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ITIL :: View topic - Cost Vs Benefit
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Cost Vs Benefit

 
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mstickle
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Joined: Oct 09, 2007
Posts: 3

PostPosted: Tue May 13, 2008 1:41 am    Post subject: Cost Vs Benefit Reply with quote

Hi,

I'm looking for an effective way to measure the cost Vs benefit for Changes, so if for example, a request was raised that was said to generate 100,000 I want to be able to measure the cost of implementing the change to the amount of revenue it is said to generate. Some people have mention ROI calculations but I'm not sure if this is the right way to go (?) Does anyone have any ideas?

Thxs! Confused
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Diarmid
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Joined: Mar 04, 2008
Posts: 1884
Location: Newcastle-under-Lyme

PostPosted: Tue May 13, 2008 4:47 pm    Post subject: Reply with quote

Hi,

surely ROI is just a particular perspective on cost v benefit? As such, ROI is not a way of measuring but of perceiving and presenting.

Can you clarify what you mean by "effective"? otherwise I do not know how to describe "ways of measuring".
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"Method goes far to prevent trouble in business: for it makes the task easy, hinders confusion, saves abundance of time, and instructs those that have business depending, both what to do and what to hope."
William Penn 1644-1718
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kinger
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Joined: May 08, 2008
Posts: 39
Location: South West

PostPosted: Tue May 13, 2008 6:10 pm    Post subject: Re: Cost Vs Benefit Reply with quote

mstickle wrote:
Hi,

I'm looking for an effective way to measure the cost Vs benefit for Changes, so if for example, a request was raised that was said to generate 100,000 I want to be able to measure the cost of implementing the change to the amount of revenue it is said to generate. Some people have mention ROI calculations but I'm not sure if this is the right way to go (?) Does anyone have any ideas?

Thxs! Confused


Personally, my advice would be to use the CAB as your forum for this kind of decision. It needs to be made by business users in conjunction with the information they get fed back from the technical team.

This shouldn't be any different to any other business decision (for example, how did they decide/ prove that implementing change management would show a cost benefit?) and needs to be made by consulting with the right people at the right levels. I believe your challenge here will be finding who those people are and pitching it to the right audience, but once you have it right, the assessments should be reasonably swift, accurate and assits the change process.
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asrilrm
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Joined: Oct 07, 2007
Posts: 441
Location: Jakarta, INA

PostPosted: Wed May 14, 2008 12:19 pm    Post subject: Reply with quote

Hi,

You didn't mention to what context the Benefit/Cost analysis would refer.

In my experience, cost of implementing a change would only be cost of personnels involved in the implementation, which is the tangible cost.
Intangible cost like fallback cost, etc. are only budgeted and would be accounted after successful or failed implementation.

ROI is something you will have to calculate in the process prior to the implementation, which I believe is in the Feasibility Study for new development, or in the Term of Reference for modifying existing equipments.
In the context of ITIL Change Management Process, investments are not part of the process.
What it means is that you cannot use ROI to measure change implementation cost.

Ouch, I hope I'm not confusing

Asril
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Skinnera
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Joined: May 07, 2005
Posts: 121
Location: UK

PostPosted: Fri May 16, 2008 12:46 am    Post subject: Reply with quote

Hi - I would have said that this is a function of the Project or delivery team to assess whether what they planned and implemented actually delieverd the anticipated benefits to the org.

From my perspective, our bit of Chaneg Management is about protecting service when they do their techie stuff, not commenting on the merits of the overall activity.
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