Putting the ROI into ITIL

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How do you put the ROI in ITIL? That is the question many IT organizations are grappling with today. This article isbased on conversations with IT executives in Fortune 2000 companies, all of whom see value in using the ITILframework, but are trying to figure out where to start, how to quantify benefits, how to justify it at a business leveland how to make a smooth transition into an ITIL world. We were on a quest to find the answer and one day, sittingin the office of a senior executive at one of the largest companies in Detroit, the answer presented itself. We call thisthe "Miracle in Detroit" and we want to share it with you.
Introduction look at ITIL can be challenging for IT managers: A massivehigh cost project which is hard to sell to management andEvery IT manager intuitively understands the difficulty of promises returns many years in the future and only afterachieving, and as importantly, demonstrating, a return on significant investment. If you can pick concrete milestonesinvestment for technology projects. We all know the drill - and, for each milestone, demonstrate and measure the valuedelays, changing requirements, changing environments, all provided to the organization, much of this risk would beleading to challenges in meeting the stated goals of the mitigated.project. These issues are particularly acute for large, multi-phase deployments such as an ITIL implementation. What can you pick as a first milestone in an ITIL project whichwill make others say: "Wow, yes this is the right way to go?"The IT department has become the central artery of a large What can you do to get management to buy into your vision?number of organizations. This central artery increasingly finds Read on.itself in a predicament - increasing dependence on itsservices with decreasing budget is putting an enormous The Miracle in Detroitstrain on the organization. The annual cost in terms ofdowntime, compliance costs, and organizational inefficiency Our quest is to find that magical milestone; a milestone thatis high. makes believers out of nonbelievers, a milestone that can berealized quickly with limited resources. First, we went out toThe IT Infrastructure Library (ITIL) offers a solution. But a first several high performing organizations and began askingThe Miracle in Detroit: Putting the ROI into ITIL
them what this milestone would look like. Not surprisingly budget and how to narrow it down comes to one variablethere was no clear cut answer. "Change".
So we stepped back and began asking the question in a Wow!more quantifiable manner: what is the one metric that couldbe used to show management how much work is actually Where are the savings?required to keep the clogged arteries running as of thismoment. We considered several alternatives - uptime, Armed with this insight we began asking questions about thedowntime, and % utilization of infrastructure - but none was various processes that constitute the ITIL framework. Inable to capture the essence of what we were after. particular, we wanted to know what variables people felt thecost of those processes depended upon.Then one day sitting in the offices of a senior executive at oneof the largest companies in Detroit the answer presented The results were illuminating. First, we learned that threeitself. variables are enough to quantify the change environment:
1. Number of request for changes (RFC)Cost of IT Operations ÅÅÅÅÅÆÆÆÆÆ Amount of Change 2. Number of file changes3. Number of releases (a release is a batch of changesgrouped together for build, test and push)Could it be that simple? What about automation? What aboutstrategic planning? An intense session followed and it And when we asked about what input variables each ITILemerged that this executive had saved hundreds of millions process depended upon, the answers came back as theof dollars in operational cost across three different following:companies during his career. And this was not theory: he hadthe numbers to prove it! The gist of the conversation went as The cost of 1follows: z Change Management = F(# of RFC)z 2Release Management = F(# of releases, # fileWhat is the IT cost of running fax machines? We set them up changes,) 3and ... [download for more]