Financial Management For The Service Desk
•Download as PPTX, PDF•
1 like•638 views
Slides from an SDI webinar, broadcast on 21 July 2015. A practical look at how service desk managers can approach financial monitoring and budgetary control and some top tips to help make this part of your job a little easier. Presented by Service Desk Consultant and SDI Associate Trainer Lynne Nash.
Recommended
Recommended
More Related Content
Viewers also liked
Viewers also liked (13)
More from Service Desk Institute
More from Service Desk Institute (20)
Recently uploaded
Recently uploaded (20)
Financial Management For The Service Desk
- 1. www.servicedeskinstitute.com Surprise | Delight | Inspire Financial Management for the Service Desk Lynne Nash, L B Nash (Consulting) @lb_nash_uk
- 2. www.servicedeskinstitute.com Introduction • Over 25 years in the Service Desk industry • Experienced Service Desk Manager • SDI educator • APMG examiner • SDI Standards Committee member
- 3. www.servicedeskinstitute.com Objectives • The importance of Financial Management • Building your financial network • Talking the Talk - financial terminology • Budgeting, Accounting and Forecasting • The Power of Unit costs
- 4. www.servicedeskinstitute.com Importance of ITFM • Manage the cost of providing IT services • Align IT service costs to business processes • Support the customer and the business by delivering value for money • Assisting the organisation achieve its objectives
- 5. www.servicedeskinstitute.com Importance of SDFM • Operationally – Costs need to be managed – Efficiencies need to be realised • Strategically – Demonstrate sound financial management – Obtain stakeholder investment
- 6. www.servicedeskinstitute.com Financial Networking • Who has the knowledge? – Line manager – Peer group – Finance department • How can you get the knowledge? – Courses, books, websites – Coaching & mentoring
- 7. www.servicedeskinstitute.com Talk the Talk • What is your funding model? – Centrally funded – Some central funding, some billed (cross charged) – All billed • What type of accounting? – Financial – Management
- 8. www.servicedeskinstitute.com Talk the Talk • Income – Revenue – Budget • Expenditure (costs) – Operating – Capital Income – Expenditure =
- 9. www.servicedeskinstitute.com Talk the Talk • Costs – Fixed…salaries – Variable…overtime – Direct…mobile phones – Indirect…utilities
- 10. www.servicedeskinstitute.com Budgeting • Staff Costs – Salary – Pension Contributions – Employer’s NICs – Life Insurance – Other Benefits Add 25% to 30%
- 11. www.servicedeskinstitute.com Budgeting • Other staff costs – Temporary/Contract staff – Overtime – Recruitment – Training – Recognition and rewards (non salary) • Marketing & Promotions
- 12. www.servicedeskinstitute.com Budgeting • IT services – Provisioning (Capital) – Support & Maintenance (Operational) – 3rd Party Contracts (Operational) • Facilities • HR, Finance & Legal services
- 14. www.servicedeskinstitute.com Forecasting • Reactive – Reduction in income – Impact of unplanned changes • Proactive – Impact of proposed changes – Making a business case
- 15. www.servicedeskinstitute.com Unit Costs • Purpose – Charging – Scaling – Decision Making • What Unit? – Call – Incident / Request – Customer – Time Average costs or detailed?
- 16. www.servicedeskinstitute.com Unit Costs Time = Money Cost of SD / Man hours = Cost per man hour Man hours = Working time x No. Staff Working time = No. Working days x Hours in Day Working days = (52 x 5) – holidays, training, sickness
- 17. www.servicedeskinstitute.com To Conclude • Be on good terms with your Finance dept. • Know your funding model & budget • Get to grips with forecasting • Track your unit costs, Time = Money • Keep finance on the agenda • You are running a business… It’s all about the bottom line!
Editor's Notes
- In my first service desk manager role with the BBC I had financial responsibilities so I was lucky to learn financial management early in my career. I’ve been teaching service desk managers for quite a long time and it always surprises me that so few manage a budget or are even aware of the cost of running their service. <questionnaire> Do you manage your own service desk budget?
- IT Financial Management is concerned with managing the cost effectiveness of IT services aligned to business objectives. For me the last point is the most important. You need to know the organisation’s financial objectives and understand how the service desk can contribute. Whatever is done at the departmental level needs to be mirrored at the team level.
- If you are not already involved in service desk financial management you are probably thinking…”I have enough to do already, why take on additional tasks if I don’t have to?” Firstly the Service Desk is a service and like all IT services it needs to be cost effective and deliver value for money. This means not just managing costs within budget but realising efficiencies to reduce cost. Delivering the best service we can for the least amount of money. Strategically, if we want to help the organisation achieve it’s objectives we have to demonstrate good business judgement and that means running the service desk as a business within a business. If your business development strategy requires investment you need to be able to persuade your investors (stakeholders) to back you. To succeed you need to demonstrate sound financial management and make a compelling financial case. Career wise, if you don’t have financial responsibility now you will do in the future. Being proactive about filling the gaps in your knowledge will help build your reputation now while gaining experience that will make you a better candidate when applying for management roles in the future. Tactically it’s a good move! And you never know…it may help you with your personal financial responsibilities
- Like any discipline you need to find out who has the knowledge and experience and persuade them to pass it on. You can learn the basics from books or online learning resources and you can go on courses. Find out if your company run any in house courses specifically for managers. However, you will still need good relationships with those who have the specific information you need to understand your business. Start with your line manager, get financial matters as a standard agenda item on your 1-2-1s, find out what they have to do and when, offer to help/take on appropriate responsibility in return for coaching. Find out if any of your peer group already have financial responsibility, they can be a good source of advice and guidance. Even if you are already experienced, building strong connections with the finance department and getting known by the CFO will not only make getting financial information easier, it will help when building business cases for investment…you will know the language to use and the arguments that will impress.
- There’s a lot of terminology to get you head around and it all needs to be put in the context of the funding model for your business. First and foremost you need to know where your funding/income/revenue comes from. Is IT funded from a central or corporate IT budget or does it cross charge or bill each department for the services they use? You may have a combination of the two with corporate services, the ones everyone uses, being centrally funded with business specific services being charged directly to each department or business unit (e.g mobile phones) Or standard services being centrally funded with non standard services charged directly. Even in an externally facing service desk it would be unusual for revenue to come directly, it’s the business’s revenue from which the service desk would be funded. Only if you are actually running the service desk as a commercial venture would you need to do full financial accounting with results published externally. Management accounting is what most of use would do. It still requires us to manage income v expenditure but for internal budgeting and decision making purposes. It is also important to know your organisation’s accounting year. The tax year starts 5th April but an organisation may start it’s financial year on a different date as long as it is the same every year.
- So we need to manage the money we are given to run our service. If we cannot increase our income directly then we need to manage our expenditure or costs. Costs come under two headings…Our day to day running costs come out of the operating budget, investment in new assets (software, hardware, furniture, etc) will come out of a capital budget. Capital expenditure gets depreciated over time rather than coming out of a single year’s profit or loss. However, maintenance and repair of capital assets comes out of the operating budget. IT may not have it’s own capital budget, there may just be a company capital budget and we need to make business cases to get a share so we will focus on the operating budget. It’s important to know what the business values in financial management but at the very least we need to come in on budget or break even. In commercial businesses profit is usually king so by reducing costs and coming in under budget we are directly affecting business profit. In public sector and charities not exceeding budget will be important but it doesn’t mean we shouldn’t try to reduce costs as any surplus can go on delivering more services to the business customers. You need to know what happens to the surplus if you do save money. Can you use it to fund your own service improvements so that you can deliver more value for the same income?
- There are various descriptions for costs Fixed costs are usually set for a given period, salaries are usually set for a year. Support and maintenance on your call management system might be fixed for 3 years Variable costs like overtime will vary according to what’s going on within the business, staff changes, projects, etc. Some costs, like a mobile phone, may have a fixed portion – the line rental – and a variable portion – call charges. To budget for them they would be separate line items. Direct costs can be traced directly to you team whereas indirect costs are usually a percentage of something used by everyone in the company. Water, power, building maintenance, etc. They could be apportioned on a per department, per room, or even a per head basis. If It’s per department you will need to find out how your department then apportions the costs between the If you budget and track your household expenses and can manage a spreadsheet, you are pretty much set for taking things into the business arena. It more complex in that there are more line items to consider (and it’s not your own money!) but the principles are the same.
- Before you can start influencing budgeting for the service desk you need to know what the current situation is. If there’s a spreadsheet already get hold of a copy. If there isn’t one just for the service desk find out what the line items are in the IT operating budget and create your own. You will need to work with your manager or the finance team to get figures specifically for your team. Your major expense will obviously be staffing and it’s important to have each analyst listed separately in the budget. If not detailed that way in the spreadsheet you inherit, the breakdown is usually available from either Finance or HR. Without this it will be difficult to account for changes. Staffing is usually considered a fixed cost unless you have contractors and temporary staff who are paid according to the numbers of hours worked. However, unless pay reviews occur at the start of your accounting year you will need to budget in advance for any pay increases. If you pay shift working allowances these could be fixed or variable costs depending on the model used and they are usually listed separately from the salaries…if it’s separate on a pay slip it needs to be separate in your budget. Staff costs aren’t just salaries, there’s pension contributions, Employer’s National Insurance Contributions, possibly life insurance (death in service) and whatever other benefits your organisation provides as part of the employee package. Car allowances, health insurance, etc. There will be calculations your company uses that you will need to embed in your spreadsheet so that if you change the salary, all the associated costs update accordingly. This is important for understanding the impact of any changes
- There are other staff costs salary and you will need to budget for these as well. For recruitment and overtime, they past is a good predictor of the future. HR should be able to provide figures for the cost of recruitment. Training is quite often a central budget held by HR but they will usually publish a ‘per head’ training allowance figure that you can use for planning purposes but you may not need to include it in your budget. If IT has it’s own training budget you will need to find out how that is apportioned. You may or may not have a budget for reward & recognition programs, it depends on your organisation’s policy. The same hold true for marketing and promoting the service desk but if we are running the service desk as a business within the business it’s something we should consider.
- Don’t forget that your team use IT services too, you may need to budget for this depending on how IT is funded. These may be direct or indirect. Maintenance of existing IT services would come out of your operating budget but remember new hardware, software, applications, etc is capital not operating expenditure unless the cost is very small. Facilities costs include office space, power, water, maintenance, fixtures and fittings. It’s usually an indirect cost and you will have share of the costs for the whole building or site. We may need to budget for other internal services too depending on our organisation’s policies, particularly if any of them are outsourced. When budgeting it is important to plan for predictable changes
- Accounting is probably the easiest part of financial management, it’s simply tracking what has been spent. As long as we have plugged ourselves into the right sources it’s a task we can schedule. Once we have our budget we need to create a copy of it so that on a month by month basis we can update it to show actual expenditure. This will allow us to track how we are doing. Planned v actual expenditure. The reason we want actual v planned expenditure is so that we can predict and plan in advance for whether we are going to come in under or over budget. If there’s a surplus what can we do with it? How can we change things to avoid a deficit?
- Predicting the future is forecasting and more of an art rather than a science. An IT director I once worked with told me that the only time you can accurately forecast is in month 12! In a way the budget itself is a forecast at the start of the financial year. We have predicted how much we will need to run the service desk and been allocated the requisite amount of funds to do so. As we go through the year we start seeing how we are doing against that prediction and can adjust accordingly. However, through the year things can change. The business may do as well as it thought and budgets get cut. Costs change…3rd parties increase their charges by more than was anticipated or staff leave & new staff join which leads to changes in the staff costs. Our workload might increase and we have to look at meeting the need in the most cost effective way. If it’s temporary maybe the overtime budget will be sufficient. If we can save money in one area can we use it elsewhere? So we have our original budget…then our accounts…now we need a forecast spreadsheet, based on the latest accounts so that we can plug in new figures to see what the outcome will be. Our senior analyst leaves, we promote someone to the post probably at a slightly lower salary if they don’t have the same experience, and then recruit to back fill. We will save on salary costs in the short term but may need to increase overtime until the new person is on board and productive. Having plugged in all the new figures what will the impact be on end of year? The earlier we identify a surplus or deficit the more proactive we can be. There are also strategic plans that we will want to progress. Some projects will require capital investment but there may be a knock on to the operational budget. To make a strong business cases we need to show we have considered ongoing costs as well as the original investment. Forecasting can help us show the positive and negative financial impacts of change. !
- One of things that is important in proactive forecasting is knowing your units costs. They are also important if you bill or cross charge for your services. Think of your electricity bill…you are billed based on how many units you used. Even notional charging (showing customers how much it would cost if they were charged) helps customers realise that IT isn’t free and can lead to better decision making. If you are thinking of changing the scale or scope of the service knowing your unit costs will help you identify the impact. The biggest issue is identify the correct unit. To some extent the unit will be driven by how specific you need to be. Will an average cost be sufficient for you needs? The average cost per incident is important for IT to know but if you are forecasting for the Service Desk you have to start taking into account how much of the work was done by other teams. If you are billing customers for service they may want very detailed billing information.
- On the service desk time is the resource that we have to spend. Therefore Time = If we divide the cost of running the service desk by the number of man hours we have we get a cost per man hour. We can divide that by 60 to get cost per minute and that’s possibly the smallest unit we’re likely to deal with. Now you can look at time spent on telephone calls, incidents and service requests and cost it specifically. Multiply it up for your cost per customer/department etc. You can also start to see which types of incidents are most costly which can help make the case for Problem management. You can look at efficiencies and express it as a cost saving. You can put a cost on all the administration and routine maintenance activities. Whether or not you include your cost in the calculations will depend on how much operational involvement you have but do the sums for yourself and you can even put a cost on all those meetings you have to attend! Remember to adjust the number of working days for holidays, training days and sick leave. Time really is money on the service desk.