What does service management really cost?
It can be challenging to accurately estimate the full cost to deploy and operate a service management solution. This requires taking a clear, comprehensive look at how an organization currently operates, and what that really costs.
According to a 2018 Forrester report, many companies are moving from IT Service Management (ITSM) to Enterprise Service Management (ESM) solutions. ESM integrates business-centric services into a series of streamlined IT service management processes. This supports savings that typically go far beyond what’s possible with traditional ITSM.
Here’s how one multibillion-dollar food manufacturer with worldwide operations methodically investigated its total cost of ownership (TCO), return on investment (ROI) and hard cost reductions for its ESM deployment. Prior to deploying a Cherwell ESM solution in 2016, this company had been using a leading ITSM platform for nearly three years.
“TCO is a big deal for us, since cost effectiveness is a core principle here,” said the IT manager for this project. “So we examined how we used ITSM from 2014-2016. We broke down every ticket in that system to understand our baseline metrics and costs: who worked it, at which level? How long did it take for resolution?”
At that time, the company had seven designated support levels, each with a different cost. The highest level of support involved working with vendors or contractors, and could cost hundreds of dollars per hour. The lowest level of support was the help desk. However, help desk staff could only resolve 10 types of ITSM service requests and incidents; everything else required escalation.
Assessing ITSM costs with such granularity enabled this company to make a fair comparison between legacy ITSM and the new ESM options. “We were able to estimate what tickets and services would cost under ESM — for everything we were already doing, plus all the new things that ITSM couldn’t do, such as services for human resources, facilities, legal, etc.,” said the manager. “This new value vastly exceeded what was possible before.”
A key source of added value from ESM, they found, was being able to handle more service requests with lower-level support. This led to developing a new, expanded strategy for delivering services to internal customers.
“We expanded our idea of the help desk from being simply a basic ticket-taking team, to our new service desk concept,” he explained. “We gave those staff more responsibility, and trained them to handle and complete more tasks. Then we drove more tickets to the service desk, which they could now handle more quickly, without escalation. This led to a 76 percent decrease in our average cost per ticket, and it doubled our first-call resolution rate.”
Implementing service management also expanded self-help capabilities across this company. “People anywhere in the company can now request services or report something as broken, at any time, through an online portal,” said the manager.
Licensing is another key aspect of understanding the full costs and savings associated with a service management solution. Most ITSM solutions offer only named user licenses, which gets more costly as a system gains additional users. Concurrent licensing is an option that some vendors offer, and it can dramatically reduce licensing costs.
“A company might have 100 ESM users, but they might only need 30-40 concurrent licenses, especially if they operate in widely dispersed time zones,” said Matt Klassen, vice president of product marketing for Cherwell. “Companies often overlook this huge savings when evaluating ESM solutions.”
Integrations, applications and workflow automations are also important considerations. By its nature, ESM must directly connect with a wide range of legacy and future systems, supporting diverse functions. When evaluating ESM solutions, check for existing integrations, applications and workflows. How easy is it to customize and maintain these, or to build new ones?
For instance, Cherwell’s ESM is “codeless,” in that new applications or workflows, as well as customization of integrations, can mostly be handled by personnel who are not high-level programmers.
“You still need to understand at least the basics of SQL database queries, stored values, form layouts, functions and expressions,” said the manager at the food company. “But we’ve found that lots of people in our company want to step up into this role, to help shape the processes and tools they use every day. Upskilling is far less costly than hiring a team of developers.”
Support is another consideration. Some ESM vendors offer highly active and useful user communities, where users in a region or around the world share tips and custom solutions. As with open-source software communities, this can be a free, robust source of support and inspiration — as well as practical tools, such as applications built and tested by other users of the same platform. When support comes only from the vendor, that’s far more costly.
Time to deployment can be critical, especially where legacy software subscriptions are involved. For example, when deploying their Cherwell ESM platform, the food manufacturer faced a tight deadline for renewal of their hefty annual ITSM system subscription fee.
“Cherwell had 90 days to get our ESM up and running, to a level equal to or better than our existing ITSM system,” said the manager. “They worked with us to build the required foundation, and we hit that deadline. Simply because we didn’t have to renew our ITSM, we were able to start counting that money every day we use ESM.”
The food company could not discuss specific ROI for their new ESM implementation. However, the manager said that their CIO “is very, very happy with those numbers.” He added, “Even better, this project makes everyone happy. People tell us ‘thank you!’ every day. That’s a huge bonus; we don’t get that with most technology projects.