How to Create an Undisputable Service Management Business Case

How to Create an Undisputable
Service Management Business Case
Sponsored By March 24, 2011

“Our mission is to provide groundbreaking, sustainable, Nina Segura B.S., M.A., CSSBB, President
process solutions from Strategy to Execution.” Phone (954) 260-3888

Consulting, Classes, Team Training Coaching

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

© 2005-2011 Metaspire LLC All Rights Reserved.

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© ITSM Academy 2
Welcome!

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.
3

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

4

What is a Business Case?

Information-Based Tool
that provides: Answers Fundamental Question: Utilizes multiple
• Planning “What are the Financial & analytical approaches
• Decision Support Business Consequences for
• Project Prioritization taking an Action?”
• Proposal Evaluation

5

Core Business Case Components
Inputs -Critical Elements Approach Financial Metrics

Business Knowledge

Payback Period
Assumptions

Cost Benefit Analysis Internal Rate of Return
Scope
(CBA)

Net Present Value
Time

Return on Investment

6

How do we Determine Benefits?
Saves Costs
 Cost Reduction - Variable  IT software/hardware
or Base cost expenditures
 Rework Elimination  Vendor Costs
 Reduced cycle time  Plant & Equipment
 Incremental Revenue -  Opportunity Cost
Increased Sales
 Cost of resources
 Cost Avoidance - Cost
 Sunk Costs – Sizing
Prevention
Requests
 Labor Productivity - Time
savings and not RIF
 Competitive Landscape
7

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.

8

Cost Benefit Analysis
$20.00 per call +
X $7.25 ID Card Cost $27,250
=
1000 Financial
Unit Cost
Defective + = Impact
$547,250 Difference
Employee
1 day lost productivity x
IDs X = $520,000
($65 hr. $520/day) Total Cost
2 sigma Lost Productivity in Revenue
$546,702.75

$20.00 per call + COPQ
X $7.25 new plastic = $27.25
1 Unit Cost
Defective + = $547.25
IDs
1 day Lost productivity x = $520
X ($65 hr. $520/day) Total Cost
5 sigma Lost Productivity in Revenue

9

Process Architecture -CBA Provide Products/
Services

Develop
Planning the Maintain Perform
Developing People Technology
Business Maintain Client What is this
Business Accounting Consulting Development Relationship Costing you?
Solutions

Develop Living Conduct Respond to
Forecast Company Assess Client Create Virtual Create Marketing
Strategic Business Performance Inquiries from
Finances Needs Solutions Strategies
Plan Appraisal website
2 2 $288.46
$0.00
Owners $0.00
$150,000
Conduct Weekly Conduct Perfor-
Create Company Develop
Status Report Build Solutions mance Maintain Website Acquire Clients
Budget Newsletters
Meetings Evaluations
3 $216.35
2 $62.50
$0.00

Maintain Master
Maintain P&L Evaluate Results Lead Sales Event
Operational Plan
$0.00
Operations 2 $62.50
$65,000 $0.00

Develop
Create Balance
Advertising
Sheet
Materials
$0.00
2 $62.50
3 $64.90

Create Press
Produce Invoices
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.
Metaspire Consulting - 10211 Pines Blvd., Suite 117, Pembroke Pines Fl. 33026 Yearly Total: $197,307.69

10

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

11

Lean is a Cyclical Process

12

Six Sigma- Lean Tools
 A few Core Six Sigma- Lean Tools to support
business case
 Voice of the Customer
 Value Stream Map/ Workflow/ SIPOC
 Fishbone
 FMEA

13

Voice of the Customer

14

Value Stream Mapping

15

What is a Workflow Model?
Customer
Technical Problem

Solution 4
Activities
Source Receive Solution
Swim/Workflow Lanes

Line of Visibility

Confirmed Solution
Help Desk Support Rep
Decision Point
1
Gather Issue
3
Process Information Diagnosis Solve Yes Implement Solution
Performers/ Problem?

Sink
5
2 No 6
Document Closed
Diagnose Problem Assign to Level 2
Ticket

Level 2 Ticket

Closed Ticket
Call Ticket Number

Line of Automation
System

Stores
Issue Description

Update Call Update
Create Call
Record Record w/
Record
Owner Solution

16

Business Interaction Model - SIPOC
Purpose: Determine Benefits
• 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.

17

Root Cause Analysis (Fishbone)

18

Prioritization Techniques
Failure Modes & Effects

19

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

20

ITIL Training Scheme
Master

ISO/IEC 20000
ITIL
Certified Process
Foundation Expert Design Engineer (CPDE)
Complementary Course 5 credits Complementary Course
1 credit 1.5 credits
Managing Across the Lifecycle

3 credits each 4 credits each
CSI Service Offerings and Agreement (SOA)
SO
ST
SD Release, Control and Validation (RCV)
SS

Planning, Protection and Optimization (PPO)

Operational Support and Analysis (OSA)

Lifecycle Stream Capability Stream
© ITSM Academy 2008
2 credits
V3 Foundation

21

Metaspire Consulting

Thank you for attending! 10211 Pines Blvd. Suite 117
Pembroke Pines Fl, 30326
954-437-7244
www.metaspireconsulting.com

Questions???

Consulting, Classes, Team Training Coaching

22

How to Create an Undisputable Service Management Business Case

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