SYNERGY ITSM INC Delivering IT Service Management Success

In the Trenches Series:

IT Service Support: The Cost of Doing Nothing

Like everyone else in IT leadership, you probably find yourself caught between the
proverbial rock and a hard place in this economy. Perhaps you are being asked to cut
labor while maintaining or increasing efficiencies. Or the business demands maximum
uptime with decreased budget allowance while you grapple with technology refresh
requirements and the never-ending learning curve tossed at us in IT.

So what do you do? If you are like many IT leaders, right now you are doing nothing.
Up until now, few of us would have argued with that strategy, but the days of
complacency are probably over. What you might need to figure out is whether doing
nothing is costing you more than investing in improvement in your IT Service
Management.

Brutal Honesty

Take a look at this IT maturity map and ask yourself where your department is today.

The majority of mid-market organizations look at this and see bits and pieces of
headway across Levels 0-2. Most will rate themselves as a “1.5”. The lower you are on
this map, the higher the costs are to provide IT support and delivery to the business.
You can justify the investment in the first three foundations and increase your maturity
very rapidly. Let’s examine these underlying foundations and the supporting
benchmarks for costs.
 SYNERGY ITSM INC Delivering IT Service Management Success
In the Trenches Series:
IT Service Support: The Cost of Doing Nothing

Tool Leverage
Somewhere in the list below is a description of how you are using technology to
manage IT Service Support today.

1) Nirvana:
You have an IT Service Management System with:
a. A robust workflow engine
b. Well-written business rules that support your processes and are
well-adapted to your IT people
c. Accurate data on your performance
d. Integrated with your other point-solutions
e. Minimal customization
f. Current version that is supported by the vendor
g. Staff in-house that understand how to administer it
h. The ability to let end-users help themselves as much as possible
i. A good knowledgebase to share information
j. An accurate picture of where your IT assets are, who is using
them, how often they break and when you make changes to
them.

2) Hanging in There:
You have an official system, but with some issues:
a. Out of date, unsupported
b. You built it yourself and no one knows how to alter it
c. Workflow? What’s that??
d. Not everyone is using it so we don’t know how many requests
we are getting
e. We have five different systems that can help manage IT but
they don’t talk to each other
f. We bought a huge system and are only using a percentage of its
capabilities sand can’t afford to maintain it
g. The vendor says I have to upgrade but all my customizations
are going to go down the drain if I do (or it will cost an arm and
a leg to rebuild them)
h. You have more than one service desk and each one has it’s own
solution
i. People circumvent the system to get around deficiencies and
bureaucratic requirements

3) Up a Creek:
a. You are using spreadsheets to track your requests and issues
b. You have multiple databases or spreadsheets that contain your
asset information…none of them 100% accurate
c. You are relying only on outlook or email to track your requests
d. You don’t think you even need technology to track this
 SYNERGY ITSM INC Delivering IT Service Management Success
In the Trenches Series:
IT Service Support: The Cost of Doing Nothing

What’s the Damage?

Here is a set of cost benchmarks for just the Incident/Service Request

management process. If you are not moving toward Nirvana, you are costing
yourself a LOT of money.

The Real Value-Add of Automating Support

$100 +

Level 3 Engineers
a n d On - s it e
$50 - $75 support

Level 2 Desktop/
$15 - $30 Network Groups
Cost
First Level
Resolution
$2 - $8 Automation with Workflow, Knowledge
Management, Service Level Management
Automated
Self-Service
$0
Call
E l i m i n a ti o n Mean time to resolution

Let’s look at an example for a typical company hanging in there.

Assumptions Benchmark/Avg Cost per Month

Number of End-users Supported: 2000
Number of Issues/Requests per
month: 3000 1.5 requests per user
Number Resolved at Level 1
(60%): 1800 $22.50 $40,500
Number Resolved at Level 2
(33%): 1000 $62.50 $62,500
Number Resolved at Level 3 (7%): 200 $100.00 $20,000
TOTAL COST $123,000
 SYNERGY ITSM INC Delivering IT Service Management Success
In the Trenches Series:
IT Service Support: The Cost of Doing Nothing

If you invested in a moderately-priced Service Management System and properly

implemented it, these statistics could conservatively look like this:

Assumptions Benchmark/Avg Cost per Month

Number of End-users Supported: 2000
Number of Issues/Requests per
month: 3000 1.5 requests per user
Number Resolved at Level 0-Self
Service (7%): 200 $5 $1,000
Number Resolved at Level 1
(70%): 2100 $22.50 $47,250
Number Resolved at Level 2
(20%): 600 $62.50 $37,500
Number Resolved at Level 3 (3%): 100 $100.00 $10,000
TOTAL COST $95,750

This is a conservative analysis and, of course, your results will vary, but that’s a
difference of $27,250.00 per month you could use to pay for the system, redeploy
resources or if need be cut labor. This is a very simple model based solely on
driving down the same volume of requests to a lower level of technical expertise.
Let’s look at the next foundation for maturing your IT organization.

Operational Processes

One could rightfully argue that this is really the first step because if you don’t
define your IT Support processes properly, you will end up enabling broken
procedures and policies with your shiny new technology. Or, as an esteemed
colleague of mine, Don Lee of I.T. Business Engineering says, “Technology makes
bad process go faster”. That being said, let’s look at where you are and what cost
benefit there might be from assuring your processes are the most efficient and
effective for your organization.

Despite the terrific theoretical frameworks we have today like ITIL and BS20000,
one size does not fit all…especially if you are a mid-market organization. These
frameworks are an excellent foundation and truly can provide a best-practice
guideline, but the over-used term “best practice” is used to justify every
consultant’s, software vendor’s and industry pundit’s opinion based on statistics.
Best practice is in reality what works best in your organization. No more…no less.
Fact is, no organization—large or small—should try to implement an entire
framework. This has been compared to “taking one pill from every medicine
bottle in a pharmacy.” Doing so would cost a fortune and likely be ineffective.

What will work best in your organization is a set of documented, repeatable,

sustainable procedures and policies that remove or reduce business risk and
handling/down time for incidents, service requests, change requests, asset
lifecycle management and critical business services. This is achieved by:

1) Getting in touch with real business need

 SYNERGY ITSM INC Delivering IT Service Management Success
In the Trenches Series:
IT Service Support: The Cost of Doing Nothing

2) Analyzing what you do today

3) Assessing what works, what doesn’t and what’s missing
4) Designing and documenting what will work best that takes the least
amount of time to execute (Lean Process Design).
5) Automating wherever possible and financially feasible
6) Educating and training your people to properly follow the processes
7) Accurately measuring so you can continue to make your processes
better (Continuous Improvement)

So what’s in it for you? Using our same example for only the Incident/Service
Management Process, here is a potential result based on benchmarks:

Assumptions Benchmark/Avg Cost per Month

Number of End-users Supported: 2000
1.1 requests per
Number of Issues/Requests per month: 2200 user
Number Resolved at Level 0-Self
Service (7%): 140 $2 $280
Number Resolved at Level 1 (75%): 1650 $11.00 $18,150
Number Resolved at Level 2 (20%): 440 $50.00 $22,000
Number Resolved at Level 3 (3%): 73 $100.00 $7,300
TOTAL COST $47,730

That is a savings of $75,270.00 per month over the current state with which you
could replace or upgrade your technology AND hire competent experts to guide
you through improvement very rapidly.

Business Service Management

No, it’s not just some catch phrase that’s become wildly popular and bandied
about. It’s the pinnacle to which we all should aspire. Although it deserves a white
paper of its own, here is a brief discussion. Let’s start with the official definition
from Wikipedia:

Business Service Management (BSM) is a methodology for monitoring and measuring

IT services from a business perspective. BSM consists of both structured process and
enabling software.

BSM allows IT departments to operate by service rather than by individual

configuration items or technology silo, enabling prioritization of efforts, ultimately
improving the service that is delivered to the business or organization.

Touching on all the Lifecycle Processes within the Information Technology

Infrastructure Library, BSM is a way to bring together many disparate processes and
tools, and creating quantifiable improvement in efficiency and the ability to view
technology as it is germane to business mission.
 SYNERGY ITSM INC Delivering IT Service Management Success
In the Trenches Series:
IT Service Support: The Cost of Doing Nothing

Translation: BSM means organizing and managing your IT Department by the

services which you provide to the business, executing support and delivery of
those services and measuring and reporting to the business on how well you
support its strategy with technology.

This is a fundamental shift in thinking for most IT leaders who have traditional
silos like Help Desk, Desktop Services, Network, Servers, Applications,
Developers, Security, etc. It doesn’t mean those groups should necessarily go
away, but it does mean that they need to look at what they do from a business-
focused viewpoint and understand that they are responsible for providing the
services together, not merely doing their part.

If you create a Service Catalog (even if you only start with your critical services)
and manage incidents, problems, changes, configurations (assets), availability,
capacity, etc. related to these services, you not only get your staff working
together, but you will rapidly increase the perception of IT as an integral part of
the business by the C-level executives. That fact alone will open funding doors to
improvement projects.

Cost benefits of BSM include everything we have spoken about up to this point.
They also include rather difficult to measure justifications such as:

1) Employee productivity. Gartner estimates that end users experience

12% downtime every year because of unusable technology. Let’s be
conservative in our model and assume 3% downtime for our 2000
users at an average loaded salary of $38,000. If our BSM strategy can
eliminate even half of that, then the business benefits by $760,000 per
year.
2) Increased revenue through automated strategies like rapid
provisioning of sales personnel or reduced development time for Order
to Delivery systems.
3) Reduced risk from regulatory audits
4) Increased employee job satisfaction and reduced attrition rates.
5) Increased customer satisfaction (happier IT employees make happier
customers).

Though extremely difficult to benchmark, these are areas that you should be
exploring along with other business challenges that you could help mitigate with a
BSM strategy. Regardless of your role in the organization, shifting from thinking of
technology as a necessary commodity to reinforcing it as an integral part of the
business will gain the attention of those upstream and downstream from you.

The Devil is in the Details

So far we have taken a look at three areas of improvement that will drive your
organization up the maturity ladder. We have explored an example of a fictitious
medium-sized company where we found that an investment in the right system
and the correct redesign of processes will reap huge benefits…$900,000 in
operational improvements and $760,000 in savings to the business through
 SYNERGY ITSM INC Delivering IT Service Management Success
In the Trenches Series:
IT Service Support: The Cost of Doing Nothing

greater productivity for a total of $1.6 mm per year through increased efficiency
and effectiveness.

Using this exercise, earmarking discretionary funds or adding to your budget for
next year a $100,000 ITSM technology and $50,000 professional services
investment becomes quite justifiable.

This fictitious company is probably not the mirror of your company. In order to
realistically estimate your costs and benefits, you need to gather the details for
your environment. Using your service desk data and calculating the cost of
support based on the incident management process is a good place to start for
two reasons:

1. The data is more readily available if you have a system and use it correctly
2. Support involves labor intensive and expensive processes that when
streamlined can effect great savings.

Identify the historical metrics and data that will be the most accurate. If you have
reliable data, use it. If you don’t have reliable data, poll your staff for anecdotal
data and take your best educated guess. If you have no clue, use a benchmark as
we have done in our example. If possible, get a recent three- six month sample of
the following data points:

1) Number of Incidents/Requests per Year recorded—again, the

benchmark here is 1.5 per en user per month. If you get less than
that, you are either performing better than the industry average, or,
more likely, not all incidents/requests are being recorded. Gartner tells
us that the cost of these unrecorded incidents can be up to ten times
the amount of one that is recorded and properly measured.

2) Number of end users who are consumers of your technology. Restrict

this to employees who actively access your services or contact you for
help. Some organizations equate this to the number of workstations or
laptops supported…but that can be misleading in certain industries like
Healthcare where multiple users leverage each workstation.

3) Number of employees involved in support and the percentage of their

time spent handling support requests. These will include the following
groups:

a. Service Desk: The number of full time equivalents (FTE) who

spend 100% of their work time receiving, recording and
resolving incoming requests. Next, estimate the average annual
salary with benefits load that you pay these resources and
multiply it by the number of FTE. This is your labor cost at Level
One.
 SYNERGY ITSM INC Delivering IT Service Management Success
In the Trenches Series:
IT Service Support: The Cost of Doing Nothing

b. Service Desk: Add up the overhead costs that include the

annual cost of any equipment or software purchases or leases,
overtime, training, telecom expenses, manager salaries, etc.

c. Level Two: The number of full time equivalents who will first be
assigned an Incident or Service Request if the Service Desk
cannot resolve it. These usually align with your traditional IT
silos like Desktop Support, Network, Server, Application
Administrators, Telecom, etc. Very Important: Estimate the
average percentage of time in their workday that they spend
handling the Incidents/Service Requests to which they are
assigned. The benchmark for this is 25%-50% with the balance
of their time being spent on project work or routine IT recurring
work. Next, estimate the average annual salary with benefits
load that you pay these resources, multiply it by the percentage
of their time spent and then multiply that by the number of
Level Two FTE. This is your labor cost at Level Two.

d. Level Three: The number of full time equivalents who handle the
issues that cannot be resolved at Level One or Two. These are
typically Software or Network Engineers who are highly paid and
should NOT be spending much time on resolving incidents.
Estimate the average percentage of time in their workday that
they spend handling the Incidents/Service Requests to which
they are assigned. The benchmark for this is 5-10% with the
balance of their time being spent on project work. Next,
estimate the average annual salary with benefits load that you
pay these resources, multiply it by the percentage of their time
spent and then multiply that by the number of Level Three FTE.
This is your labor cost at Level Three.

e. Finally, if you outsource any part of support to a third party,

such as field support or desktop repair or even Service Desk
services, estimate the total annual amount of those contracts.

4) Number of Total Incidents/Requests that are resolved by each Level

before being escalated to the next Level:

a. Level One Service Desk

b. Level Two
c. The balance will be Level Three

Once you have gathered this data, it is fairly simple to calculate the basic total
cost of support by adding your costs together. The next step is to go a little
deeper and arrive at the cost to resolve an Incident/Request at each level. If you
would like some help, please contact the author for a copy of a basic spreadsheet
that will calculate it for you.
 SYNERGY ITSM INC Delivering IT Service Management Success
In the Trenches Series:
IT Service Support: The Cost of Doing Nothing

Once you know the cost at each of your levels and how well you perform to the
industry benchmarks, you can begin estimating what will happen if you make
changes to your technology or processes and how it affects the cost of labor. The
savings become apparent as you drive the resolution of your requests to less
expensive resources. You can use these differences to make a business case for
new technology or consulting professional services.

If you understand the savings attainable, you will now understand the cost of
doing nothing. Once you take this perspective, it’s easy to see how the cost of
doing nothing far outweighs the cost of improving your IT Support. If you are like
95% of the organizations out there, it’s not a question of can you afford to
improve, but a question of can you afford not to

Donna Hammond has worked in the Service Support space for the past 10 years in businesses as
large as a Big-5 consulting firm to as small as a 5-person Help Desk. She has an extensive
background in designing, building and improving medium to enterprise sized support organizations
that handle both IT and Non-IT support functions. She has also managed and directed support
operations and understands them not only from a strategic view, but from a tactical perspective.
She is currently the Business Development leader at Synergy ITSM, Inc.
Email: donna@synergyitsm.com or call toll free at 1-800-977-4876 Ext 706.