How to Create an Undisputable Service Management Business Case

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Metaspire Consulting - 10211 Pines Blvd., Suite 117, Pembroke Pines Fl. 33026Phone: 954-437-7244 - Fax: 954-442-8653 - www.metaspireconsulting.com

How to Create an Undisputable Service Management Business Case

Consulting, Classes, Team Training Coaching

March 24, 2011

Nina Segura B.S., M.A., CSSBB, PresidentPhone (954) 260-3888

Sponsored By

“Our mission is to provide groundbreaking, sustainable, process solutions from Strategy to Execution.”

2© ITSM Academy

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Introduction & Expectations Metaspire combines extensive management experience with proven

methodologies to create a practical and customized approach to help each client address their needs.

Our scalable methodology integrates Business Process Management, Organizational Development Principles with Six Sigma Disciplines.

We assist technology organizations in a variety of ways including:

IT and Business Strategy Alignment

Rapid Improvement Events

Technology Service/ Acquisition Business cases

Planning & Implementation of Portfolio Management, or Continuous Process Improvement Councils

Process Reengineering & Re-design Analysis & Facilitation -ProVision

Technology Solution Requirements

Resolution of complex challenges facing large-scale IT system

implementations.

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Session Objectives Understand What is a Business Case

Identify Core Business Case Components

Understand How to Determine Benefits

Create a Cost Benefit Analysis

Understand What Six Sigma Lean is

Create an Awareness of Six Sigma Lean Tools:

Voice of the Customer

Value Stream Mapping

Root Cause Analysis

Benefits of Six Sigma Lean in the ITIL Framework

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What is a Business Case?

Information-Based Toolthat provides:• Planning• Decision Support• Project Prioritization• Proposal Evaluation

Answers Fundamental Question: “What are the Financial &

Business Consequences for taking an Action?”

Utilizes multiple analytical approaches

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Inputs -Critical Elements Approach Financial Metrics

Business Knowledge

Assumptions

Scope

Time

Cost Benefit Analysis(CBA)

Internal Rate of Return

Payback Period

Net Present Value

Return on Investment

Core Business Case Components

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How do we Determine Benefits?Saves Costs

Cost Reduction - Variable or Base cost

Rework Elimination

Reduced cycle time

Incremental Revenue -Increased Sales

Cost Avoidance - Cost Prevention

Labor Productivity - Time savings and not RIF

Competitive Landscape

IT software/hardware expenditures

Vendor Costs

Plant & Equipment

Opportunity Cost

Cost of resources

Sunk Costs – Sizing Requests

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Business Case Scenario A few months ago, ABC Company launched new

Employee Identification Cards to 3,000 employees. Of the cards issued, 1,000 had magnetic strips that did not work, which resulted in employees calling the ABC Service Desk.

Each call into the Service Desk costs $20.00. Each time a card needs to be re-issued it costs $7.25.

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$546,702.75

X=

=

+ =

$20.00 per call +$7.25 ID Card Cost

1000

Defective

Employee

IDs

$27,250

X $520,000

X=

=

+ =

$20.00 per call +$7.25 new plastic

1

Defective

IDs

$27.25

XLost Productivity in Revenue

$520

Financial

Impact

Difference

1 day lost productivity x

($65 hr. $520/day)

1 day Lost productivity x

($65 hr. $520/day)

$547,250

$547.25

COPQ

Cost Benefit Analysis

Lost Productivity in Revenue

5 sigma

2 sigma

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Unit Cost

Unit Cost

Total Cost

Total Cost



Process Architecture -CBA

What is this

Costing you?

Develop Living

Strategic Business

Plan2

Forecast Company

Finances

Assess Client

Needs

Conduct

Performance

Appraisal

Create Virtual

Solutions

Create Marketing

Strategies

2

Respond to

Inquiries from

website$288.46

$0.00

Owners $0.00

$150,000

Conduct Weekly

Status Report

Meetings

Create Company

BudgetBuild Solutions

Conduct Perfor-

mance

Evaluations3

Maintain Website Acquire ClientsDevelop

Newsletters

$216.35

2 $62.50

$0.00

Maintain Master

Operational PlanMaintain P&L Evaluate Results Lead Sales Event

$0.00

Operations 2 $62.50

$65,000 $0.00

Create Balance

Sheet

Develop

Advertising

Materials$0.00

2 $62.50

3 $64.90

Produce InvoicesCreate Press

Release

$0.00

Technologies $0.00

$45,000 $0.00

Collect Invoice

$$$$$

Develop e-mail

solicitations

$0.00

$0.00

3 $64.90

Create and

Distribute Payroll

$0.00

$0.00

$0.00

Total: $822.12

Notes: (Summary of Business Case) Weekly Total: $4,110.58

This matrix will help you identify how much it is costing you per day, per week, per month, and per year when a process is not working properly. Monthly Total: $16,442.31

In this example, we're examining the TOTAL monetary impact (Owner, Operator, Technology) of a malfunctioning system.

Yearly Total: $197,307.69

Planning the

Business

Maintain

Accounting

Maintain Client

Relationship

Provide Products/

Services

Perform

ConsultingDeveloping People

Develop

Technology

Solutions

Business

Development

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What is Six Sigma? Lean? What is Six Sigma?

Six Sigma is a rigorous and disciplined methodology that uses data and statistical analysis to measure and improve a company's operational performance by identifying and eliminating "defects."

Lean is based on five principles:

1. Specify what represents value to the customer

2. Identify all specific actions required to bring a product or service from order to delivery

3. Eliminate all kinds of non-value adding activities

4. Produce only what the customers need

5. Pursue perfection

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Lean is a Cyclical Process

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Six Sigma- Lean Tools A few Core Six Sigma- Lean Tools to support

business case


Value Stream Map/ Workflow/ SIPOC

Fishbone

FMEA

13




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Value Stream Mapping

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What is a Workflow Model?

System

Line of Automation

Help Desk Support Rep

Line of Visibility

Customer

Technical Problem

Ca

ll T

icke

t N

um

be

r

Diagnosis

Issue Description

Le

ve

l 2 T

icke

tYes

No

SolutionC

on

firme

d S

olu

tion

Clo

se

d T

icke

t

3

Implement Solution

6

Assign to Level 2

4

Receive Solution

5

Document Closed

Ticket

1

Gather Issue

Information

2

Diagnose Problem

Create Call

Record

Update Call

Record

Owner

Solve

Problem?

Update

Record w/

Solution

Swim/Workflow Lanes

Activities

Decision Point

Process

Performers/

Stores

Source

Sink

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Business Interaction Model - SIPOCPurpose:

• Depicts internal and external entities (organizational areas) interactions.

• Typically used for identifying major business functions and the associated deliverables that the area of focus performs.

Benefits:• Determines impacts of deliverables

e.g. there may be two groups producing the same deliverables. Answers the question “How can we leverage best practices, departments, or positions ?”.

• Helps establish what is required at a more tactical level to accomplish goals.

• Provides a framework for making process improvement scope decisions.

Determine Benefits

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Root Cause Analysis (Fishbone)

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Prioritization TechniquesFailure Modes & Effects

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Benefits of Lean in the ITIL Framework Help your IT organization achieve continuous improvement and

organizational agility

Introduces a more structured engineering approach to ITIL’s framework

Lean thinking promotes continuous improvement and waste reduction into ITIL’s best practices

Identify and target waste

Document value streams

Measure customer satisfaction

Continuous process improvement

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ITIL Training Scheme

V3 Foundation

Lifecycle Stream Capability Stream

Operational Support and Analysis (OSA)

Planning, Protection and Optimization (PPO)

Release, Control and Validation (RCV)

Service Offerings and Agreement (SOA)

Managing Across the Lifecycle

2 credits

3 credits each 4 credits each

5 credits

ITIL

Expert

SSSD

ST

CSI

SO

Master

© ITSM Academy 2008

Certified Process

Design Engineer (CPDE)

Complementary Course

1.5 credits

ISO/IEC 20000

Foundation

Complementary Course

1 credit

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Thank you for attending!Metaspire Consulting

10211 Pines Blvd. Suite 117Pembroke Pines Fl, 30326

954-437-7244www.metaspireconsulting.com

Questions???

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