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ITIL :: View topic - Demonstrating the ROI to a customer
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Demonstrating the ROI to a customer

 
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nzmoko
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PostPosted: Tue Jun 15, 2010 12:59 pm    Post subject: Demonstrating the ROI to a customer Reply with quote

Our organisation sells Problem Management explicitly as a service - we have a lot of customers that buy into the service and have a leveraged team of 14 Problem Managers.

I'm keen to get your views on how you sell the benefits of Problem Management to the business/customer.

Typically, we use a ROI calculator based on incident reduction as a direct result of problem management activity to demonstrate what could be achieved over a 12 month period.

Incident reduction and a reduction in repeat incidents/problems are important... what else?
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Diarmid
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Location: Newcastle-under-Lyme

PostPosted: Tue Jun 15, 2010 5:58 pm    Post subject: Reply with quote

Incident prevention.

But calculating the ROI is a bit tricky when its about something that did not happen.
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Timo
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PostPosted: Wed Jun 16, 2010 1:41 am    Post subject: Reply with quote

"Incident reduction and a reduction in repeat incidents/problems are important... what else?"

faster handling and resolution of incidents due to availability of known errors and workarounds that your incident management has access to and can extract valuable info from.

I agree with Diarmid, that ROI is tricky to calculate. However, and this is something I have been contemplating and using in some instances, ROI may not necessarily have to be expressed in financial terms, even though it is a purely financial concept (call it something else if you'd like, like VOI - value on investment)... For some of you customers it could be sufficient to see intangible benefits such as increased satisfaction of their users, improved perception of service, etc. Just another angle to look at it.
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nzmoko
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PostPosted: Fri Jun 25, 2010 2:39 pm    Post subject: ROI Reply with quote

Thanks for your feedback.

Customer sat is something we do measure so we can always demonstrate that as one of our KPI's that feeds one of our CSF's (Improved Service Quality).

Internally, it's quite easy to show the operational cost via touch-time calculations, how long it takes to do "stuff" and process flow efficiency (all based on the cost of a person per hour spent performing the activity).

And it's easy demonstrating to the customer that they had this big issue, we identified RC, implemented a fix and now incidents are tracking at "0"
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Diarmid
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PostPosted: Fri Jun 25, 2010 5:39 pm    Post subject: Re: ROI Reply with quote

nzmoko wrote:
Customer sat is something we do measure...

And it's easy demonstrating to the customer that they had this big issue, we identified RC, implemented a fix and now incidents are tracking at "0"


That only applies for the reactive element of problem management, i.e. after something has gone wrong.

Proactively preventing incidents from occurring in the first place is where Problem Management distinguishes itself. But you will be hard pushed to demonstrate customer satisfaction for that (no removed pain, no perceived gain), and the ROI is tricky to say the least since it is based on "might haves".
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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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Bluesman
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PostPosted: Wed Aug 25, 2010 7:16 pm    Post subject: Reply with quote

Proactive arguments:

Try to establish a very conservative "cost model" - staff wages, lost manhours, cost of office space, lost goodwill, lost X, Y and Z -
and then assume this or that IT service breaks.

You will find that the total cost - even where figures are VERY modest - will be surprisingly high.

Present the model to the customer, and play around with duration, number of people affected etc etc...and they´ll get the message.

Example of trivial stuff that can rapidly become VERY costly:
What if the projector in the huge lecture hall (1000+ seats) breaks?
Simple issue, just a matter of replacing it.

Now..what if there´s no spare available due to some stupid reason?

What if it breaks during a 4-hour lecture? What if it breaks after the first 5 mins, as opposed to the last 5 mins?
What if the lecturer is a local teacher holding a seminar with a few sleepy students?
What if the lecturer is a high-profile celebrity from the other side of the globe?
What if all of the attendees (1000 seats) have traveled far to attend - say it´s an international congress/conference?
What if the media is there ....what is the estimated badwill worth?

Adds up to horrific money, even if you are very conservative in your model. Play around with some scenarios, they´ll get the point.

HTH/Richard
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