Leveraging KPI’s to Maximize the ROI of Support

Leveraging KPI’s to Maximize the
ROI of Support
Jeff Rumburg • MetricNet

More than 3,000 IT Service and Support Benchmarks
Global Database
30+ Key Performance Indicators
Nearly 60 Industry Best Practices
Empirical Observations from Our Global Database

10 Mega Trends: Service and Support as a Business
 Holistic use of KPI’s and Benchmarking
 Process Optimization (ITIL, ITSM)
 User Self-Help
 Desktop Virtualization
 Marketing Service and Support
 Understanding of TCO and First Level Resolution
 Knowledge Management
 Remote Diagnostic Tools
 The Widespread Adoption of ROI Analysis
 Service and Support as a Business
3© 2014 MetricNet, LLC, www.metricnet.com

4
The Paradox of IT Support
 Less than 5% of all IT spending is
allocated to end-user support
 Service desk, desktop support,
field support
 This leads many to erroneously
assume that there is little upside
opportunity in IT support
 The result is that most support
organizations are managed with the
goal of minimizing costs
 But the most effective support
strategies focus on maximizing
value
© 2014 MetricNet, LLC, www.metricnet.com
Corporate IT Spending Breakdown
4%
96%: Non support functions
End-User Support
 Application
Development
 Application
Maintenance
 Network
Operations
 Mainframe and
midrange Computing
 Desktop Computing
 Contract Services
(e.g., disaster
recovery)

5
The Cost Center Dilemma in IT Service and Support
 Responsible for cost control
 Not responsible for…
 Revenue generation
 Profits
 Investment decisions
Cost Center Profit Center
VS.
 Creates economic value
 Demonstrates profitability
 Cost savings
 Cost Benefit Analysis
 ROI Analysis
 The vast majority of service and support organizations operate as cost centers
 They are expected to control costs, but are not expected to make any explicit financial
contribution to the enterprise
 The focus in a cost center is on minimizing costs
 The focus in a Profit Center is on creating and maximizing value!

6
Do Profitable Businesses Offer a Solution?

7
Sources of Value: Demonstrating Profitability
IT Service and Support can create value in a number of ways:
 Minimizing Total Cost of Ownership (TCO) by maximizing level 1
resolution rates
 Improving end-user productivity by reducing incident resolution
times
 Reducing ticket volumes through technology and Root Cause
Analysis
 Mitigating the effects of unplanned downtime through planning,
prevention, and aggressive remediation

Total Cost of Ownership: North American Averages
Support Level Cost per Incident
Vendor
Level 2: Desktop Support
Field Support
Level 3 IT
(apps, networking, NOC, etc.)
Level 1: Service Desk
$471
$196
$85
$62
$22

9
0
10
20
30
40
50
60
70
0 1 2 3 4 5
ProductiveHoursLostperEmployeeperYear
IT Support Returns Productive Hours to End Users
1 (top) 2 3 4 (bottom)
Customer Satisfaction 93.5% 84.5% 76.1% 69.3%
First Contact Resolution Rate 90.1% 83.0% 72.7% 66.4%
Mean Time to Resolve (hours) 0.8 1.2 3.6 5.0
Service Desk
Desktop Support
Performance Quartile
Support Function Key Performance Indicator
37.4 46.9Average Productive Hours Lost per Employee per Year 17.1 25.9
Performance Quartile n = 60

10
Reducing Ticket Volumes -- Root Cause Analysis: Level -1
Metric Beginning of Year End of Year Change
End-Users Supported 8,190 8,650 460
Monthly Ticket Volume 21,300 19,100 -2,200
Monthly Tickets per User 2.60 2.21 -0.39
Annual Operating Expense $4,769,496 $4,226,448 -$543,048
Cost per Ticket $18.66 $18.44 -$0.22
Annual Cost per User $582 $489 -$94

11
Reducing the Cost of Downtime
Cost of Downtime
Productivity
Losses
Business Losses
 Lost productivity from
employees who are idled
or slowed by the outage
 Lost sales
 Lost customers
 Product spoilage and
shrinkage
 Damage to business
reputation

ROI Defined
ROI =
Return
Investment
=
Savings
Spending
 ROI is a simple ratio
 It requires quantification of Return (Savings), and Investment
(Spending)
 It is measured over a one-year timeframe (One Year ROI is implied in
the metric)
 It is one of the most widely used and accepted financial metrics
 It can be used prospectively, as part of a Business Case Analysis
 …Or retrospectively to evaluate the past business success

14
An Industry Case Study
The Scenario
 An insurance company spending $4.8
million per year on their service desk
 The service desk supports 8,190 users
 And handles 21,300 tickets per month

15
Support Level Cost per Ticket
Vendor
Field Support
Level 3 IT
$471
$196
$85
$62
$22
Case Study Part 1: Minimizing Service and Support TCO

A SPOC Service Desk is Highly Leveraged
User Community
Level 1:
Service Desk
Level 2:
Desktop
Support
Field
Support
Level 3:
IT Support
Vendor
Support

Key SPOC Principles
Key SPOC Principles
 Enterprise takes an end-to-end view of user
support
 User/Customer has a single point of contact
for all IT-related incidents, questions,
problems, and work requests
 The Level 1 Service Desk is the SPOC
 Level 1 is responsible for:
 Ticket triage
 Resolution at Level 1 if possible
 Effective handoffs to n level support
 Resolution coordination and facilitation
 Ticket closure
 Desktop “Drive-bys”, “Fly-bys”, and “Snags”
are strongly discouraged
© 2014 MetricNet, LLC, www.metricnet.com 17

Two Metrics You Should Know
First Level Resolution Rate (FLR)
The number of tickets resolved at level 1 divided by all
tickets that can potentially be resolved at level 1.
% Resolved Level 1 Capable (PRLC)
The percentage of tickets resolved by desktop support
that could have been resolved at level 1 support.
18

Industry Data for Level 1 Resolution
0
5
10
15
20
25
30
35
40
45
50
55
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100%
Net First Level Resolution Rate
NumberofDataPoints
Average ------ 73.9%
Max 98.9%
Min 24.0%
Median 75.0%
> 95% Net FLR 2.0%
Industry Average Net FLR Statistics
Net First Level Resolution Rate
NumberofDataRecords

0
2
4
6
8
10
12
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
22%
24%
26%
28%
30%
32%
34%
36%
38%
40%
% Resolved Level 1 Capable
NumberofSupportOrganizations
FirstQuartile=12.7%.
FourthQuartile=24.3%.
Median=18.1%
Industry Data for % Resolved Level 1 Capable

21
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
NetFirstLevelResolution
Remote Diagnostic Software No Remote Diagnostic Software
The Effect of Remote Diagnostic Software on FLR
Average = 77.8% FLR
Average = 61.4% FLR

22
The Effect of a Mature Knowledge Base on FLR
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
0 1 2 3 4 5 6
KBase Maturity
NetFirstLevelResolution

23
The Result: Maximizing First Level Resolution Rates
93% = Insurance Company First Level Resolution Rate
- 74% = Industry Average First Level Resolution Rate
=================================================
19% Higher First Level Resolution Rate than Industry Average
X 21,300 Tickets per Month X 12 Months per Year
=================================================
48,564 More Tickets Resolved at Level 1 each Year vs. Average
X $62 per Ticket Escalated Beyond Level 1
=================================================
$ 3.0 Million Estimated Annual Savings by Minimizing TCO

24
0
10
20
30
40
50
60
70
0 1 2 3 4 5
Case Study Part 2: Returning Productivity to End-Users
Service Desk
Desktop Support

25
The Result: Returning Productive Hours to End-Users
33 Hours = Industry Average Lost Productivity per User per Year
- 17 Hours = Insurance Company Estimated Lost Productivity per User
====================================================
16 Hours in Saved Productivity per User per Year
X 8,190 End-Users
====================================================
131,040 Productive Hours Returned to the Workforce each Year
÷ 1,700 Productive Hours per User per Year
====================================================
77.1 FTE Headcount Savings per Year
X $82,300 Annual Salary and Benefits per User
====================================================
$ 6.3 Million Estimated Annual Savings from Returned Productivity

26
Case Study Part 3: Cost Savings from Root Cause Analysis
Cost per Ticket $18.66 $18.44 -$0.22
$ 94 in Savings per User per Year
X 8,650 End-Users
=========================================
$ 813,100 Estimated Savings from Root Cause Analysis

27
Return on Investment: Summing it Up
$ 3.0 Million Estimated Annual Savings from Minimizing TCO
+ $ 6.3 Million Estimated Annual Savings from Returned Productivity
+ $ 0.8 Million Estimated Savings from Root Cause Analysis
====================================================
$ 10.1 Million Estimated Economic Contribution per Year
Estimated ROI = $10.1 Million ÷ $4.8 Million = 210% per Year
Return Investment

28
Cost of Downtime
Cost of Downtime
Productivity
Losses
Business Losses
 Lost productivity from
employees who are idled
or slowed by the outage
 Lost sales
 Lost customers
 Product spoilage and
shrinkage
 Damage to business
reputation

29
Cost of Unplanned Downtime
Cost of Prevention and Readiness
CostofUnplannedDowntime
Empirical data shows that the
more an enterprise spends on
outage prevention and
readiness, the lower the cost
of unplanned downtime will be

30
Total Cost of Downtime
Cost of Prevention and Readiness
CostofPrevention+Downtime
The TCO for downtime must
include the costs of
prevention, readiness,
downtime, and recovery
Point of Minimum
Total Cost

31
Downtime Mitigation Strategies for Service and Support
 Disaster Recovery Drills
 Outbound user notifications for planned outages
 Outbound user notifications for major unplanned outages
 Recorded messages to inform inbound callers that
service and support is aware of and working to resolve
any major issues

The Critical Metrics of ROI
 Annual Operating ExpenseInvestment
Return  Estimated Annual Savings / Economic
Contribution
Root Cause
 Productive Hours Returned to Users
Downtime  Mitigation of Unplanned Downtime
Efficiency
 % Resolved Level 1 Capable
TCO
 First Level Resolution Rate
 Tickets Avoided

33
The Big Picture for ROI Metrics

34
The Paradox of IT Support
 Less than 5% of all IT spending is
allocated to end-user support
 Service desk, desktop support,
field support
 This leads many to erroneously
assume that there is little upside
opportunity in IT support
 The result is that most support
organizations are managed with the
goal of minimizing costs
 But the most effective support
strategies focus on maximizing
value
Corporate IT Spending Breakdown
4%
96%: Non support functions
End-User Support
 Application
Development
 Application
Maintenance
 Network
Operations
 Mainframe and
midrange Computing
 Desktop Computing
 Contract Services
(e.g., disaster
recovery)

35
Support Level Cost per Ticket
Vendor
Field Support
Level 3 IT
$471
$196
$85
$62
$22
IT Support Has an Opportunity to Minimize TCO

36
0
10
20
30
40
50
60
70
0 1 2 3 4 5
Quality of Support Drives End-User Productivity
Service Desk
Desktop Support

37
Proactive IT Support Can Reduce Ticket Volumes
Cost per Ticket $18.66 $18.44 -$0.22
$ 94 in Savings per User per Year
X 8,650 End-Users
=========================================
$ 813,100 Estimated Savings from Root Cause Analysis

38
Return on Investment: Summing it Up
$ 3.0 Million Estimated Annual Savings from Minimizing TCO
+ $ 6.3 Million Estimated Annual Savings from Returned Productivity
+ $ 0.8 Million Estimated Savings from Root Cause Analysis
====================================================
$ 10.1 Million Estimated Economic Contribution per Year
Estimated ROI = $10.1 Million ÷ $4.8 Million = 210% per Year
Return Investment

84%
47%
31% 29%
22%
19%
8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Service Desk Desktop
Support
Network
Outages
VPN Training Enterprise
Applications
Desktop
Software
Factors Contributing to IT Customer Satisfaction
%SayingVeryImportant
 n = 1,044
 Global large cap companies
 Survey type: multiple choice
 3 responses allowed per survey
 84% cited the service desk as a very important factor in their overall satisfaction with corporate IT
 47% cited desktop support as a very important factor in their overall satisfaction with corporate IT
IT Support Drives Customer Satisfaction for All of IT

Bottom Line: The Business of IT Service and Support
 IT Service and Support can and should be
viewed as a business and a profit center
 You must quantify your value (Return) to the
enterprise
 And then demonstrate your profitability!
40

Question and Answer
Jeff Rumburg • MetricNet

For More Information
 Read MetricNet’s whitepaper on Service and Support as
a Business
 http://www.metricnet.com/service-and-support-as-a-
business

Please make sure to complete an
evaluation on your smartphone by going to
www.HDIConference.com/Eval, or by going
to the HDI 2014 mobile conference app.
Thank you for attending this session

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 Technical Support
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Data in Excel format

More than 3,000 IT Service and Support Benchmarks
Global Database
30+ Key Performance Indicators
Nearly 60 Industry Best Practices
25 Years of Service and Support Benchmarks

49
Your Presenter: Jeff Rumburg
Jeff Rumburg is a co-founder and Managing Partner at MetricNet,
LLC. Jeff is responsible for global strategy, product development,
and financial operations for the company. As a leading expert in
benchmarking and re-engineering, Mr. Rumburg authored a best
selling book on benchmarking, and has been retained as a
benchmarking expert by such well-known companies as American
Express, Hewlett-Packard, and GM. Prior to co-founding
MetricNet, Mr. Rumburg was president and founder of The Verity
Group, an international management consulting firm specializing in
IT benchmarking. While at Verity, Mr. Rumburg launched a number
of syndicated benchmarking services that provided low cost
benchmarks to more than 1,000 corporations worldwide.
Mr. Rumburg has also held a number of executive positions at META Group, and Gartner, Inc. As
a vice president at Gartner, Mr. Rumburg led a project team that reengineered Gartner's global
benchmarking product suite. And as vice president at META Group, Mr. Rumburg's career was
focused on business and product development for IT benchmarking. Mr. Rumburg's education
includes an M.B.A. from the Harvard Business School, an M.S. magna cum laude in Operations
Research from Stanford University, and a B.S. magna cum laude in Mechanical Engineering. He
is author of A Hands-On Guide to Competitive Benchmarking: The Path to Continuous Quality
and Productivity Improvement, and has taught graduate-level engineering and business courses.
Mr. Rumburg serves on the Strategic Advisory Board for HDI.

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Leveraging KPI’s to Maximize the ROI of Support

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