Calculating the Value of IT Service Management


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Calculating the Value ofIT Service Management
A Proposal for InterEntity ITSM

• Martin Erb Sr. ServitectCapital
  [e-mail]
• Richmond Virginia USA

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Agenda

• Capital One Overview and Business/IT Fusion
• Specific Benefits Calculation Examples
• Proposal for an InterEntity ITSM Process
  Communication Standard
• Q A
• Assumption Familiarity with ITIL and COBIT

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The ITIL and other Processes

• Configuration Management
• Incident Management
• Event Management
• Problem Management
• Change Management
• Service Level Management

• Availability Management
• Capacity Management
• Service Desk Function
• IT Service Continuity Management
• Financial Management for IT Services
• Release Management
• Monitoring
• Security Management

Not explicitly ITIL
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Availability Time Line ComponentsNOT TO SCALE
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SLA Components

• Performance ex trans/sec sec./web page
• Availability ex performing x of specified
  hours
• Volume ex transactions / unit time storage of
  X records
• Cost ex /year /transaction /customer/month

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Performance Calculation

• Service performance sum of component latencies
  taking into account parallel resource queues
• See books by Daniel Manascé for the queuing
  theory math formulae and Excel spreadsheets

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Availability Calculations

• Component Availability
• MTBF MTTR
• MTBF
• MTTR Mean Time to Repair detection triage
  notification repair restoration
• MTBF mean time between failures
• OR Component Availability
• Total samples failed samplestotal
  samples
• Service Availability
• Comp 1 avail comp 2 avail comp 3 avail
  comp N avail

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Top 10 Keys to Making IT Service Management a
Reality

• 10. Learn continuously about best practices ex
  ITIL EMM CMM
• 9. Implement process ownership responsibility
  authority accountability
• 8. Know what the business objectives are and how
  they are measured business metrics
• 7. Know what IT metrics are related to the
  business metrics and how they are related

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Top 10 Keys to Making IT Service Management a
Reality

• 6. Make sure all metrics are measured collected
  and reported as required
• 5. Sell the concept inside and outside IT
• 4. Be ready to implement service management
  whenever and wherever you can
• 3. Get a commitment from IT and business
  management like Y2K
• 2. BE PATIENT

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Top 10 Keys to Making IT Service Management a
Reality

• 1. IT Service Management is the definition and
  execution of Processes..not a team or a tool

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Sources of Benefit Dollars

• Hard Savings
• Income Generated During Avoided Downtime
• Headcount Avoided with Automation
• Recovery Effort Not Expended
• Soft Savings
• Time Required to Generate Income Not Generated
  During Downtime

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Benefit Factors 1 of 4

• Annual Incident Profile
• NonPersonal Space Incidents 28530
• MonitoringInitiated Incident Ratio 70
• MonitoringInitiated Incidents 19971
• Monitoring Warnings 41500
• AvoidedIncident/Warning Ratio 20
• Avoided Incidents 8300

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Benefit Factors 2 of 4

• People
• Affected MTTR Total
• Incident Impact 3.65 6.4 Hours 23.36 PHrs
• Incident Called Monitoring
• Type in Initiated
• Sev 1 4000 2000
• Sev 2 40 20
• Sev 3 1 1
• Wtd Avg 4 3.5
• MTTR 9.6 Hrs. 5.0 Hrs.

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Benefits Factors 3 of 4

• Capital One People
• People Working FTEall types 18900
• PHrs/Yr Person Hours/Year 1920
• Company Person Hours/Year 36288000
• Capital One Financials Sample
• Net Income 899644000
• Per Person Hour 24.79
• Operating Cost 2987713450
• Per Person Hour 82.33
• Direct Cost of Monitoring and ITSM 7746862

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Benefits Factors 4 of 4

• Assumptions
• Net Income Recoverable 75
• Net Income Catchup Ratio 50
• Cost Avoidance
• Automated Incident Initiation and
  Notification 25/Incident
• Technician Cost 50/hr.
• Technician Effort 75

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Hard Value Benefit 1 of 2

• Actual Baseline
• NonPersonal Space NPS
• Incidents / Yr. 28530 36830
• Outage Hours per
• NPS Incident MTTR x 6.38 x 9.60
• People Affected / Incident x 3.85 x
  4.00
• Person Hours Lost / Yr. 700323
  1414272
• Percent of Person Hours Lost 98.26
  96.49

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Hard Value Benefit 2 of 2

• Net Person Hours Not Lost 713949
• Net Income Lost per Person Hr. x
  24.79
• Net Value PHrs Not Lost 17700064 1.
• Savings from Automation 499275
  2.
• Value of Technician Time Saved 3444998
  3.
• Total Savings 21644336
• Direct Cost 7746862
• Net Hard Value 13897474
• already accounted for in Net Income

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Soft and Total Benefit

• Recovery Cost Avoidance
• Rework Person Hours Avoided @ 50 356974
• Operating Cost per Rework Person Hr. x
  82.33
• Net Soft Value 29390914
• Net Hard Value 13897474
• Net Soft Value 29390914
• Total Value 43288388

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Questions on the Benefit?
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A Proposal for InterEntity ITSM

• There is an increasing reliance on third parties
  to provide IT services
• ISPs
• Network Providers
• ASPs
• Hardware Maintenance Providers

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Process Mapping Assumes 1 Entity
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Incident Management

• Customer A
• Open an Incident Record
• Dispatch to Provider w/ CI and Incident
• Update w/ Provider Incident
• Accept Request
• Verify
• Close
• Link to Problem

• Provider B
• Accept and Open Incident
• Acknowledge with Incident
• Repair
• Request Verification
• Accept Verification
• Close w/ Incident
• Link to Problem

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Problem Management

• Customer A
• Raise Problem Request with Symptom CI or Incident
  
• Note Prov. Prob
• Request Status
• Update Problem Record
• Update Problem Record
• Verify
• Close Problem

• Provider B
• Accept Request
• Acknowledge and Provide Problem
• Return Status
• Status Change Known Error
• Resolve
• Request Solution Verification
• Update Problem Record
• Close Problem

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Change Management

• Customer A
• Acknowledge or not CI Maintenance
• Suppress Monitoring
• Update Service Desk

• Provider B
• Maintenance Advice for CI

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Challenges

• Transaction Definition
• Field Contents
• Qualifiers
• Edits
• Transmission Media and Protocols
• Formats
• XML

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Proposal

• itSMFSponsored InterIndustry Customers and
  Providers International Working Group to Define
  for 9/2004
• ITSM Transaction Sets
• Media and Protocols
• Formats
• Incident Management Pilots?

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Thank YouQuestions on Proposal?
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