The first, and arguably the most important, step in launching an ITFM program is to gain internal buy-in across both executive leadership and affected stakeholders. Without their support, the program will face a long, uphill battle — a battle that few IT Leaders can successfully navigate.
Thankfully, a solid business case can make the process of securing buy-in far simpler.
From a high level, there are four core components of any ITFM business case:
Let’s break down each component to understand its place in the architecture of an effective ITFM business case.
The foundation of a solid business case is built with a clear understanding of each core persona the program will impact, as well as the value they’re positioned to receive. In general, there are four standard personas to consider:
Here’s a brief summary of the key benefits a successful ITFM program can provide to each persona group across the business:
Keep in mind, this isn’t necessarily an exhaustive list. Depending on existing processes and organization structure, other potential benefits may also exist.
To capture all potential value a new ITFM program could deliver to each persona, meet with each persona group across the business to truly understand their needs, wants, and pains.
Every organization is different, and without consulting each persona group directly, there’s a good chance you’ll miss key benefits they could reap from the program.
Building on the potential value defined by each persona group, every business case should include a summary of anticipated tangible benefits. When we say tangible benefits, we’re referring exclusively to benefits that result in measurable cost savings or avoidance.
Of course, there’s no universal guarantee for the savings each organization will achieve.
But by looking at what other organizations have accomplished — and pairing that information with a deep understanding of your own organization — it’s possible to calculate a “good enough” assumption to inform the business case and guide an intelligent decision making process.
That said, here are several of the most notable cost savings and optimization wins you can expect a mature ITFM program to deliver.
There are two avenues of optimization for vendor spend: 1) identifying redundant or unused contracts, and 2) consolidating related contracts across separate vendors to a single vendor, i.e. reducing the total number of vendors in the portfolio, to leverage economies of scale and negotiate better pricing.
In one instance cited by Gartner, an organization who pursued the second avenue alone was able to reduce total vendor spend by 20%.
Over time, all organizations accumulate some degree of application portfolio waste. That waste comes in many forms: idle or over-provisioned apps silently burning resources, duplicative apps driving unnecessary maintenance and support costs, or apps that simply aren’t delivering sufficient business value to justify their cost (to name a few).
But with an accurate, transparent view of costs for all applications in service — along with a cost model that maps application costs to business functions — these issues become far easier to spot; and after capturing the low hanging fruit, organizations are equipped to continually optimize TCO and business value for each application in the portfolio.
As a point of reference for what an effective app rat initiative can accomplish, consider Gartner’s example of BT Innovate & Design, which reduced its portfolio of 2,500 applications by 30% over three years.
Unused or over-provisioned infrastructure is present in every IT organization, and it’s exceedingly difficult to eradicate without granular transparency of costs. And according to a review of several research reports, infrastructure waste could be as high as 30% on average worldwide.
Implementing sound ITFM principles allows IT Leaders to easily spot waste across all infrastructure assets (including cloud), then decide whether to exit or reallocate.
Many IT organizations still don’t have a firm grasp on the specific services they deliver to the business, how much those services truly cost, and what can be done to optimize those costs. By introducing a service cost model and understanding all underlying cost drivers, it becomes far simpler to create accurate unit rates and optimize them continually, which often results in a savings of 20-30%.
After working to optimize internal service delivery costs, IT organizations can pursue further savings by managing demand through a monthly showback or chargeback (bill of IT). When IT consumers can see and understand their monthly costs — and what’s being delivered for those costs — they’re able to intelligently guide their own usage. A monthly bill of IT also offers opportunities to drive adoption or discontinuation of specific technologies through strategic pricing, and IT Leaders can create tiered service options to match consumer needs as well.
McKinsey & Company reports an effective demand management strategy can yield a 15-20% efficiency savings over 3-4 years.
With a clear understanding of what the organization stands to gain by implementing a new ITFM program, the next step is to estimate startup and maintenance costs.
This exercise should also provide a rough estimate for time-to-value, e.g. how long it will take to recoup startup costs and begin realizing ROI, by weighing the anticipated savings and benefits against the required investment to start the program.
Critical action items to complete for this portion of the business case include:
Depending on budget size, complexity of existing systems, number of consumers, and many other factors, the cost of starting a new ITFM program might not be justified. That’s why it’s so important to assess the organization’s current state to make an informed decision.
In other words, what is the cost of doing nothing?
Without a clear answer to that question, there’s no objective way to judge if a new program is worthwhile; every organization must weigh the consequences of maintaining the status quo against the potential costs and benefits of a new ITFM program.
The simplest way to capture potential costs of delaying a new program is to step back and consider the “why” that’s driving organizational interest in ITFM.
What are the needs, pains, and wants that sparked this discussion in the first place, and what are the consequences of those things going unaddressed?
The answers to those two questions will vary by organization, and they may be difficult to quantify. But with the right diligence and investigation, capturing a useful estimate for the impact of doing nothing is possible.
These are just three examples from the long list of potential “why’s” that could apply to your organization. Define them all and attempt to quantify the impact of ignoring them.
This exercise will bring another layer of clarity to the business case — ensuring potential benefits are examined in-context with the reality of today’s current environment.
As you work to build out your business case, and when you move to present it internally, here are a few additional pieces of guidance to keep in mind:
Don’t overemphasize potential savings – Although a successful ITFM program does reduce costs, it should ultimately shift the business’s focus from cost to value. So as you communicate the potential worth of a new program, don’t let the tangible benefits of savings and optimization steal too much attention from intangible benefits like operational efficiency and business alignment. Be sure to highlight both equally.
Stay mindful of your organization’s unique traits – There’s no “one size fits all” formula to create an effective ITFM business case. Although the components explained in this post are applicable to nearly all organizations, there many others that will only apply to yours. That said, be as rigorous as possible in your search for value narratives based on the unique traits of your organization.
Be ready to field objections – No matter how comprehensive a business case may seem, there will always be questions and objections. Do your best to anticipate pushback, and prepare accordingly to deliver fast and compelling responses.