se itsm measuring value of itil

Measuring the Value of ITIL

Learn how to reduce risk and increase IT contribution, measuring the value and building

a business case for ITIL deployment.

SE ITSM

Agenda

• IT challenges • Transforming IT into a strategic asset• Building the Business Case• How SoftExpert ITSM reduces risk and

increases reward

IT challenges

• Executives concerns– To meet the changing demands– To provide tangible evidence of alignment– Move beyond the image of IT as a cost center– Be seen as an innovator and business enabler

• Business challenges– To increase revenue and profits– To improved efficiencies– To deliver more value to consumers and citizens

IT challenges

Understand the business needs

Understand how IT activities can

assist the business

Provide value in the form of

services

Examine risk and reward

Transforming IT into a strategic asset

Use ITIL best practices.

Focus on people, process, products and partners.

Goal towards efficiency, equity, economy and effectiveness

Manage IT as an investment portfolio.

Produce Investment Return

Building the Business Case

• Monetary considerations– Cost savings – Cost avoidance– Increased revenue – Increased productivity

• Non-monetary considerations– Customer satisfaction– Market share– Social value– Environment impact

ITIL

Building the Business Case

Optimized and Added Value Service Delivery

Proactive Service Delivery

Best Practice Service Delivery

Service Delivery Consistency and Repeatability

Incident and Problem Management

Mat

urity

Sta

ges

Building the Business Case

• Incident and Problem Management– Concerned with stabilization of existing services.– Efficient and effective management of calls.– Justifications for investments based on cost

savings.

Building the Business Case

• Incident and Problem Management– Cost per Time Unit = [___ (percent) of

productivity lost x ___ (currency) cost per time unit of labor] + [___ (percent) of revenue lost x ___ (currency) revenue at risk in time period] + [___ any other significant costs per time, including loss of good will, SLA violations, etc.]

– [90% x $400] + [100% x $100] = [$360] + [$100] = $460/hour

Building the Business Case

• Incident and Problem Management– Cost of Delay in Incident Resolution = ___ (time)

of delay x $___ (currency) cost of impact per time unit

– Total Cost Saving per Incident = ___ (currency) cost of delay in Incident resolution + ___ [(currency) total cost of all labor involved in managing Incident x 50%]

Building the Business Case

• Incident and Problem Management– Total Cost Savings per Year = ___

[(currency) total cost savings per issue x (number) issues of type 1/year] + ___ [(currency) total cost savings per issue x (number) issues of type 2/year] + ___ … + ___ [(currency) total cost savings per issue x (number) issues of type n/year]

Building the Business Case

• Success cases– Visa: reduced the time to resolve Incidents by 75%.

Smart Enterprise Magazine

– Nationwide Insurance: $4.3 million ROI. CMP

– Caterpillar: response time for Incident Management jumped from 60% to more than 90%.

– Capital One: • 30% reduction in systems crashes and software-

distribution errors• a 92% reduction in “business-critical” Incidents.

Computerworld

Building the Business Case

• Service Delivery Consistency and Repeatability– Focus on setting and meeting Service Level

Agreements (SLAs).– Introducing processes that support and drive

service effectiveness.– Prevention and management of breached

incidents, calls and cases.

Building the Business Case

• Service Delivery Consistency and Repeatability– Cost of Incident Backlog = ___ (number) of

outstanding incident x ___ (currency) total cost savings per incident

– Cost of Rework = ___ (currency) total cost of resolution per Incident x ___ (number) incident resolution attempts.

– Impact of SLA breaches = cost of impact per time unit

Building the Business Case

• Success Case– Raymond James Financial Inc.: number of calls to

the Help Desk dropped by 25%. Computerworld

– Avaya: cut their IT budget by 30%. Techworld

– Telkomsel: helped reduce operational IT costs by 50-60%. Computerworld UK

Building the Business Case

• Best Practice Service Delivery– Change management– Consistent processes– Impact of Change = ___ (currency) cost per time

unit of unintended consequences + ___ (currency) cost of rework

Building the Business Case

• Best Practice Service Delivery– The Impact of Not Having Effective Processes: – Step 1: score the health of each process on a scale of 0 to 100.

• 0 – process does not exist• 1 to 10 – process is severely impaired• 11 to 39 – process is functioning but has significant issues• 40 to 60 – process is generally functioning well but suffers periodic

problems• 61 to 89 – process is very reliable and consistent but is not optimized• 90 to 100 – these scores are reserved for highly efficient and effective

processes

Building the Business Case

• Best Practice Service Delivery– The Impact of Not Having Effective Processes: – Step 2: convert the process score to a process value:

• divide the process score by the total number of processes under evaluation

• Add together the process values for all of the processes– 0 to 10 –stage 1 business case – 11 to 39 – establish basic quality objectives – 40 to 60 – needs to improve processes.– 61 to 89 –needs deliver significant value.– 90 to 100 –Stage 5 business case

Building the Business Case

• Best Practice Service Delivery– Labor Cost Savings = ___ (percent) of productivity

lost x ___ (currency) cost per time unit of labor for given employee x ___ (number) amount of time saved :

Building the Business Case

• Success Case– State of North Carolina:

• Improved incidents resolution by 32%.• Improved Service Requests response by 20%• Change Management process compliance increased more

than 100%. ITIL V3: Continual Service

– Ontario Justice Enterprise: cut support costs by 40%. Network World

– JPMorgan Chase:• 93% customer satisfaction ratings • 75% first-call resolution rate. Computerworld UK

Building the Business Case

• Proactive Service Delivery– Aims to meet both current and future organizational

requirements.– Introduction of a centralized processes for investment

decisions.– focused on value added that comes from IT

innovations .

Building the Business Case

• Proactive Service Delivery– Benefit from Value Added Activities = ___ (currency)

value of new business enabling services + ___ (currency) value of IT driven innovations

– Improved Prioritization of Investment Decisions = ___ (currency) value of newly chosen investments – ___ (currency) value of de-prioritized investments

Building the Business Case

• Success Case– Procter & Gamble:

• 6% to 8% cut in operating costs• reduced Help Desk calls by 10%. Network World

– Shell: savings of 6,000 staff-days and $5 million dollars annually. Smart Enterprise Magazine

– Finisar: • increased customer satisfaction to 95%. • cut the amount spent on IT from 4% of revenue to

2.4%. CIO Magazine

Building the Business Case

• Optimized and Added Value Service Delivery – Focus on delivering of added value.– Attainment of cross-organizational best practices.– Excellence beyond best practices.– Benefits from Driving Business Innovation and

Success = ___ (currency) value of access to new customers + ___ (currency) value of share taken from competitors + ___ (currency) value of competitive differentiators + ___ (currency) value of other business innovation activitie

Building the Business Case

• Optimized and Added Value Service Delivery – Value of Continual and Dynamic Management = ___

(currency) value of continually detecting and responding to customer needs + ___ (currency) value of continually detecting and responding to competitive threats + ___ (currency) value of continually detecting and responding to new opportunities

Building the Business Case

• Success Case– State of Illinois: saved over $130 million annually. Public CIO

– Victorian State Revenue Office: saved $2 million annualy. ZDNet

– MeadWestvaco: • Saved more than $100,000 annually.• 10% gain in operational stability. CIO Magazine

Summary of benefits

• Improve resource utilization• Be more competitive• Decrease rework• Improve upon project deliverables and time• Improve availability, reliability and security of mission critical

IT services• Justify the cost of service quality• Provide services that meet business, customer and user

demands• Provide demonstrable performance indicators

ITIL book reference

• The following assumptions are made:– All employees cost $50 an hour– Your organization comprises 500 Users– The total number of Incidents is 5,000 per year– The average time to fix an Incident is ten minutes– A working year has 200 days

ITIL book referenceProcess Purpose Cost/Benefit Examples

IncidentManagement

Continuity of the service levels underpin Service Desk function.

The implementation of Incident Management has resulted in a decrease in down time per user. If the downtime per user is reduced by one minute per person per day, this would save the organization 500 * 200 * $50 * 1/60 = $83,300 per year.

ITIL book referenceProcess Purpose Cost/Benefit Examples

Problem Management Minimize disruption of the service level.

Suppose that the implementation of Problem Management decreases the number of recurring incidents by 500 (10% of total) per year. This means a revenue of 500 * $50 * 10/60 = $4,000 per year.

ITIL book referenceProcess Purpose Cost/Benefit Examples

Change Management Efficient handling of changes.

Two changes are implemented simultaneously, resulting in a major problem. The customer support system fails, resulting in the loss of 50 Customers with an average purchasing power of $500. This has just cost your company $25,000 potential revenue.

ITIL book referenceProcess Purpose Cost/Benefit Examples

IT Assets & Configuration Management

Controlling the IT infrastructure. Ensuring that only authorized hardware and software are in use.

Following the implementation of Configuration Management, the Service Desk has a much greater insight into the relationship between users, configuration items and incidents. The three people assigned to incident matching can be reduced to two, resulting in a benefit of 200 * 8 * $50 = $80,000 per year.

ITIL book referenceProcess Purpose Cost/Benefit Examples

IT Service Continuity Management

Ensure quick recovery after a disaster.

A water pipe breaks, flooding the server room. It takes two days to be operational. The average User has missed 10 hours of work. Total costs (apart from the pumping): 500 * 10 * $50 = $250,000. Please note that a good contingency plan is not cheap; However, the recovery costs (as in this example) could be dramatic.

ITIL book referenceProcess Purpose Cost/Benefit Examples

Financial Management Provide insight, control and charge the costs of IT services.

Imagine that the true costs of delivering IT services are charged back, or at a minimum communicated to the business customers that use them. If this resulted in a 10% reduction in the requests for new services, this would directly result in a reduction of IT expenditures.

SoftExpert IT Service Management

Enabling and Sustaining IT Services

SE ITSM

CPM

BPM

ITSM

ECM

EAM

GRC

HDM

Capabilities

Business Strategic Planning

IT Strategic Planning

Mission /Values /Objectives...

Risk Management

Strategic Initiative Management

Process Management

Quality Management

IT Human Resource Management

Project and Service Management

Incident and Problem Management

Change Management

Capacity and Availability Management

Finance Management

IT Performance Management

Monitoring and Control

Excellence and Compliance Management Software

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