Every Service Costing Model Has to change at some point. When and How to rationalize and socialize those changes are important points to consider before the project gets started
2. Thavron Biases
• Systems Thinking
• Universal Business Service Model
• Manufacturing and Supply Chain roots
– Lean (MESA Lean Manufacturing Strategic Initiative Guidebook author, Toyota Method via GM/Delphi)
• Modeling/Frameworks
• Common Sense
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3. Every Model is a Chargeback Model
IT costs impact
everyone’s bottom
line. This makes
any change in IT
costs important.
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4. What Causes IT Costs to Change?
Consumption changes
Data Changes
Model/Allocation changes
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5. The Business Changes their Behaviors
• Changes in headcount
• M&A/Divestiture
• New products
• Retiring products
• Changes in process
• …
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6. When the Data goes bad
• Data Linkages
• Data Structure
• Data Corruption
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7. Validate with monthly processes
• Regular governance processes
– Fallout
– Unexpected changes in source data
– Technical failure
– Include some feedback /corrective
mechanism
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8. Every Model will Change
• Organizational Changes
• Philosophical Changes
• Infrastructure Type changes
– Not linkages in the data
• Service Lifecycle impact
• Fundamental changes in source
data
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9. Everyone has a model
Input Calculation Output
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10. Not every change is an event
• Define what is a material event for your company
– Any change to budgeted charges?
– Percent Variance tolerance ( 3-5% common)
– Street impact measures
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11. When it goes wrong……
• Business loses confidence in:
– Model
– Team
– Process
– IT
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12. Pitfalls
• Didn’t really understand the old
method
• Data changed between versions
• Don’t really understand the new
method
• Model implemented wasn’t
properly validated and was
wrong
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13. When It really is an event…….
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14. When It really is an event…….
Make it an Event!
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15. The Ugly
• Tedious
• Financial Validations
• Time/resource intensive if the changes are extensive
• Excel will be your best friend
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16. The Bad
• Almost always time constrained
• Finance Team does not have expertise to validate model code
logic
• People forget to budget for the staffing to test and validate
• Team has never built or executed test cases before
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17. The Good
Success Stories
– Change from no model , no services
to implemented service costing
– Change from infrastructure only
charges to Business Service charges
– Change from a “broken” model to
“fixed” model
– Migrate from one vendor system to
another
– Migrate from Excel to COTS package
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18. How to make it work
• Plan to Plan
• High level Plan before you budget
– How many moving pieces?
– Availability and Condition of the data?
• Be honest about the skills and capabilities of your own staff
• Leverage internal expert knowledge in IT System change where
possible
• Training
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19. What do you need?
• Documented Use Cases for the system
• Test Cases that are adaptable to work for before and after
– If it is a full system change, will have to duplicate and update the test
cases
• Validate both the model logic and the outcomes
• Have a plan and know what can be validated outside of the
system
• Socialization with the consumers
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20. Socialization
• Communication Plan
• Communicate
• Share the end tie outs – no need to drag everyone through the
mud
• Bundle it up and make it infrequent
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21. Keys to Success
• Clearly Defined Use and Test
Cases
• Plan for Testing and Validation
• Know yourself and be honest
about it
• Staff appropriately
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22. Discussion
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Follow up questions?
Nan Braun
nbraun@thavronsolutions.com
765.252.4509 / http://thavron.com /@ThavronSol