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Selling the case for IT Service Management, Part II

ROI is not the end-all, be-all of buidling your business case for IT service management, writes ITSMWatch columnist David Mainville of Consulting-Portal.
Oct 28, 2010
By

David Mainville





One of the biggest “red herrings” when it comes to building the business case for ITSM is the question of return on investment (ROI). ROI is a financial term for the formula used to derive the monetary gain of a particular capital investment. It is usually expressed as a percentage. For example, I predict a return of 15% on our investment of $2 million.

In most IT shops (there are exceptions), ROI has become synonymous with benefits. It is extremely hard to measure the financial benefits of an ITSM program because most IT departments do a terrible job of establishing a baseline of existing costs. That’s also a key reason many outsourcing initiatives go sour (but I’ll leave that for a future article).

Do you know the fully loaded cost to implement a change, resolve an incident or to take an application from design through to production? If not, how are you going to calculate the ROI of any ITSM related improvement? That is why I recommend avoiding ROI as the basis of your business case and focusing instead on the needs and drivers of your sponsor. You shouldn’t even begin building the case until you understand what those needs and drivers are.

Your manager may continue to ask for the ROI of ITSM but it’s up to you to do your homework and find out what the real drivers are.

If your company has published a strategic plan, you should read it. If your company publishes goals for the year, you need to become very familiar with them. If you boss has specific performance goals by which he or she is measured, you need to know what they are.

Once you understand the real drivers, you need to build the case using a very structured and logical approach. The key is to tie the case back to the needs and drivers of your sponsor. I suggest the following outline:

  • Executive Summary – Identify the problem you are trying to solve (remember the sponsor’s drivers), your approach for addressing the problem, the benefits that will be derived, what you will lose if you don’t proceed and of course, the cost of proceeding. This is basically a concise two-page summary of your entire business case so write it last.
  • Project Timeline – A detailed work breakdown structure, project Gantt chart, dependencies and milestones.
  • Approach & Deliverables – A step by step description of all activities and talks along with the specific deliverables for each task.
  • Resources & Cost – A breakdown of all costs including an estimate of people’s time, outside consulting, training, software, as well as any other material costs.
  • Benefits Analysis – This is where you get to explain the detailed benefits that will be derived and the risk of not proceeding. Tie the benefits directly back to your sponsor’s drivers.

The other thing I highly recommend is pre-selling your proposal. Think of it as lobbying (another distasteful word to many) to get the support of all the stakeholders. You can’t implement ITSM on your own, so you definitely need to build a support network ahead of time.

This is another area where Dr. Cialdini’s Six Principles of Persuasion can be very helpful. Leverage the principle of Reciprocity by promising something in return for supporting your proposal, or by offering help to other influential people.

Use the principle of Scarcity to communicate what your sponsor and stakeholders will lose if they don’t take you up on your business case. For example, “If we don’t move quickly we will lose our one chance to roll out this new business service on time and within budget”.

Referencing outside experts and providing samples of detailed ITSM success stories are examples of using the principle of Authority.

A trial close, such as “If I can deliver a 25% reduction in ITSM software costs would you support me in this proposal?” is one way of exercising the principle of Commitment.

Build on the principle of Consensus by giving examples of how other companies, especially ones in your own industry, are benefiting from the implementation of ITSM.

Finally, solicit the support of people who are well liked and respected by management, along with your own good reputation, when presenting the case to your sponsors. This is how you can exploit the principle of Liking.

So let me take a moment to summarize.

First off, I am in no way downplaying the importance of having a logical and fact based approach to ITSM. Marketing will never replace substance. However, even the best plan will do nobody any good if you can’t get approval for it. That is where selling comes in.

Getting approval to proceed means understanding the drivers of your sponsors and framing your case in terms that resonate with them.

Construct a business case that is structured and logical. Be concise in the executive summary but support it with lots of facts and details.

IT is also extremely important that you enlist the help of other stakeholders to help you sell it. The more support you have, the easier it will be.

So now that I have freely shared some of my experience with you, I would like to get your commitment to join the hundreds of individuals that have achieved the elusive goal of selling the case for ITSM and maybe one day I can count on you to return the favor. Persuasive enough?

David Mainville is CEO and co-founder of Consulting-Portal, an ITSM consulting and ITIL training company focused on helping Fortune 500 and mid-size companies assess, design and implement robust ITSM processes. Consulting-Portal also offers a full curriculum of ITSM education including: ITIL, ISO and CobiT. In 2008, Consulting-Portal launched IToptimizer.com, an online solution to help companies assess, design and govern their ITSM processes.

Tags:
ROI, ITIL, ITSM, Consulting-Portal, business case



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