Whitepaper

The Financial Value of On-Demand IT Services

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More IT Services, Less Budget

For the last few years, the economy has been tumultuous. Faced with economic downturn, slowed consumer spending, and falling share prices, businesses are rightfully counting every penny.

Executives are now tasked with justifying each and every IT investment to validate equal or greater return.  This has resulted in the reallocation of resources to projects and initiatives that produce the quickest return, are tied directly to immediate revenue generation or enable cost reduction

In order to stay ahead of the competition, enterprises must provide the highest level of customer service, while focusing IT resources on strategic business initiatives. Meanwhile, IT organizations within these businesses are facing shrinking budgets just when their infrastructure is expected to support more devices and systems than ever before, all while operating at peak performance.

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Meeting the Demand

The opportunity is available for mid-size enterprises to increase both top-line and bottom-line growth by implementing IT Service Management (ITSM) solutions. ITSM solutions enable these enterprises to manage IT services as a business within a business allowing the leverage of existing IT infrastructure and staff to reduce IT operations costs, while improving system performance. Managing IT as a business creates the ability to select investments (i.e. hardware, software, outsourcers) that produce the quickest and highest payback with the least amount of upfront capital, and continuously manage those investments so they can exceed expectations while proving the value of your IT infrastructure improvements.

Benefits of managing IT at a business level include:

Predictable costs–A standardized cost structure for IT operations to ensure profitability margins.

Predictable performance–IT infrastructure (servers, networks, databases) and applications are highly available and perform consistently to meet and exceed service levels.

Efficient Resource Utilization–Generation of new revenue streams by allocating  critical IT resources to support new business initiatives and applications.

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The Business Case for Managing IT as a Business

The Scenario

AtoZ Company is a leading manufacturer of innovative, high quality electronic products with annual revenue of $1.4 billion and a global network of ISO 9001 and 9002-certified facilities and supply sites. The Company is presently on an aggressive growth streak, acquiring several large competitors over the past two years.

During the previous year, AtoZ has upgraded all of its sites with an improved network infrastructure and updated ERP system. AtoZ presently utilizes five external vendors for network, processing, and hardware resources. In addition, AtoZ has implemented product and system conversions for three years and have two more scheduled conversion rollouts within the next 18 months.

As a direct result of the upgrades, there has been a substantial increase in the quantity and duration of performance related service calls to the IT help desk. In addition, the company experiences a high agent turnover due to the drudgery of handling a large number of repetitive and routine inquiries regarding system performance degradation and outages. When complex issues arise, the need to involve second and third level support engineers increases the workload with the tracking of outstanding issues, all of which add to the IT operations costs.  

New plant openings are often delayed due to the incompletion of IT infrastructure changes and. the unpredictability of costs associated with these changes is causing management to constantly create budget variances. This action inevitably leads to decreased profits for the company through loss of sales and opportunities to open new markets.

Lately, IT infrastructure planning has not been as consistent as desired, as manager attention has been diverted to taking escalated calls and addressing users needs directly.

The Challenge

AtoZ Company’s challenge  is common among companies of their size. They are constantly required to make process improvements in their IT infrastructure while continuing to meet (or exceed) customer expectations while managing the changes directly related to recent mergers, acquisitions and new site openings. This combination of events conceivably strains managers, agents, IT administrators, and customers equally.

Overview:

·         AtoZ has invested in help desk and monitoring software products to support Operations Management services utilizing three applications to manage their infrastructure. Unfortunately, each application requires its own costly infrastructure and support staff.  While these tools generate more data, they do not offer the visibility required to assist in the overall improvement of IT infrastructure management. These monitoring systems create excessive actionable incidents that increase infrastructure costs and make it difficult to sustain and support growth plans.

·         The service desk is difficult to manage and maintain.  Agents find that it adds to their workload, and reconfiguring it to meet the business needs of IT requires a specialized programming staff.

·         Root cause identification is time consuming and difficult due to a lack of end-to-end reporting and diagnostic capability.

·         The development staff is growing and making an increasing amount of system changes. However, these changes do not follow any structured process and often inadvertently cause outages.

·         Excessive numbers of fault and performance issues are not automatically detected and resolved, leading to reduced system availability and performance.

·         In an effort to reduce predictable service issues at new sites upon opening, IT staff tends to order high-end equipment that is expensive and may provide more functionality than is actually needed.

·         Lack of a common infrastructure framework makes it difficult to align IT infrastructure investments with business objectives.

In addition, AtoZ Company does not have a process in place to measure and report on service provider performance, therefore they are unable to measure the effectiveness of their service providers.. As a result, it is difficult and time consuming for AtoZ to request charge-back’s for service outages due to their inability to attest service level agreements.

The Solution

AtoZ initially considered completely outsourcing their IT infrastructure management. However, this approach would provide little flexibility while dramatically increasing risk. To meet management goals while maintaining control over critical functions, AtoZ chose to engage an IT Service Management solution provider who could fully leverage existing in-house management tools and complement the existing staff, adding maximum business value with minimal disruption to on-going operations.

An IT management solution partner delivers process discipline, as well as remote monitoring, management, reporting, tracking and help desk services. Many infrastructure failures result from flaws in process and methodology. Thus, the greatest value-add a management partner can provide is process and change management methodologies that stem from their expertise and experience in implementing best management practices. Collaboration and knowledge transfer is key to the management value proposition.

SaaS (Software as a Service) Service Desk

AtoZ selected a Software as a Service (“SaaS”) based enterprise service desk solution to provide service desk personnel and end-users with an easy-to-use, browser-based interface for incident, problem, and change request management.

Remote Monitoring, Management and Problem Resolution

AtoZ selected Managed Services to proactively resolve problems in the IT infrastructure (i.e. applications, databases, networks, and server) by providing 24/7 monitoring, problem identification, diagnostics, reporting, and resolution. InfraSolve covers the application layer (such as SAP, Oracle Financials, or Microsoft Exchange) and the supporting IT infrastructure. 

Reporting Portal

AtoZ has access to a highly secure Web-based reporting portal that provides views into the availability and performance of the business application infrastructure, as well as detailed application/device specific breakdowns.

ITSM Best Practices Consulting and Training

ITSM introduces a comprehensive set of processes that enable the IT organization to manage the entire infrastructure from inception through production. These processes are documented in the public domain within the Information Technology Infrastructure Library’s (ITIL) ITSM best practices framework. ITIL contains a practical set of guidance tools for the planning, development, delivery, and support of IT infrastructures. All three processes eliminate inadvertent outages from incorrect changes to the infrastructure:

Change Management - maximizes the benefit to the business of making changes to the infrastructure while minimizing the risks involved in making those changes.

Configuration Management - maximizes the benefit to the business of making changes to the infrastructure while minimizing the risks involved in making those changes.

Release Management - controls the release, distribution, implementation and maintenance of Configuration items.

The Result

Revenue Increases

AtoZ Company has experienced improvement of revenue generation activities, or top-line productivity growth with existing personnel and infrastructure by deploying ITSM solutions across the enterprise.

Operating Expense Reductions

Operating expenses have experienced quantifiable reductions that enable AtoZ to achieve their growth plans with existing resources, or to maximize investments in other targeted areas. The chart below illustrates  AtoZ’s operating expenses before and after implementing ITSM solutions.

ROI Analysis

ITSM Solutions will cost AtoZ Company $621,000 over three years.

Note:  Costs of implementation and applications may vary by client, based upon existing system ITSM Solutions architecture and organizational processes.

Over the same three-year period, AtoZ Comapany realized the following net financial benefits of using ITSM SOLUTIONS’s solutions. These financial benefits are based upon the assumptions, business profile, and business issues provided in this review.

The business impact reflects the following benefits:

• Reduction in operating expenses of $2,016,038

·   Increased revenue of $6,750,000

The total return on investment (ROI) of using InteQ’s portfolio of Service Management solutions over three years is $8,145,038.

For more information, please contact us or call 888.448.6468.

Disclaimer

This report provides approximations of important financial consequences that should be considered in decisions involving purchase, installation, and configuration of computing hardware and software as well as professional services. The analysis is based on information that was provided by InteQ and is believed to be accurate.