

Depreciated Replacement Cost. The depreciated replacement cost relates to renewing existing assets

only. The reduction in later years reflects T1 moving to Ci Anywhere where the renewals are likely to

be more of an operational expense.

Note that the NAMS model applies depreciation at the flat dollar rate for each year of the plan. This

approach does not accommodate two key aspects of this plan.

1. With a catch up scenario this understates depreciation and gives the impression that IS is

increasing the ICT asset base.

2. T1 depreciation accounts for about 40% of the depreciation charge and is due to end in 2023.

The depreciation associated with the annual spend included in renewals to extend the useful

life by 7 years will influence the Depreciated Replacement Cost and that effect is not catered

for in NAMS.

The graph below should be considered as indicative as it is based on an average percentage

depreciation per asset class rather than a detailed analysis by individual asset.

Figure 7 Projected Depreciated Replacement Cost

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

DR

C (

$000

s)

Year

Projected Depreciated Replacement Cost (ICT_S2_V3)

Existing Assets ($000)'s New Assets ($000)'s


25

Appendix C. Demand Factors

C.1. Customer Levels of Service

All activities performed by Council are defined in accordance with the four Scope Levels and five risk consequences. IS response times are based on scope and consequence.

Scope levels are:

1. Enterprise 2. Business 3. Work Group, or 4. Individual.

This classification is used to assess the scope in terms of how many people will be affected if an IS

service is compromised or fails to deliver; and the flow-on effect in terms of Public or Organisational

impact of any service failure.

Scope Definition

Enterprise Any activity that supports Council-wide multi-division business functions and

processes and whose failure, corruption or degradation would cause large scale

interruption to business processes; negatively impacting multiple divisions, and

directly impeding Council’s ability to conduct business. Such activities will typically

involve real-time exchange of information between a range of council business

applications.

Business Activities that support divisional functions whose failure, corruption or degradation

would limit the ability to provide core divisional services, or whose interruption

would remove service availability from significant council locations. Such activities

may share information with other council activities (including Enterprise level) but

would typically to so on a deferred basis (e.g. batched on other defined interface).

Business activities will typically be those whose unavailability would be visible to the

public or are integral to meeting council’s statutory responsibilities.

Work Group Activities that support the functions of individual departments or workgroups (that

are not core business processes of a division) or provide infrastructure to specific

council locations. Delivery failure will cause isolated disruption which may be

addressed through local work-around or work rescheduling and involve processes

that are not time-critical to Enterprise level or Business level activities.

Individual Activities that support the work of individuals or groups of individuals on a stand-

alone basis. Delivery failure or interruption will be isolated.

Table 9 Customer Scope Levels


26

Risk consequences are:

Consequence Public / Customer Impact Reputation Organisational Impact

Catastrophic Organisation wide inability

to operate one or multiple

sites of operation. Inability

to meet customer

expectations.

Delivery failure leads to

legislation breach exposing

council executive to legal

action. Fallout leads to high

levels of negative or

ongoing government and

media exposure.

Delivery failure could lead

to direct property or

environmental damage;

personal injury or fatality;

or significant financial loss.

Major Inability to operate at a

local level. Some areas

unable to meet customer

expectations.

Delivery failure risks

compliance or impacts high

profile Council initiatives;

results in major asset

embezzlement; or brings

damaging publicity or

government attention.

Delivery failure risks

property or environmental

damage; threatens Council

cash flow (including payroll)

or delays availability of

mission critical information.

Moderate Disruption of a number of

aspects of operations at a

local level. Some impact on

meeting customer

expectations.

Delivery failure will be

brought to the attention of

government. Some media

attention expected.

Customer complaints likely.

Delivery failure delays

availability of decision

support information or

impact departmental cash

flow.

Minor Some disruption to

operations at a local level.

Little impact on meeting

customer expectations.

Limited government and

media attention, some

complaints could be

expected.

No financial impact beyond

work group productivity.

Insignificant Little or no interruption to

operations at local level.

Nil impact on meeting

customer expectations.

Limited or no media

attention, limited or no

complaints.

No financial impact beyond

individual’s productivity.

Table 10 Failure Risk Consequences

Response times

IS would target response times are shown below. Resolution times would depend on the type of failure

and resources to fix.

Table 11 Target Response times


27

C.2. Legislation

The following is the relevant legislation relation to the provision and ownership of ICT Assets.

Legislation Requirement

Local Government Act 2009 The purpose of this Act is to provide for the way in which a local government is constituted and the nature and extent of its responsibilities and powers and a system of local government in Queensland that is accountable, effective, efficient and sustainable.

Sets out role, purpose, responsibilities and powers of local governments including the preparation of a long term financial plan supported by asset management plans for sustainable service delivery.

Australian Accounting Standards

As the basis of providing moves from a local asset base to subscription services, applicability of AASB 9 Financial Instruments or AASB 16 Leases may need to be checked depending the contractual basis of the ICT consumption.

Table 12 Legislation