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Leveraging KPI’s to Maximize the ROI of Support

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Most service and support professionals are familiar with the concept of return on investment (ROI), but very few service and support organizations measure or track it. However, support groups that …

Most service and support professionals are familiar with the concept of return on investment (ROI), but very few service and support organizations measure or track it. However, support groups that understand and communicate ROI on a regular basis gain a number of important advantages, chief among which is the ability to justify investments in people and technology. In this session, attendees will learn about three critical KPIs for measuring ROI, simple calculations for ROI in service and support, techniques for communicating ROI to key stakeholders, and more!

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  • 1. Leveraging KPI’s to Maximize the ROI of Support Jeff Rumburg • MetricNet
  • 2. More than 3,000 IT Service and Support Benchmarks Global Database 30+ Key Performance Indicators Nearly 60 Industry Best Practices Empirical Observations from Our Global Database
  • 3. 10 Mega Trends: Service and Support as a Business  Holistic use of KPI’s and Benchmarking  Process Optimization (ITIL, ITSM)  User Self-Help  Desktop Virtualization  Marketing Service and Support  Understanding of TCO and First Level Resolution  Knowledge Management  Remote Diagnostic Tools  The Widespread Adoption of ROI Analysis  Service and Support as a Business 3© 2014 MetricNet, LLC, www.metricnet.com
  • 4. 4 The Paradox of IT Support  Less than 5% of all IT spending is allocated to end-user support  Service desk, desktop support, field support  This leads many to erroneously assume that there is little upside opportunity in IT support  The result is that most support organizations are managed with the goal of minimizing costs  But the most effective support strategies focus on maximizing value © 2014 MetricNet, LLC, www.metricnet.com Corporate IT Spending Breakdown 4% 96%: Non support functions End-User Support  Application Development  Application Maintenance  Network Operations  Mainframe and midrange Computing  Desktop Computing  Contract Services (e.g., disaster recovery)
  • 5. 5 The Cost Center Dilemma in IT Service and Support  Responsible for cost control  Not responsible for…  Revenue generation  Profits  Investment decisions Cost Center Profit Center © 2014 MetricNet, LLC, www.metricnet.com VS.  Creates economic value  Demonstrates profitability  Cost savings  Cost Benefit Analysis  ROI Analysis  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 Profit Center is on creating and maximizing value!
  • 6. 6 Do Profitable Businesses Offer a Solution? © 2014 MetricNet, LLC, www.metricnet.com
  • 7. 7 Sources of Value: Demonstrating Profitability IT Service and Support can create value in a number of ways:  Minimizing Total Cost of Ownership (TCO) by maximizing level 1 resolution rates  Improving end-user productivity by reducing incident resolution times  Reducing ticket volumes through technology and Root Cause Analysis  Mitigating the effects of unplanned downtime through planning, prevention, and aggressive remediation © 2014 MetricNet, LLC, www.metricnet.com
  • 8. Total Cost of Ownership: North American Averages Support Level Cost per Incident Vendor Level 2: Desktop Support Field Support Level 3 IT (apps, networking, NOC, etc.) Level 1: Service Desk $471 $196 $85 $62 $22 8© 2014 MetricNet, LLC, www.metricnet.com
  • 9. 9 0 10 20 30 40 50 60 70 0 1 2 3 4 5 ProductiveHoursLostperEmployeeperYear IT Support Returns Productive Hours to End Users 1 (top) 2 3 4 (bottom) Customer Satisfaction 93.5% 84.5% 76.1% 69.3% 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% 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 Service Desk Desktop Support Performance Quartile Support Function Key Performance Indicator 37.4 46.9Average Productive Hours Lost per Employee per Year 17.1 25.9 Performance Quartile n = 60 © 2014 MetricNet, LLC, www.metricnet.com
  • 10. 10 Reducing Ticket Volumes -- Root Cause Analysis: Level -1 © 2014 MetricNet, LLC, www.metricnet.com 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
  • 11. 11 Reducing the Cost of Downtime Cost of Downtime Productivity Losses Business Losses  Lost productivity from employees who are idled or slowed by the outage © 2014 MetricNet, LLC, www.metricnet.com  Lost sales  Lost customers  Product spoilage and shrinkage  Damage to business reputation
  • 12. 12 ROI Case Study
  • 13. ROI Defined 13© 2014 MetricNet, LLC, www.metricnet.com ROI = Return Investment = Savings Spending  ROI is a simple ratio  It requires quantification of Return (Savings), 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
  • 14. 14 An Industry Case Study 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 © 2014 MetricNet, LLC, www.metricnet.com
  • 15. 15 Support Level Cost per Ticket Vendor Level 2: Desktop Support Field Support Level 3 IT (apps, networking, NOC, etc.) Level 1: Service Desk $471 $196 $85 $62 $22 © 2014 MetricNet, LLC, www.metricnet.com Case Study Part 1: Minimizing Service and Support TCO
  • 16. A SPOC Service Desk is Highly Leveraged User Community Level 1: Service Desk Level 2: Desktop Support Field Support Level 3: IT Support Vendor Support 16© 2014 MetricNet, LLC, www.metricnet.com
  • 17. Key SPOC Principles Key SPOC Principles  Enterprise takes an end-to-end view of user support  User/Customer has a single point of contact for all IT-related incidents, questions, problems, and work requests  The Level 1 Service Desk is the SPOC  Level 1 is responsible for:  Ticket triage  Resolution at Level 1 if possible  Effective handoffs to n level support  Resolution coordination and facilitation  Ticket closure  Desktop “Drive-bys”, “Fly-bys”, and “Snags” are strongly discouraged © 2014 MetricNet, LLC, www.metricnet.com 17
  • 18. © 2014 MetricNet, LLC, www.metricnet.com Two Metrics You Should Know First Level Resolution Rate (FLR) The number of tickets resolved at level 1 divided by all tickets that can potentially be resolved at level 1. % Resolved Level 1 Capable (PRLC) The percentage of tickets resolved by desktop support that could have been resolved at level 1 support. 18
  • 19. 19© 2014 MetricNet, LLC, www.metricnet.com Industry Data for Level 1 Resolution 0 5 10 15 20 25 30 35 40 45 50 55 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100% Net First Level Resolution Rate NumberofDataPoints Average ------ 73.9% Max 98.9% Min 24.0% Median 75.0% > 95% Net FLR 2.0% Industry Average Net FLR Statistics Net First Level Resolution Rate NumberofDataRecords
  • 20. 0 2 4 6 8 10 12 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 30% 32% 34% 36% 38% 40% % Resolved Level 1 Capable NumberofSupportOrganizations FirstQuartile=12.7%. FourthQuartile=24.3%. Median=18.1% Industry Data for % Resolved Level 1 Capable 20© 2014 MetricNet, LLC, www.metricnet.com
  • 21. 21 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% NetFirstLevelResolution Remote Diagnostic Software No Remote Diagnostic Software The Effect of Remote Diagnostic Software on FLR Average = 77.8% FLR Average = 61.4% FLR © 2014 MetricNet, LLC, www.metricnet.com
  • 22. 22 The Effect of a Mature Knowledge Base on FLR © 2014 MetricNet, LLC, www.metricnet.com 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% 0 1 2 3 4 5 6 KBase Maturity NetFirstLevelResolution
  • 23. 23 The Result: Maximizing First Level Resolution Rates © 2014 MetricNet, LLC, www.metricnet.com 93% = Insurance Company First Level Resolution Rate - 74% = Industry Average First Level Resolution Rate ================================================= 19% Higher First Level Resolution Rate than Industry Average X 21,300 Tickets per Month X 12 Months per Year ================================================= 48,564 More Tickets Resolved at Level 1 each Year vs. Average X $62 per Ticket Escalated Beyond Level 1 ================================================= $ 3.0 Million Estimated Annual Savings by Minimizing TCO
  • 24. 24 0 10 20 30 40 50 60 70 0 1 2 3 4 5 ProductiveHoursLostperEmployeeperYear Case Study Part 2: Returning Productivity to End-Users 1 (top) 2 3 4 (bottom) Customer Satisfaction 93.5% 84.5% 76.1% 69.3% 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% 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 Service Desk Desktop Support Performance Quartile Support Function Key Performance Indicator 37.4 46.9Average Productive Hours Lost per Employee per Year 17.1 25.9 Performance Quartile n = 60 © 2014 MetricNet, LLC, www.metricnet.com
  • 25. 25 The Result: Returning Productive Hours to End-Users © 2014 MetricNet, LLC, www.metricnet.com 33 Hours = Industry Average Lost Productivity per User per Year - 17 Hours = Insurance Company Estimated Lost Productivity per User ==================================================== 16 Hours in Saved Productivity per User per Year X 8,190 End-Users ==================================================== 131,040 Productive Hours Returned to the Workforce each Year ÷ 1,700 Productive Hours per User per Year ==================================================== 77.1 FTE Headcount Savings per Year X $82,300 Annual Salary and Benefits per User ==================================================== $ 6.3 Million Estimated Annual Savings from Returned Productivity
  • 26. 26 Case Study Part 3: Cost Savings from Root Cause Analysis © 2014 MetricNet, LLC, www.metricnet.com 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
  • 27. 27 Return on Investment: Summing it Up © 2014 MetricNet, LLC, www.metricnet.com $ 3.0 Million Estimated Annual Savings from Minimizing TCO + $ 6.3 Million Estimated Annual Savings from Returned Productivity + $ 0.8 Million Estimated Savings from Root Cause Analysis ==================================================== $ 10.1 Million Estimated Economic Contribution per Year Estimated ROI = $10.1 Million ÷ $4.8 Million = 210% per Year Return Investment
  • 28. 28 Cost of Downtime Cost of Downtime Productivity Losses Business Losses  Lost productivity from employees who are idled or slowed by the outage © 2014 MetricNet, LLC, www.metricnet.com  Lost sales  Lost customers  Product spoilage and shrinkage  Damage to business reputation
  • 29. 29 Cost of Unplanned Downtime Cost of Prevention and Readiness CostofUnplannedDowntime Empirical data shows that the more an enterprise spends on outage prevention and readiness, the lower the cost of unplanned downtime will be © 2014 MetricNet, LLC, www.metricnet.com
  • 30. 30 Total Cost of Downtime Cost of Prevention and Readiness CostofPrevention+Downtime The TCO for downtime must include the costs of prevention, readiness, downtime, and recovery Point of Minimum Total Cost © 2014 MetricNet, LLC, www.metricnet.com
  • 31. 31 Downtime Mitigation Strategies for Service and Support  Disaster Recovery Drills  Outbound user notifications for planned outages  Outbound user notifications for major unplanned outages  Recorded messages to inform inbound callers that service and support is aware of and working to resolve any major issues © 2014 MetricNet, LLC, www.metricnet.com
  • 32. The Critical Metrics of ROI  Annual Operating ExpenseInvestment Return  Estimated Annual Savings / Economic Contribution Root Cause  Productive Hours Returned to Users Downtime  Mitigation of Unplanned Downtime Efficiency  % Resolved Level 1 Capable TCO  First Level Resolution Rate © 2014 MetricNet, LLC, www.metricnet.com 32  Tickets Avoided
  • 33. 33 The Big Picture for ROI Metrics
  • 34. 34 The Paradox of IT Support  Less than 5% of all IT spending is allocated to end-user support  Service desk, desktop support, field support  This leads many to erroneously assume that there is little upside opportunity in IT support  The result is that most support organizations are managed with the goal of minimizing costs  But the most effective support strategies focus on maximizing value © 2014 MetricNet, LLC, www.metricnet.com Corporate IT Spending Breakdown 4% 96%: Non support functions End-User Support  Application Development  Application Maintenance  Network Operations  Mainframe and midrange Computing  Desktop Computing  Contract Services (e.g., disaster recovery)
  • 35. 35 Support Level Cost per Ticket Vendor Level 2: Desktop Support Field Support Level 3 IT (apps, networking, NOC, etc.) Level 1: Service Desk $471 $196 $85 $62 $22 © 2014 MetricNet, LLC, www.metricnet.com IT Support Has an Opportunity to Minimize TCO
  • 36. 36 0 10 20 30 40 50 60 70 0 1 2 3 4 5 ProductiveHoursLostperEmployeeperYear Quality of Support Drives End-User Productivity 1 (top) 2 3 4 (bottom) Customer Satisfaction 93.5% 84.5% 76.1% 69.3% 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% 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 Service Desk Desktop Support Performance Quartile Support Function Key Performance Indicator 37.4 46.9Average Productive Hours Lost per Employee per Year 17.1 25.9 Performance Quartile n = 60 © 2014 MetricNet, LLC, www.metricnet.com
  • 37. 37 Proactive IT Support Can Reduce Ticket Volumes © 2014 MetricNet, LLC, www.metricnet.com 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
  • 38. 38 Return on Investment: Summing it Up © 2014 MetricNet, LLC, www.metricnet.com $ 3.0 Million Estimated Annual Savings from Minimizing TCO + $ 6.3 Million Estimated Annual Savings from Returned Productivity + $ 0.8 Million Estimated Savings from Root Cause Analysis ==================================================== $ 10.1 Million Estimated Economic Contribution per Year Estimated ROI = $10.1 Million ÷ $4.8 Million = 210% per Year Return Investment
  • 39. 84% 47% 31% 29% 22% 19% 8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Service Desk Desktop Support Network Outages VPN Training Enterprise Applications Desktop Software Factors Contributing to IT Customer Satisfaction %SayingVeryImportant  n = 1,044  Global large cap companies  Survey type: multiple choice  3 responses allowed per survey  84% cited the service desk as a very important factor in their overall satisfaction with corporate IT  47% cited desktop support as a very important factor in their overall satisfaction with corporate IT 39© 2014 MetricNet, LLC, www.metricnet.com IT Support Drives Customer Satisfaction for All of IT
  • 40. © 2013 MetricNet, LLC, www.metricnet.com Bottom Line: The Business of IT Service and Support  IT Service and Support can and should be viewed as a business and a profit center  You must quantify your value (Return) to the enterprise  And then demonstrate your profitability! 40
  • 41. Question and Answer Jeff Rumburg • MetricNet
  • 42. For More Information  Read MetricNet’s whitepaper on Service and Support as a Business  http://www.metricnet.com/service-and-support-as-a- business © 2014 MetricNet, LLC, www.metricnet.com 42
  • 43. Please make sure to complete an evaluation on your smartphone by going to www.HDIConference.com/Eval, or by going to the HDI 2014 mobile conference app. Thank you for attending this session
  • 44. Question and Answer Jeff Rumburg • MetricNet
  • 45. 45 About MetricNet
  • 46. 46© 2014 MetricNet, LLC, www.metricnet.com Benchmarking is MetricNet’s Core Business Call Centers Telecom Information Technology Satisfaction  Technical Support  Customer Service  Telemarketing/Telesales  Collections  Service Desk  Desktop Support  Field Support  Price Benchmarking  Customer Satisfaction  Employee Satisfaction
  • 47. MetricNet Benchmarks MetricNet Benchmarks Peer Group Benchmarks Industry Benchmarks Benchmarking Data Files © 2014 MetricNet, LLC, www.metricnet.com 47  Custom Benchmark  Unique Peer Group  Industry Benchmarking Reports by geography  Custom Benchmarking Data in Excel format
  • 48. More than 3,000 IT Service and Support Benchmarks Global Database 30+ Key Performance Indicators Nearly 60 Industry Best Practices 25 Years of Service and Support Benchmarks
  • 49. 49 Your Presenter: Jeff Rumburg © 2014 MetricNet, LLC, www.metricnet.com Jeff Rumburg is a co-founder and Managing Partner at MetricNet, LLC. Jeff is responsible for global strategy, product development, and financial operations for the company. As a leading expert in benchmarking and re-engineering, Mr. Rumburg authored a best selling book on benchmarking, and has been retained as a benchmarking expert by such well-known companies as American Express, Hewlett-Packard, and GM. Prior to co-founding MetricNet, Mr. Rumburg was president and founder of The Verity Group, an international management consulting firm specializing in IT benchmarking. While at Verity, Mr. Rumburg launched a number of syndicated benchmarking services that provided low cost benchmarks to more than 1,000 corporations worldwide. Mr. Rumburg has also held a number of executive positions at META Group, and Gartner, Inc. As a vice president at Gartner, Mr. Rumburg led a project team that reengineered Gartner's global benchmarking product suite. And as vice president at META Group, Mr. Rumburg's career was focused on business and product development for IT benchmarking. Mr. Rumburg's education includes an M.B.A. from the Harvard Business School, an M.S. magna cum laude in Operations Research from Stanford University, and a B.S. magna cum laude in Mechanical Engineering. He is author of A Hands-On Guide to Competitive Benchmarking: The Path to Continuous Quality and Productivity Improvement, and has taught graduate-level engineering and business courses. Mr. Rumburg serves on the Strategic Advisory Board for HDI.
  • 50. Meet a Sampling of Our Clients MetricNet Conducts benchmarking for IT Service and Support organizations worldwide, and across virtually every industry sector. © 2014 MetricNet, LLC, www.metricnet.com 50
  • 51. You Can Reach MetricNet… By Phone… 703-992-7559 On Our Website… www.metricnet.com Or E-mail us… info@metricnet.com © 2014 MetricNet, LLC, www.metricnet.com 51
  • 52. Leveraging KPI’s to Maximize the ROI of Support Jeff Rumburg • MetricNet