Thursday, 22 January 2015

Showing Service Management Value: Incident Management

Whenever you are talking about making any improvements to service delivery the key question is going to be where to start. Part of the improvement process is to identify what to improve upon. Most organizations will outline that the 'buck stops here so this is one improvment objective to look at - Value. Granted, Incident management in itself isnt a 'value add' process however I decided to start here since many organizations already are doing this on some level.

In another career lifetime I worked with a person who said that every minute counted, he said that if you added all the lost minutes together you could produce unimagined results. He usually followed this up with “time is money”. While he may not have been a positive mentor in the sense that I learned how to improve customer service I did learn something from him. Every minute counts.

Keep in mind, calculating the return on investment isn’t always going to be down to dollars and cents, minutes and hours. In some cases there will be areas which are going to less quantifiable like customer satisfaction for instance.

For some quantifying what a service costs will present at least two issues I can think of right away.

     1. That you won’t be able to quantify the cost of your services, and in the seemingly endless search this initiative will lose traction and fall off the radar altogether.
     2. Because of number 1, you decide to leverage values which have been deemed as industry standards. The trouble is when you are asked how you came up with the values and answer “industry standards” your audience may see this data as inaccurate or a guess at best.

So how do you proceed?

To begin with, if you do nothing you will achieve nothing. Doing something even if it appears insignificant will have some impact. I suggest by starting with what you already know. What it costs for you and your team to manage incidents.

Here is a simplified example:
Note: these numbers have no value other than to show mathematics you can apply to your organization


Priority
Volume
Duration (average)
Total Duration (minutes
1
100
4hrs
24000 mins
2
200
8hrs
96000 mins
3
700
24hrs
1008000 mins

Staff
Salary/Year
Cost/min*
People
Total Salary
Tier 1
50K
.40
10
500000
Tier 2
75K
.60
10
750000
Tier 3
100K
.80
10
 *Based on 40hrs/week and 52 weeks per year

If we were to suggest that each incident requires the following:
·       2 Tier 1 @ 0.40/min = .80/min
·       2 Tier 2 @ 0.60/min = 1.20/min
·       1 Tier 3 @ 0.80/min
The total for all Priority 1 would be 2.80(24000) = 67200.00 per year

What if we were to enable other teams in a way to reduce cost? Let’s say that we were to eliminate the need for a Tier 3 person at all for incidents 2.00(24000) = 19200 savings!

Alternatively if we were to reduce the average outage time in Priority 1 incidents from 4 hours to 3 hours it would look like this  2.80(18000) = 50400.00 per year – that’s a 16800 dollar savings.

Now I appreciate that these people are not working on these issues all the time but what we are looking at is identifying where our costs are associated. We may currently escalate all priority 1 incidents to our Tier 3 support as in this example, however after looking at the costs we may decide that there are better ways to do things compared with “we have always done it this way and it seems to work”.

The 30 people we have in IT are not likely to change as a result of reducing incidents however we should be in a position to re-allocate them to other work accordingly. In most cases putting particular skills to work in areas where they are used in a more cost effective way.

What an exercise like this really illustrates is where you can make some improvements or where any automation could help to reduce your costs.

 

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