Service Value with Business Service Management!
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Service Value with Business Service Management!
- 1. Business Service ManagementValue and Benefits Michele Hudnall michele@BusinessServiceManagementHub.com Click Here to hear the presentation!
- 2. So What! Why Act Now? 1 hour of down time = ~$100,000 Most organizations experience ~ 10 hours / year $1M / year in down time >70% of outages are reported by customers >80% of outages are bad changes What about revenue impact? How Can You Afford Not To?
- 3. So What! Why Act Now?Service Focus, Growth & Increased Complexity Conservative efficiency gain in an $100M organization 1-12% of Revenue is IT Spend 5% $5 M IT Spend 70% of IT Spend is Operations $3.5 M Operations 50% is Spent on Human Capital $1.75M People 85% of Time is Spent Reacting & Maintaining $1.49M “Keeping the Lights on” 1.5% of Revenue Maintenance 30% $1.49M Maintenance 35% Conservative 15% Improvement Reduce 85% Reacting & Maintaining To 70% Reduces $1.49M to $1.23M $260,000 Shift To Adding Value versus “Bulb Monitor”! Reactive 40% Reactive 50% Proactive 15% Proactive 30%
- 5. $1M in Outage time or
- 6. 1% of Revenue –– $1MReactive 40% Proactive 30%
- 7. So What! Why Act Now?Service Focus, Growth & Increased Complexity Conservative efficiency gain in an $100M organization 1-12% of Revenue is IT Spend 5% $5 M IT Spend 70% of IT Spend is Operations $3.5 M Operations 50% is Spent on Human Capital $1.75M People 85% of Time is Spent Reacting & Maintaining $1.49M “Keeping the Lights on” 1.5% of Revenue Maintenance 30% Total Cost Management and Impact Avoidance $1.260M Shift To Adding Value ~20% Cost of a Tool = 80% Return Further potential with tool consolidation Reactive 40% Proactive 30%
- 8. The Value and Benefits of the Business Service Management Imperative Efficiency Gains Flexible Technologies Deployed & Managed Impact Avoidance Proactive Service Priority & Value Risk & Impact Controlled Technology driving Business Grow Top Line with Technology 2% of Revenue Lost –> Revenue Growth
- 9. Business Service ManagementImperative Michele Hudnall michele@BusinessServiceManagementHub.com
Editor's Notes
- Hi Michele Hudnall here - Business Service Management is an Imperative today - Business expects IT to be efficienct. Now that budgets are opening, investment is for technology that drives growth. We have focused on what we know for too long, operating or "keeping the lights on" and have ignored setting ourselves up to drive growth with technology.A service provider explosion is occurring with new technology as the catalyst, offering low cost, flexible and consistent options - this is your competition.These slides and metrics illustrate how an IT budget breaks down and how you can re-deploy it to drive value and growth.Let's start......
- So What? Why act now? What's the big deal?1 hour of down ime is approx. $100,000 / hourMost organizations experience ~10 hrs / year~$1M in down time costs - reacting and maintaining>70% of outages are reported by your customers>80% of outages are bad changesAnd we have not applied revenue impact. A single large outage has been reported in the press over and over again and runs about 1-2% of revenue.How can you continue - the question is how can you afford not to make the transformation from managing technology to managing services.
- Here's an example I've done repeated with both private and public companies. I've takend the headlines of an outage of name brand organizations and worked the math and the assumptions hold true and scale well.Let's start with a $100M organization and conservative efficiency gain of just 15% - most should experience 30%+ easily by investing in the automation and transformation.First we start with IT Spend - either you know your IT Spend or here is a quick estimate - on average it can range from 1-12% of revenue depending upon industry. I'll use 5% as middle of the road - $5M Next, 70% of IT Spend = Operations - $3.5M in this examplehalf of that is what we spend on our human resources - or $1.75M in this exampleAn astounding 85% of their time is spent - "just Keeping the Lights on" reacting and maintaining or $1.49MTo put this into perspective that's 1.5% of RevenueWith just a 15% improvement down to 70%, you can see there is a shift of $260,000 towards value versus just being a "bulb monitor"This is just one piece of the equation. Let's continue
- As we spend most of our time maintaining and reacting - we are reacting to service impacting events caused by poor changes, health of the infrastructure, etc without the ability to avoid these outages.So as we started:Service impacting events cost us approx $100,000/hr with an average of 10 hrs / year at a cost of outage time of $1M or in this example - another 1% of revenueThis does not include lost revenue, this represents internal costs reacting and restoring service.Let's wrap up this case....
- The value add opportunity is $1.26M in efficiencies avoiding impact and using technology to more proactively monitor and manage the environment.Factoring in a tool cost of 20% -- the return is easily in the first year and can be as high as 80% - however, you could estimate a 50% - 80% return fairly easilyUSD currency was used in this example, currency does not matter as it is based upon industry accepted percentagesAgain, this did not consider the cost savings from the reduction of resources (hardware, software and tools) or lost revenue which can further grow the value of the practice making a Business Service Management practice your imperative.
- In summary what we have covered is:Efficiency Gains that most significantly come in 2 flavors - first in moving from reacting and maintaining to real time service management reflecting business priority and value that allow us to deploy and manage flexible technology optionsImpact Avoidance - by viewing the infrastructure as a service instead of technology you have a view of risk and impact and can proactively manage with business priority and value.Finally by freeing resources you will have Technology driving Business within your organization driving top line growth and managing costs efficientlyService impacting events and focusing only on "just keeping the lights on" is costing your organization on average 2% of revenue / year and will just continue - why not apply that to driving growth with a sound Business Service Management practice.
- This illustration of real cost and value if what your lose every year and can be applied by transforming from operator to service manager.These are old measures that haven't changed for most because we take on new technology without adjusting our practices. The catalyst of the cloud, virtualization and the service provider explosion is your chance to mimic the service provider's model and manage based upon services, service value and drive growth into your business.Thank you and feel free to drop me a note, question anytime to discuss your model driving value.