The ROI of ITSM – Know

Your Financial Impact!

Jeff Rumburg
Managing Partner
MetricNet, LLC

28 Years of Service and Support Benchmarks

Global Database

More than 3,700 IT Service and Support Benchmarks

70+ Key Performance Indicators

More than 120 Industry Best Practices

 What is the Financial Impact of ITSM?
 Profit = Revenue – Cost
 Increase Revenue
 Grow market share
 Increase customer lifetime value
 Increase average size of sale

 Decrease Costs
 Reduce operational expense
 Reduce cost of downtime
 Increase user productivity

 Return on Investment

ROI Calculation Will Prove Economic Value

Return Savings or Profits
ROI = =
Investment Spending
 ROI is a simple ratio
 It requires quantification of Return (Savings or Profits), and Investment (Spending)
 It is measured over a one-year timeframe (One Year ROI is implied in the metric)
 It is one of the most widely used and accepted financial metrics
 It can be used prospectively, as part of a Business Case Analysis
 …Or retrospectively to evaluate the past business success
4
 The ITSM Discipline
ITSM
Framework

IT Service And IT Service

Support Delivery

• Change Management • Availability Management

• Configuration Management • Capacity Management
• Incident Management • IT Service Continuity
• Release Management • Service Level Management
• Problem Management • Financial Management
• Service Desk

ITSM as a Discipline vs. Tools that Facilitate Implementation

Lean

PRINCE Six
Sigma

PDCA
ITSM COBIT

ISO CMMI

ITIL
 Moving From Traditional IT to ITSM Processes
Traditional IT ITSM Process
Technology Focus Process Focus
Fire Fighting Prevention
Reactive Proactive
Users Customers
Centralized, Done In-House Distributed, Sourced
Isolated, Silos Integrated, Enterprise-Wide
One Off, Ad hoc Repeatable, Accountable
Informal Processes Formal Best Practices
IT Internal Perspective Business Perspective
Operational Specific Service Orientation
ITSM Defined: ITSM is a strategic discipline used by organizations worldwide to effectively design, deliver, manage
and improve the way Information Technology services are offered to customers/end-users.

Survey Results: The Benefits of Mature ITSM Processes

38%
Increased
Productivity

4% 42%

Better Support
for Digital
Cost Improved

Transformation Savings Response Time

31%
18%
Faster Release
Time
 Global Estimated Cost of Unplanned Downtime

Source: EMC

Maturing Change Management Processes leads to Demonstrable ROI!

Finance
 Pershing reduced incident response time by more than 50%. CIO Magazine
 Raymond James Financial dropped the number of calls to the service desk
by as much as 25% within 18 months. Computerworld
 JPMorgan Chase eliminated 500,000 service desk calls.
 Capital One reduced system crashes and software distribution errors by
30% and business critical incidents by 92%. Computerworld
 Sallie Mae reduced the handle time of service desk calls by 40%. Bank
Tech News
 Visa saw a reduction in the mean time to resolve incidents by as much as
75%. Smart Enterprise Magazine
Maturing Change Management Processes leads to Demonstrable ROI!
Education
 Perdue University reduced second-level support calls by 50% and enabled a $73
million ERP implementation without adding more FTEs or degrading service levels.
InfoWorld
Telecommunications
 Avaya cut its IT budget by 30%. Techworld
 Telkomsel reduced operational IT costs by 50-60%. Computerworld UK
Government
 The State of Illinois saved over $130 million annually.
 The US Postal Service realized a 50% reduction in incident resolution time, and a
30% reduction in time to implement new changes. Pink Elephant

Quantifying ITSM Maturity

Source: InfoTech
 Let’s Get Specific

Shift Left Reduces Total Cost of Ownership

 Contact Deflection into Lower Cost Channels
80% $24.50

70% $24.00

60% $23.50
Voice

Cost per Ticket

50% $23.00
% of Ticket Volume

Chat
40% $22.50
Email/Web
30% $22.00
Self Service

20% $21.50 Average Cost

per Ticket
10% $21.00

0% $20.50

Year

Quality of Support Drives End-User Productivity

Performance Quartile n = 60

Performance Quartile
Support Function Key Performance Indicator
1 (top) 2 3 4 (bottom)
Customer Satisfaction 93.5% 84.5% 76.1% 69.3%
Service Desk First Contact Resolution Rate 90.1% 83.0% 72.7% 66.4%
Mean Time to Resolve (hours) 0.8 1.2 3.6 5.0
Customer Satisfaction 94.4% 89.2% 79.0% 71.7%
Desktop Support First Contact Resolution Rate 89.3% 85.6% 80.9% 74.5%
Mean Time to Resolve (hours) 2.9 4.8 9.4 12.3
Average Productive Hours Lost per Employee per Year 17.1 25.9 37.4 46.9
 Case Study 101: Service Desk ROI
Service Desk Location(s) Anytown, USA

Hours of Operation Sunday – Thursday, 7 AM – 9 PM ● Friday, 7 AM – 6 PM

Data Time Period July 2016 – June 2017

Annual Operating Expense $2,754,406

Voice 6,763
Voicemail 93

Email 817

Web Portal 1,027

Monthly Inbound Contact Volume
Chat 464

Walk-In 237

Other 439

Total 9,840

Monthly Outbound Contact Volume 3,707

FTE Personnel Headcount Technology Profile

Technician Level 1 11.0 Trouble Ticket System Cherwell

Technician Level 2 6.0 Automatic Call Distributor (ACD) Avaya Aura Contact Center

Technician Level 3 5.0 Interactive Voice Response (IVR) Avaya Aura Contact Center

Supervisor/Team Lead 1.0 Knowledge Management System Right Answers/Cherwell

Manager 1.0 Labor Reporting System Custom software

QA/QC 0.5 Remote Control Software Bomgar

Trainer 0.5 Self-Help Software Right Answers/Cherwell

Service Delivery 1.0 Call Quality Avaya

Technology Tools Analyst 1.0 Other Technology DeskAlerts, Oracle OIM

Administrative 0.25

Total 27.25

ROI From Channel Mix

Contact Channel Average Monthly Contact Volume Cost per Contact
Voice 6,763 $23.33
Voice Mail 93 $23.33
Email 817 $18.66
Web 1,027 $18.66
Chat 464 $17.73
Walk-up 237 $35.00
Other 439 $23.33
Self Service 5,275 $2.00
Monthly Total 15,115 $229,510
Annual Total $2,754,120

Annual Savings vs. Voice Only $1,477,476

 ROI from Shift Left
Average Monthly Contact Volume 9,840
Peer Group 82.4%
First Level Resolution
Company ABC 91.5%
Monthly FLR Ticket Volume vs. Peer Group 895
FLR Savings per Ticket $69
Estimated Annual Shift Left Savings $741,424

ROI from User Productivity Gains

Balanced Scorecard Quartile Performance 1
Industry Average 25.9
Annual Productive Hours Lost per User
Company ABC 17.1
Productive Hours Returned per User per Year 8.8
Number of End Users Supported 8,200
Total Productive Hours Returned to MITRE End Users 72,160
Annual Working Hours per FTE 1,800
Estimated FTE Savings 40
Estimated Annual Fully Loaded FTE Cost $120,000
Productivity ROI $4,810,667
 Total Estimated Service Desk ROI is 255%

Channel Mix ROI $1,477,476

Shift Left ROI $741,424
Productivity ROI $4,810,667
Total ROI $7,029,567
Annual Operating Expense $2,754,406
Annual ROI 255%

Case Study 102: Root Cause Analysis

The Scenario

 An insurance company spending $4.8 million per year

on their service desk

 The service desk supports 8,190 users

 And handles 21,300 tickets per month

 They embarked upon an aggressive Root Cause

Analysis program
 ITSM Maturity Directly Impacts The Number of Incidents

Source: HDI http://www.thinkhdi.com/landing/~/media/HDICorp/Files/Industry-Reports/state-of-todays-IT-2017.pdf

The Result: Cost Savings from Root Cause Analysis

Metric Beginning of Year End of Year Change
End-Users Supported 8,190 8,650 460
Monthly Ticket Volume 21,300 19,100 -2,200
Monthly Tickets per User 2.60 2.21 -0.39
Annual Operating Expense $4,769,496 $4,226,448 -$543,048
Cost per Ticket $18.66 $18.44 -$0.22
Annual Cost per User $582 $489 -$94

$ 94 in Savings per User per Year

X 8,650 End-Users
=========================================
$ 813,100 Estimated Savings from Root Cause Analysis
 Mature ITSM Organizations Think and Act Like Businesses

Exploit Value

Metrics Focused

Proactive

Marketing

Managing Service and Support as a Business Linked to ITSM Maturity

Source: HDI http://www.thinkhdi.com/landing/~/media/HDICorp/Files/Industry-Reports/state-of-todays-IT-2017.pdf

 More Mature Organization are Metrics Focused

Source: HDI http://www.thinkhdi.com/landing/~/media/HDICorp/Files/Industry-Reports/state-of-todays-IT-2017.pdf

The Traditional Paradigm for Technical Support

TECH

PROCESS

PEOPLE
Metrics – An Even More Fundamental Building Block

TECH

PROCESS

PEOPLE

METRICS

The Evidence for Metrics as a Foundation Discipline

100%

90%
Desktop Support Balanced Score

80%

70%

60%

50%

40%

30%

20%

10%
1 2 3 4 5
Metrics Maturity Ranking
Maturing the Metrics Discipline in Service and Support
We Have Achieved World-Class Performance 5%

We Use Metrics to Continuously Improve 10 %

We Use Metrics Prescriptively 10%

Increasing Value!
We Use Metrics Diagnostically 20%

We Understand Cause and Effect 30%

We can Define our KPI’s 80%

We do Reporting 90%

We Have Metrics 100%

The Cost Center Dilemma in ITSM

Cost Center VS. Value Center
 Responsible for cost  Creates value
control  Demonstrates value

 Not responsible for…  Cost savings

 Revenue generation  Cost Benefit Analysis

 Profits  ROI Analysis

 Investment decisions

 The vast majority of service and support organizations operate as cost centers
 They are expected to control costs, but are not expected to make any explicit financial
contribution to the enterprise
 The focus in a cost center is on minimizing costs
 The focus in a Value Center is on maximizing value!
 Guidelines for Measuring the ROI of ITSM
 Measure what matters
 Cost, Quality, Cycle Time
 Quantify the economic benefits
 Cost Savings, increased revenue or profitability, improved
productivity
 Calculate the ROI
 Invest accordingly
 Be bold about asserting your rights as a Value Center!
 Download Today’s Presentation

https://www.metricnet.com/fusion17

Some Additional Resources

Free Downloadable ITSM Maturity Self Assessments – UCISA,

Mountainview, Info-Tech

Free Downloadable ROI Calculator – ITSM Academy

Questions?
Jeff Rumburg
Managing Partner
MetricNet, LLC

Thank You!
Jeff Rumburg
Managing Partner
MetricNet, LLC
The ROI of ITSM – Know
Your Financial Impact!
Jeff Rumburg
Managing Partner
MetricNet, LLC