leveraging kpi’s to maximize the roi of support

Leveraging KPI’s to Maximize the ROI of Support

Jeff Rumburg • MetricNet

More than 3,000 IT Service and Support Benchmarks

Global Database

30+ Key Performance Indicators

Nearly 60 Industry Best Practices

Empirical Observations from Our Global Database

10 Mega Trends: Service and Support as a Business

Holistic use of KPI’s and Benchmarking

Process Optimization (ITIL, ITSM)

User Self-Help

Desktop Virtualization

Marketing Service and Support

Understanding of TCO and First Level Resolution

Knowledge Management

Remote Diagnostic Tools

The Widespread Adoption of ROI Analysis

Service and Support as a Business

3© 2014 MetricNet, LLC, www.metricnet.com

4

The Paradox of IT Support

Less than 5% of all IT spending is

allocated to end-user support

Service desk, desktop support,

field support

This leads many to erroneously

assume that there is little upside

opportunity in IT support

The result is that most support

organizations are managed with the

goal of minimizing costs

But the most effective support

strategies focus on maximizing

value

© 2014 MetricNet, LLC, www.metricnet.com

Corporate IT Spending Breakdown

4%

96%: Non support functions

End-User Support

Application

Development

Application

Maintenance

Network

Operations

Mainframe and

midrange Computing

Desktop Computing

Contract Services

(e.g., disaster

recovery)

5

The Cost Center Dilemma in IT Service and Support

Responsible for cost control

Not responsible for…

Revenue generation

Profits

Investment decisions

Cost Center Profit Center


VS.

Creates economic value

Demonstrates profitability

Cost savings

Cost Benefit Analysis

ROI Analysis

The vast majority of service and support organizations operate as cost centers

They are expected to control costs, but are not expected to make any explicit financial

contribution to the enterprise

The focus in a cost center is on minimizing costs

The focus in a Profit Center is on creating and maximizing value!

6

Do Profitable Businesses Offer a Solution?


7

Sources of Value: Demonstrating Profitability

IT Service and Support can create value in a number of ways:

Minimizing Total Cost of Ownership (TCO) by maximizing level 1

resolution rates

Improving end-user productivity by reducing incident resolution

times

Reducing ticket volumes through technology and Root Cause

Analysis

Mitigating the effects of unplanned downtime through planning,

prevention, and aggressive remediation


Total Cost of Ownership: North American Averages

Support Level Cost per Incident

Vendor

Level 2: Desktop Support

Field Support

Level 3 IT

(apps, networking, NOC, etc.)

Level 1: Service Desk

$471

$196

$85

$62

$22


9

0

10

20

30

40

50

60

70

0 1 2 3 4 5

Pro

du

cti

ve H

ou

rs L

ost

per

Em

plo

yee p

er

Year

IT Support Returns Productive Hours to End Users

1 (top) 2 3 4 (bottom)

Customer Satisfaction 93.5% 84.5% 76.1% 69.3%

First Contact Resolution Rate 90.1% 83.0% 72.7% 66.4%

Mean Time to Resolve (hours) 0.8 1.2 3.6 5.0




Service Desk

Desktop Support

Performance QuartileSupport Function Key Performance Indicator

37.4 46.9Average Productive Hours Lost per Employee per Year 17.1 25.9

Performance Quartile n = 60


10

Reducing Ticket Volumes -- Root Cause Analysis: Level -1


Metric Beginning of Year End of Year Change

End-Users Supported 8,190 8,650 460

Monthly Ticket Volume 21,300 19,100 -2,200

Monthly Tickets per User 2.60 2.21 -0.39

Annual Operating Expense $4,769,496 $4,226,448 -$543,048

Cost per Ticket $18.66 $18.44 -$0.22

Annual Cost per User $582 $489 -$94

11

Reducing the Cost of Downtime

Cost of Downtime

Productivity

LossesBusiness Losses

Lost productivity from

employees who are idled

or slowed by the outage


Lost sales

Lost customers

Product spoilage and

shrinkage

Damage to business

reputation

12

ROI Case Study

ROI Defined


ROI =Return

Investment=

Savings

Spending

ROI is a simple ratio

It requires quantification of Return (Savings), and Investment

(Spending)

It is measured over a one-year timeframe (One Year ROI is implied in

the metric)

It is one of the most widely used and accepted financial metrics

It can be used prospectively, as part of a Business Case Analysis

…Or retrospectively to evaluate the past business success

14

An Industry Case Study

The Scenario

An insurance company spending $4.8

million per year on their service desk

The service desk supports 8,190 users

And handles 21,300 tickets per month


15

Support Level Cost per Ticket

Vendor


Field Support

Level 3 IT



$471

$196

$85

$62

$22


Case Study Part 1: Minimizing Service and Support TCO

A SPOC Service Desk is Highly Leveraged

User CommunityLevel 1:

Service Desk

Level 2:

Desktop

Support

Field

Support

Level 3:

IT Support

Vendor

Support


Key SPOC Principles

Key SPOC Principles

Enterprise takes an end-to-end view of user

support

User/Customer has a single point of contact

for all IT-related incidents, questions,

problems, and work requests

The Level 1 Service Desk is the SPOC

Level 1 is responsible for:

Ticket triage

Resolution at Level 1 if possible

Effective handoffs to n level support

Resolution coordination and facilitation

Ticket closure

Desktop “Drive-bys”, “Fly-bys”, and “Snags”

are strongly discouraged

© 2014 MetricNet, LLC, www.metricnet.com 17


Two Metrics You Should Know

First Level Resolution Rate (FLR)

The number of tickets resolved at level 1 divided by all

tickets that can potentially be resolved at level 1.

% Resolved Level 1 Capable (PRLC)

The percentage of tickets resolved by desktop support

that could have been resolved at level 1 support.

18


Industry Data for Level 1 Resolution

0

5

10

15

20

25

30

35

40

45

50

55

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100%

Net First Level Resolution Rate

Num

ber

of D

ata

Poin

ts

Average ------ 73.9%

Max 98.9%

Min 24.0%

Median 75.0%

> 95% Net FLR 2.0%

Industry Average Net FLR Statistics

Net First Level Resolution Rate

Nu

mb

er

of

Data

Reco

rds

0

2

4

6

8

10

12

0% 2% 4% 6% 8% 10%

12%

14%

16%

18%

20%

22%

24%

26%

28%

30%

32%

34%

36%

38%

40%

% Resolved Level 1 Capable

Nu

mb

er

of

Su

pp

ort

Org

an

izati

on

s

Fir

st

Quart

ile =

12.7

%.

Fourt

h Q

uart

ile =

24.3

%.

Media

n =

18.1

%

Industry Data for % Resolved Level 1 Capable


21

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Ne

t F

irs

t L

ev

el R

es

olu

tio

n

Remote Diagnostic Software No Remote Diagnostic Software

The Effect of Remote Diagnostic Software on FLR

Average = 77.8% FLR

Average = 61.4% FLR


22

The Effect of a Mature Knowledge Base on FLR


0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

0 1 2 3 4 5 6

KBase Maturity

Ne

t F

irs

t L

ev

el R

es

olu

tio

n

23

The Result: Maximizing First Level Resolution Rates


93% = Insurance Company First Level Resolution Rate

- 74% = Industry Average First Level Resolution Rate

=================================================

19% Higher First Level Resolution Rate than Industry Average

X 21,300 Tickets per Month X 12 Months per Year

=================================================

48,564 More Tickets Resolved at Level 1 each Year vs. Average

X $62 per Ticket Escalated Beyond Level 1

=================================================

$ 3.0 Million Estimated Annual Savings by Minimizing TCO

24

0

10

20

30

40

50

60

70

0 1 2 3 4 5

Pro

du

cti

ve H

ou

rs L

ost

per

Em

plo

yee p

er

Year

Case Study Part 2: Returning Productivity to End-Users








Service Desk

Desktop Support





25

The Result: Returning Productive Hours to End-Users


33 Hours = Industry Average Lost Productivity per User per Year

- 17 Hours = Insurance Company Estimated Lost Productivity per User

====================================================

16 Hours in Saved Productivity per User per Year

X 8,190 End-Users

====================================================

131,040 Productive Hours Returned to the Workforce each Year

÷ 1,700 Productive Hours per User per Year

====================================================

77.1 FTE Headcount Savings per Year

X $82,300 Annual Salary and Benefits per User

====================================================

$ 6.3 Million Estimated Annual Savings from Returned Productivity

26

Case Study Part 3: Cost Savings from Root Cause Analysis







Cost per Ticket $18.66 $18.44 -$0.22


$ 94 in Savings per User per Year

X 8,650 End-Users

=========================================

$ 813,100 Estimated Savings from Root Cause Analysis

27

Return on Investment: Summing it Up


$ 3.0 Million Estimated Annual Savings from Minimizing TCO

+ $ 6.3 Million Estimated Annual Savings from Returned Productivity

+ $ 0.8 Million Estimated Savings from Root Cause Analysis

====================================================

$ 10.1 Million Estimated Economic Contribution per Year

Estimated ROI = $10.1 Million ÷ $4.8 Million = 210% per Year

Return Investment

28

Cost of Downtime

Cost of Downtime

Productivity

LossesBusiness Losses

Lost productivity from

employees who are idled

or slowed by the outage


Lost sales

Lost customers

Product spoilage and

shrinkage

Damage to business

reputation

29

Cost of Unplanned Downtime

Cost of Prevention and Readiness

Co

st

of

Un

pla

nn

ed

Do

wn

tim

e

Empirical data shows that the

more an enterprise spends on

outage prevention and

readiness, the lower the cost

of unplanned downtime will be


30

Total Cost of Downtime

Cost of Prevention and Readiness

Co

st

of

Pre

ven

tio

n +

Do

wn

tim

e

The TCO for downtime must

include the costs of

prevention, readiness,

downtime, and recovery

Point of Minimum

Total Cost


31

Downtime Mitigation Strategies for Service and Support

Disaster Recovery Drills

Outbound user notifications for planned outages

Outbound user notifications for major unplanned outages

Recorded messages to inform inbound callers that

service and support is aware of and working to resolve

any major issues


The Critical Metrics of ROI

Annual Operating ExpenseInvestment

Return Estimated Annual Savings / Economic

Contribution

Root Cause

Productive Hours Returned to Users

Downtime Mitigation of Unplanned Downtime

Efficiency

% Resolved Level 1 CapableTCO

First Level Resolution Rate


Tickets Avoided

33

The Big Picture for ROI Metrics

34

The Paradox of IT Support

Less than 5% of all IT spending is

allocated to end-user support

Service desk, desktop support,

field support

This leads many to erroneously

assume that there is little upside

opportunity in IT support

The result is that most support

organizations are managed with the

goal of minimizing costs

But the most effective support

strategies focus on maximizing

value


Corporate IT Spending Breakdown

4%

96%: Non support functions

End-User Support

Application

Development

Application

Maintenance

Network

Operations

Mainframe and

midrange Computing

Desktop Computing

Contract Services

(e.g., disaster

recovery)

35

Support Level Cost per Ticket

Vendor


Field Support

Level 3 IT



$471

$196

$85

$62

$22


IT Support Has an Opportunity to Minimize TCO

36

0

10

20

30

40

50

60

70

0 1 2 3 4 5

Pro

du

cti

ve H

ou

rs L

ost

per

Em

plo

yee p

er

Year

Quality of Support Drives End-User Productivity








Service Desk

Desktop Support





37

Proactive IT Support Can Reduce Ticket Volumes







Cost per Ticket $18.66 $18.44 -$0.22


$ 94 in Savings per User per Year

X 8,650 End-Users

=========================================

$ 813,100 Estimated Savings from Root Cause Analysis

38

Return on Investment: Summing it Up


$ 3.0 Million Estimated Annual Savings from Minimizing TCO

+ $ 6.3 Million Estimated Annual Savings from Returned Productivity

+ $ 0.8 Million Estimated Savings from Root Cause Analysis

====================================================

$ 10.1 Million Estimated Economic Contribution per Year

Estimated ROI = $10.1 Million ÷ $4.8 Million = 210% per Year

Return Investment

84%

47%

31%29%

22%19%

8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Service Desk Desktop

Support

Network

Outages

VPN Training Enterprise

Applications

Desktop

Software

Factors Contributing to IT Customer Satisfaction

% S

ayin

g V

ery

Im

po

rtan

t

n = 1,044

Global large cap companies

Survey type: multiple choice

3 responses allowed per survey

84% cited the service desk as a very important factor in their overall satisfaction with corporate IT

47% cited desktop support as a very important factor in their overall satisfaction with corporate IT


IT Support Drives Customer Satisfaction for All of IT


Bottom Line: The Business of IT Service and Support

IT Service and Support can and should be

viewed as a business and a profit center

You must quantify your value (Return) to the

enterprise

And then demonstrate your profitability!

40

Question and Answer


For More Information

Read MetricNet’s whitepaper on Service and Support as

a Business

http://www.metricnet.com/service-and-support-as-a-

business


http://www.metricnet.com/service-and-support-as-a-business

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www.HDIConference.com/Eval, or by going

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Question and Answer


45

About MetricNet


Benchmarking is MetricNet’s Core Business

Call Centers

Telecom

Information

Technology

Satisfaction

Technical Support

Customer Service

Telemarketing/Telesales

Collections

Service Desk

Desktop Support

Field Support

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MetricNet Benchmarks

MetricNet

Benchmarks

Peer Group

Benchmarks

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Benchmarks

Benchmarking

Data Files


Custom Benchmark

Unique Peer Group

Industry Benchmarking

Reports by geography

Custom Benchmarking

Data in Excel format

More than 3,000 IT Service and Support Benchmarks

Global Database

30+ Key Performance Indicators

Nearly 60 Industry Best Practices

25 Years of Service and Support Benchmarks

49

Your Presenter: Jeff Rumburg


Jeff Rumburg is a co-founder and Managing Partner at MetricNet,

LLC. Jeff is responsible for global strategy, product development,

and financial operations for the company. As a leading expert in

benchmarking and re-engineering, Mr. Rumburg authored a best

selling book on benchmarking, and has been retained as a

benchmarking expert by such well-known companies as American

Express, Hewlett-Packard, and GM. Prior to co-founding

MetricNet, Mr. Rumburg was president and founder of The Verity

Group, an international management consulting firm specializing in

IT benchmarking. While at Verity, Mr. Rumburg launched a number

of syndicated benchmarking services that provided low cost

benchmarks to more than 1,000 corporations worldwide.

Mr. Rumburg has also held a number of executive positions at META Group, and Gartner, Inc. As

a vice president at Gartner, Mr. Rumburg led a project team that reengineered Gartner's global

benchmarking product suite. And as vice president at META Group, Mr. Rumburg's career was

focused on business and product development for IT benchmarking. Mr. Rumburg's education

includes an M.B.A. from the Harvard Business School, an M.S. magna cum laude in Operations

Research from Stanford University, and a B.S. magna cum laude in Mechanical Engineering. He

is author of A Hands-On Guide to Competitive Benchmarking: The Path to Continuous Quality

and Productivity Improvement, and has taught graduate-level engineering and business courses.

Mr. Rumburg serves on the Strategic Advisory Board for HDI.

Meet a Sampling of Our Clients

MetricNet Conducts benchmarking for IT Service and Support

organizations worldwide, and across virtually every industry sector.


http://www.barclays.co.uk/

http://www.barclays.co.uk/

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Leveraging KPI’s to Maximize the ROI of Support


leveraging kpi’s to maximize the roi of support

Business

support service desk

support tco

support responsible

support organizations

support understanding

cost control

annual cost

cost centers