'Seat' sows confusion

• By Diane Frank
• Apr 24, 2000

One year after agencies began signing up for the General Services Administration's

desktop outsourcing program, most customers remain focused on — and befuddled

by — the costs involved.

The GSA Seat Management program, through which eight vendors are offering

desktop management services, is designed as a services procurement, but

agencies approach it more as a hardware buy, said Christopher Wren, Seat

Management program director at the GSA Federal Technology Service's Office

of Information Technology Integration.

"People are still focused on the hardware costs," Wren said. "The federal

government has gotten very good at buying boxes...but that's not the real

issue here."

The Seat contract does include new hardware and software, as well as

"refresh" clauses to bring in new technology as it becomes available. But

the costs are based on the support services associated with managing those

systems. So what the agency is spending per seat is not so much an issue

of the hardware but of the supporting services.

For example, one agency can specify a computer with an Intel Corp. Pentium

III 500 MHz processor and pay $200 less per seat than an agency that asked

for a system with a lower-grade Intel Celeron 450 MHz processor. Why? The

first agency has told the vendor that its systems can be monitored remotely,

which costs less than the second agency's requirement that the vendor have

three technicians on site.

"The price is a function of what goes into the "seat,' " Wren said. "So

is a $2,000 seat right for you? It depends on what your needs are."

Phil Kiviat, a federal market consultant helping agencies make their

Seat Management decisions, agreed. But the problem with understanding seat

management costs is exacerbated by the fact that agencies "do not have a

good way of measuring [the] value" of the management services, he said.

That lack of understanding is something that GSA and consultants have

been trying to explain to agencies for more than a year, Kiviat said. But

agencies often are focusing on the hardware costs because those are much

easier to comprehend. "It's easy to count the cost of things and products;

it's hard to calculate the value of a service," Kiviat said.

Another problem is that agencies still do not know how much they are spending

now nor what they are spending it on, Wren said. In the past year, more

than 60 agencies have gone through total cost of ownership studies, and

many plan to use these studies as a benchmark against which to measure future

IT spending.

"To get a good "warm fuzzy,' you want to know what you're paying today;

where your strengths and weaknesses are," Wren said.

Agencies still need to understand that spending less money is not always

the best business plan. "A low cost of ownership may not be a good thing — it may mean you are under-invested," Wren said.

Five agencies have signed up for services that the eight vendors on the

contract offer, and others are looking. Earlier this month, the Peace Corps

awarded Federal Data Corp. a five-year, $16.9 million task order for managing

885 seats.