Key considerations for implementation
E. Recommendations
Specific recommendations
C. Business impacts
The financial and non-financial business case results
Business case structure
Establishing the business case
• The business case should articulate the reason for undertaking the service management improvement • It should contain, where possible, the data and evidence
relating to the costs and expected benefits
• The focus of the business case should be on both
o The financial return on investment (ROI) for the service provider o The business value on investment (VOI) for the organization and its
customers
• It is important when developing a business case to ensure that the success criteria are clearly defined, including how and when they will be measured
143
Perspectives on benefits
• Improvements
o Outcomes that when compared to the ‘before’ state show desirable changes in metrics
• Benefits
o The gains achieved through the implementation of improvements (often described in monetary terms)
• Return on investment (ROI)
o The difference (as a percentage) between the benefit (saving) and the money spent to achieve that benefit
• Value on investment (VOI)
o The extra value created by a benefit that includes non-monetary or long term outcomes
What's in it for me?
• When creating the business case, the benefits across the organization need to be considered
• As an example, the business case for an service management capability improvement might include:
o For the business executives:
The benefits of the improvement expressed in business terms What impact it has on my business
Revenue increase / cost reduction VOI
o For the financial officers
The ROI Payback time ?
o For the IT department
145
Business cases – potential difficulties
• Getting accurate cost estimates due to:
o Lack of established formulae
o IT service management projects changing in complexity and scope over time
o Most of the costs being ongoing costs
• Quantifying indirect and intangible benefits
o Such as improved staff morale, better relationships, better control over IT assets
• Obtaining accurate information about business and IT performance
o Techniques to avoid this difficulty include direct interviews,
awareness campaigns, reviewing internal websites, contact with third parties
ROI for service management improvement
• “Sounds like a good idea” is no longer an acceptable way of making a decision of whether or not to proceed with an improvement
• Organizations need a solid business case for expending resources on improvement. This, however, can present challenges such as:
o Limited experience in identifying measurable benefits
o Poor understanding about the difference between a benefit and ROI o Intangible benefits are often difficult to quantify
o Success criteria are inadequately identified o Measurement is not straightforward
147
Calculating ROI
• Investment costs – what is paid
out to make the improvement
o Internal resource costs o Consulting costs o Tool costs
o Required equipment costs o Training costs
• Normally relatively easily identified
• Gains – what the organization
can gain from the investment
o Revenue and productivity gains as a result of less downtime o Gains associated with less
rework
o Gains from a reduction in, or the elimination of, redundant work
• Often hard to define
Return on investment
• ROI has significance in three areas:
o Business case o Pre-programme ROI
Is it worth doing? (Screening decisions) – using the net present value technique
Which shall we do first? (Preference decisions) – using the internal rate of return technique
o Post-programme ROI
Retroactively analysing a service management investment Particularly important if no pre-programme ROI performed Service management improvement initiatives must continually
demonstrate their value otherwise future funding may be withdrawn or reduced
149
Measuring benefits achieved
• The initial identification of benefits for a business case is an estimate of those likely to be realized
• There is also a need to subsequently measure the benefits actually achieved considering whether:
o The envisaged improvements were realized
o The benefits arising from the improvements were achieved o The target ROI was achieved
o The intended value-added (VOI) was achieved
o The outcomes of the preceding points lead to further process improvement actions being re-evaluated
o Enough time has passed before measuring the benefits
Stakeholder change management
• Implementing and improving service management capability may require organizational change within the service
provider
• The approach should be carefully planned, especially where people’s roles and responsibilities are likely to be affected • ITIL Service Transition contains guidance on aspects of
stakeholder change management which is reviewed in this section
• Further guidance and considerations are reviewed in the section on communications and stakeholder management (Syllabus section MALC02)
151
Organizational change for service management implementation
• The process of organizational change
Diagnosis
Acknowledge the need for change
Determine
The desired state
Implement Identify impediments Allocate responsibility Unfreeze the organization Make the change Freeze the organization
Managing organizational and stakeholder change
Methods and techniques Sourcing changes Monitoring progress Assessing organizational readiness Organizational change products Planning and implementing Strategy and design Roles, responsibilities and the role of
service transition Managing organizational change The emotional cycle of change
153
Managing organizational and stakeholder change (cont.)
• The emotional cycle of change
o Understanding the emotional impact on stakeholder attitudes
• Roles and responsibilities
o Ensuring that communication activities are allocated to the right people
• Strategy and design
o The approach and methods for the management of organizational change should be subject to strategy and design considerations
Managing organizational and stakeholder change (cont.)
• Planning and implementing
o Understanding the motivation, expected outcomes and success criteria of organizational change
• Organizational change products
o The various deliverables of organizational change
• Organizational readiness assessment
o A checklist to ensure that the required roles and skills required by organizational change have been identified
155
Managing organizational and stakeholder change (cont.)
• Monitoring progress
o Regular checks throughout the many levels affected should be performed and feedback from individuals and teams should be sought
• Sourcing changes
o Dealing with the effects of supplier and sourcing changes
• Other methods and techniques
o E.g. J.P. Kotter’s “Eight steps to transform your organization”
Summary
• This section used the CSI approach as the basis for improving service management capability and covered
o Various techniques for implementing service management capability o Assessing and improving service management maturity