IT Managers often ask “Can you provide me with the tangible benefits of ITIL?” Historically, this question has been difficult to answer since many of the benefits realized by adopting the best practices of the ITIL framework are often expressed as organizational or cultural. It is always challenging to establish key performance indicators that can be translated to numeric and percentage values. The purpose of this webinar is to present a method for reducing risk and increasing IT contribution, and to assist organizations with measuring the value and building a business case for implementing ITIL best practices. To this end, the presentation will explain why IT must become a strategic asset.

1. Measuring the Value of ITIL
Learn how to reduce risk and increase IT
contribution, measuring the value and building
a business case for ITIL deployment.
SE ITSM

2. Agenda
• IT challenges
• Transforming IT into a strategic asset
• Building the Business Case
• How SoftExpert ITSM reduces risk and
increases reward

3. IT challenges
• Executives concerns
– To meet the changing demands
– To provide tangible evidence of alignment
– Move beyond the image of IT as a cost center
– Be seen as an innovator and business enabler
• Business challenges
– To increase revenue and profits
– To improved efficiencies
– To deliver more value to consumers and citizens

4. IT challenges
Understand how Provide value in
Understand the
IT activities can the form of
business needs
assist the business services
Examine risk and reward

5. Transforming IT into a strategic asset
Produce
Investment
Manage IT
Return
as an
investment
Goal towards
portfolio.
efficiency,
equity, economy
Focus on and
people, effectiveness
process,
products and
Use ITIL partners.
best
practices.

6. Building the Business Case
• Monetary considerations
– Cost savings
– Cost avoidance
– Increased revenue
– Increased productivity
• Non-monetary considerations
– Customer satisfaction
– Market share
– Social value
– Environment impact

7. ITIL

8. Building the Business Case
Optimized and Added Value Service Delivery
Proactive Service Delivery
Best Practice Service Delivery
Service Delivery Consistency and
Repeatability
Incident and Problem Management

9. Building the Business Case
• Incident and Problem Management
– Concerned with stabilization of existing services.
– Efficient and effective management of calls.
– Justifications for investments based on cost
savings.

10. Building the Business Case
• Incident and Problem Management
– Cost per Time Unit = [___ (percent) of
productivity lost x ___ (currency) cost per time
unit of labor] + [___ (percent) of revenue lost x
___ (currency) revenue at risk in time period] +
[___ any other significant costs per time, including
loss of good will, SLA violations, etc.]
– [90% x $400] + [100% x $100] = [$360] + [$100] =
$460/hour

11. Building the Business Case
• Incident and Problem Management
– Cost of Delay in Incident Resolution = ___ (time)
of delay x $___ (currency) cost of impact per time
unit
– Total Cost Saving per Incident = ___ (currency)
cost of delay in Incident resolution + ___
[(currency) total cost of all labor involved in
managing Incident x 50%]

12. Building the Business Case
• Incident and Problem Management
– Total Cost Savings per Year = ___ [(currency)
total cost savings per issue x (number) issues of
type 1/year] + ___ [(currency) total cost savings
per issue x (number) issues of type 2/year] + ___
… + ___ [(currency) total cost savings per issue x
(number) issues of type n/year]

13. Building the Business Case
• Success cases
– Visa: reduced the time to resolve Incidents by 75%.
Smart Enterprise Magazine
– Nationwide Insurance: $4.3 million ROI. CMP
– Caterpillar: response time for Incident Management
jumped from 60% to more than 90%.
– Capital One:
• 30% reduction in systems crashes and software-
distribution errors
• a 92% reduction in “business-critical” Incidents.
Computerworld

14. Building the Business Case
• Service Delivery Consistency and Repeatability
– Focus on setting and meeting Service Level
Agreements (SLAs).
– Introducing processes that support and drive
service effectiveness.
– Prevention and management of breached
incidents, calls and cases.

15. Building the Business Case
• Service Delivery Consistency and Repeatability
– Cost of Incident Backlog = ___ (number) of
outstanding incident x ___ (currency) total cost
savings per incident
– Cost of Rework = ___ (currency) total cost of
resolution per Incident x ___ (number) incident
resolution attempts.
– Impact of SLA breaches = cost of impact per time
unit

16. Building the Business Case
• Success Case
– Raymond James Financial Inc.: number of calls to
the Help Desk dropped by 25%. Computerworld
– Avaya: cut their IT budget by 30%. Techworld
– Telkomsel: helped reduce operational IT costs by
50-60%. Computerworld UK

17. Building the Business Case
• Best Practice Service Delivery
– Change management
– Consistent processes
– Impact of Change = ___ (currency) cost per time
unit of unintended consequences + ___
(currency) cost of rework

18. Building the Business Case
• Best Practice Service Delivery
– The Impact of Not Having Effective Processes:
– Step 1: score the health of each process on a scale of 0 to 100.
• 0 – process does not exist
• 1 to 10 – process is severely impaired
• 11 to 39 – process is functioning but has significant issues
• 40 to 60 – process is generally functioning well but suffers periodic
problems
• 61 to 89 – process is very reliable and consistent but is not optimized
• 90 to 100 – these scores are reserved for highly efficient and effective
processes

19. Building the Business Case
• Best Practice Service Delivery
– The Impact of Not Having Effective Processes:
– Step 2: convert the process score to a process value:
• divide the process score by the total number of processes
under evaluation
• Add together the process values for all of the processes
– 0 to 10 –stage 1 business case
– 11 to 39 – establish basic quality objectives
– 40 to 60 – needs to improve processes.
– 61 to 89 –needs deliver significant value.
– 90 to 100 –Stage 5 business case

20. Building the Business Case
• Best Practice Service Delivery
– Labor Cost Savings = ___ (percent) of productivity
lost x ___ (currency) cost per time unit of labor for
given employee x ___ (number) amount of time
saved :

21. Building the Business Case
• Success Case
– State of North Carolina:
• Improved incidents resolution by 32%.
• Improved Service Requests response by 20%
• Change Management process compliance increased more
than 100%. ITIL V3: Continual Service
– Ontario Justice Enterprise: cut support costs by 40%.
Network World
– JPMorgan Chase:
• 93% customer satisfaction ratings
• 75% first-call resolution rate. Computerworld UK

22. Building the Business Case
• Proactive Service Delivery
– Aims to meet both current and future organizational
requirements.
– Introduction of a centralized processes for
investment decisions.
– focused on value added that comes from IT
innovations .

23. Building the Business Case
• Proactive Service Delivery
– Benefit from Value Added Activities = ___ (currency)
value of new business enabling services + ___
(currency) value of IT driven innovations
– Improved Prioritization of Investment Decisions =
___ (currency) value of newly chosen investments –
___ (currency) value of de-prioritized investments

24. Building the Business Case
• Success Case
– Procter & Gamble:
• 6% to 8% cut in operating costs
• reduced Help Desk calls by 10%. Network World
– Shell: savings of 6,000 staff-days and $5
million dollars annually. Smart Enterprise Magazine
– Finisar:
• increased customer satisfaction to 95%.
• cut the amount spent on IT from 4% of revenue to
2.4%. CIO Magazine

25. Building the Business Case
• Optimized and Added Value Service Delivery
– Focus on delivering of added value.
– Attainment of cross-organizational best practices.
– Excellence beyond best practices.
– Benefits from Driving Business Innovation and
Success = ___ (currency) value of access to new
customers + ___ (currency) value of share taken from
competitors + ___ (currency) value of competitive
differentiators + ___ (currency) value of other
business innovation activitie

26. Building the Business Case
• Optimized and Added Value Service Delivery
– Value of Continual and Dynamic Management = ___
(currency) value of continually detecting and
responding to customer needs + ___ (currency) value
of continually detecting and responding to
competitive threats + ___ (currency) value of
continually detecting and responding to new
opportunities

27. Building the Business Case
• Success Case
– State of Illinois: saved over $130 million annually. Public CIO
– Victorian State Revenue Office: saved $2 million
annualy. ZDNet
– MeadWestvaco:
• Saved more than $100,000 annually.
• 10% gain in operational stability. CIO Magazine

28. Summary of benefits
• Improve resource utilization
• Be more competitive
• Decrease rework
• Improve upon project deliverables and time
• Improve availability, reliability and security of mission critical
IT services
• Justify the cost of service quality
• Provide services that meet business, customer and user
demands
• Provide demonstrable performance indicators

29. ITIL book reference
• The following assumptions are made:
– All employees cost $50 an hour
– Your organization comprises 500 Users
– The total number of Incidents is 5,000 per year
– The average time to fix an Incident is ten minutes
– A working year has 200 days

30. ITIL book reference
Process Purpose Cost/Benefit Examples
Incident Continuity of the service The implementation of
Management levels underpin Service Incident Management has
Desk function. resulted in a decrease in
down time per user. If the
downtime per user is
reduced by one minute per
person per day, this would
save the organization 500 *
200 * $50 * 1/60 = $83,300
per year.

31. ITIL book reference
Process Purpose Cost/Benefit Examples
Problem Management Minimize disruption of the Suppose that the
service level. implementation of
Problem Management
decreases the number of
recurring incidents by 500
(10% of total) per year. This
means a revenue of 500 *
$50 * 10/60 = $4,000 per
year.

32. ITIL book reference
Process Purpose Cost/Benefit Examples
Change Management Efficient handling of Two changes are
changes. implemented
simultaneously, resulting in
a major problem. The
customer support system
fails, resulting in the loss of
50 Customers with an
average purchasing power
of $500. This has just cost
your company $25,000
potential revenue.

33. ITIL book reference
Process Purpose Cost/Benefit Examples
IT Assets & Configuration Controlling the IT Following the
Management infrastructure. Ensuring implementation of
that only authorized Configuration
hardware and software are Management, the Service
in use. Desk has a much greater
insight into the relationship
between users,
configuration items and
incidents. The three people
assigned to incident
matching can be reduced
to two, resulting in a
benefit of 200 * 8 * $50 =
$80,000 per year.

34. ITIL book reference
Process Purpose Cost/Benefit Examples
IT Service Continuity Ensure quick recovery after A water pipe breaks,
Management a disaster. flooding the server room. It
takes two days to be
operational. The average
User has missed 10 hours
of work. Total costs (apart
from the pumping): 500 *
10 * $50 = $250,000.
Please note that a good
contingency plan is not
cheap; However, the
recovery costs (as in this
example) could be
dramatic.

35. ITIL book reference
Process Purpose Cost/Benefit Examples
Financial Management Provide insight, control and Imagine that the true costs
charge the costs of IT of delivering IT services are
services. charged back, or at a
minimum communicated
to the business customers
that use them. If this
resulted in a 10% reduction
in the requests for new
services, this would
directly result in a
reduction of IT
expenditures.

36. SoftExpert IT Service Management
Enabling and Sustaining IT Services

37. SE ITSM
EAM CPM
HDM
ECM
ITSM
GRC
BPM

38. Capabilities

39. Business Strategic Planning

40. IT Strategic Planning

41. Mission /Values /Objectives...

42. Risk Management

43. Strategic Initiative Management

44. Process Management

45. Quality Management

46. IT Human Resource Management

47. Project and Service Management

48. Incident and Problem Management

49. Change Management

50. Capacity and Availability Management

51. Finance Management

52. IT Performance Management

53. Monitoring and Control

54. Excellence and Compliance
Management Software
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