Business Case for Problem Management

Transcription

1 PROBLEM MANAGEMENT ONLINE RESOURCES An implementation guide for the real world Michael G. Hall Business Case for Problem Management Date: Proposed by: Michael G Hall Page 1

2 Executive Summary FUTURISTIC Fasteners 1 has grown rapidly since 2005, into a multinational business with offices in six countries. Sales, production and R&D depend heavily on the support of stable IT services. IT's business customers are dissatisfied with the number of service interruptions that have led to lost sales in the last two years (see 2014 Executive Customer Survey for details). To improve stability, the Service Management team proposes that the problem function is formalised, to address the underlying causes of these service interruptions and position IT once again as a respected partner for our business customers. For an initial investment of $294,000 and ongoing costs of $158,000, problem will deliver a 20% reduction in service interruptions by the end of year one, with a further 20% by the end of year two. Increased sales and recovered IT costs will deliver a payback period for this business investment of less than 1 year. The ongoing costs of the function will be covered completely by costs recovered from staff overtime, currently spent managing incidents, and costs avoided by redeploying staff to replace proposed additional support and development staff recruitment. Total IT costs will remain flat. 1. What is Problem Management? Problem is a systematic and structured approach to improving service stability. Its aim is to investigate, identify and fix the causes of service interruptions. By finding the real causes and resolving them completely, problem addresses both actual and potential service interruptions. Problem adds value by ensuring that problems are addressed comprehensively - meaning that it does not just deal with the immediate problem, but also identifies all instances of a technology, system or process that could be affected and in all regions or locations, and then implements solutions across all of them. It also improves stability and reduces risk through being a positive influence on the design of applications, infrastructure systems and processes. Through improving the utilisation of resources, problem also reduces fire fighting - which means more time for 'value-adding' work. In addition, regular reporting to ensures accountability for driving improvement and makes performance visible to all, through putting KPIs in place to measure success. 2. Benefits The 2014 Executive Customer Survey highlighted the following concerns from business customers: Major systems are unreliable and experienced repeated failures during peak periods. There is little confidence that issues are being fixed, so there is an expectation that there will be further impact to revenues during this year's peak sales period. Customers feel kept 'in the dark' and IT communicates poorly when things go wrong. 1 FUTURISTIC Fasteners is not a real company Page 2

3 When system upgrades occur or new business functionality is delivered, many features do not work as expected and the business always experiences failures, even in parts of applications that have not changed. There is a feeling that the impact of the failures outweighs the benefits from the new functions. The business does not believe that IT is taking any actions to change the current situation. Implementing structured problem will give IT the capabilities to: find and fix underlying causes; improve communications about what went wrong and how it is being addressed; report on the process improvements being implemented to reduce or eliminate failures following releases; and stick to a timetable and action plan for delivering these improvements. Measuring Benefits and Predicting Outcomes Business were engaged to assess the current cost of service interruptions across the three sales channels employed by Futuristic Fasteners: our website, the three contact centres and the eleven sales offices that together represent our international presence. The total lost sales (already reported through the Annual IT Performance Report 2014) attributed to IT service interruptions in the 12 months from September 2013 to September 2014 was $3,692,400, calculated by making the conservative assumption that only 20% of service interruptions actually led to lost sales. Overtime and other costs attributed to recovery of sales and processing order backlogs for the same period are estimated at $4,829. Additional IT staff costs from dealing with service restoration are estimated to be $124,313. The proposed objective from implementing problem is to reduce the impact of service interruptions by 20% in the first full year of operation and a further 20% by the end of year two. This target includes all sources of instability identified and corrected by problem, not allowing for business changes such as mergers and acquisitions, but including general growth in volumes. Therefore, the business benefits to be realised in year one of operation of a problem function are derived by estimating what a 20% reduction of the impact of service interruptions represents: Increased revenue (equal to reduction in lost sales) of $735,000 Reduced business and IT service recovery costs of $25,000 Page 3

4 Given an assumption that greater benefits will be realised as the function becomes embedded, the prediction is that the schedule of benefit realisation will approximate to: Milestone Increased revenue Cost reduction 4 months after go-live $221,500 $7,750 8 months after go-live $445,000 $15,500 First full year $735,000 $25, Costs The following one-off and ongoing costs will be incurred: Implementation Project Assign a project manager from the PMO, as per standard project implementation policy. 3 month assignment: $20,000 Engage an experienced problem consultant to assist in the development of the process, the problem-solving methodology and the training materials, as well as assist with the selection of a problem manager: negotiated flatfee engagement for 30 days, representing a 40% discount to standard daily rates: $21,500 Launch costs, including the costs of communications, staff and briefings, newsletter articles etc. will be absorbed in the Service Management operating budget. Staff and Resources Employ one problem manager to develop, teach and own the process and methodology, as well as run all problem investigations in year one: $120,000 Continue the engagement of the consultant for one year, to coach and mentor through the implementation and then provide additional expertise as required for difficult problems: up to a maximum of $30,000 Additional metrics development, analysis and report writing provided by internal Service Level Management team: (estimated) $10,000 Training Train the new problem manager in the proposed methodology. External 5-day training course: up to $6,500 Develop awareness and familiarisation training courseware for all IT staff, in addition to consultancy costs already noted and in-house engagement of learning and development team. Plan and deliver training sessions: $6,000 Process cheat-sheets or quick reference guides will be developed in-house at no additional cost. The tool vendor provides user guides, reference materials and on-line training, as included in the licence and maintenance costs (negotiated previously by Service Management and Procurement teams). Tools One-off software licence fees for service toolset, which includes additional seats and the use of problem modules: $240,000 - Note that this will be capitalised as a project cost and amortised as an $80,000 depreciation deduction over three years. Page 4

5 Additional toolset administration and support hours to be provided through existing outsourced support contract: Up to $30,000 Increase in annual maintenance fees due to additional seats and modules: $48, The Plan A two-stage plan is proposed to implement effective problem at Futuristic Fasteners. Stage one will encompass the head office infrastructure and web support and development teams. Stage two will extend to all on-shore and off-shore development and support teams, as well as all IT services delivered by teams located in regional offices. Each stage will be delivered in three phases: implementation; consolidation; and steady state The stages will overlap, with the implementation phase for stage two starting more or less in line with the move from implementation to consolidation in stage one. Lessons learned in stage one will be applied in stage two and the efficiencies gained will mean that stage two is expected to be completed in about 60 per cent of the time taken for stage one. Before implementation, there will be a short planning and development phase. This 'Phase Zero' will include tasks to: select or appoint a process owner, whose first job is to produce the phase zero plan; define the process steps and standard problem-solving methodology; develop the training plan - who will be trained in what and when; set measures to track the progress of the implementation project and the maturity of the process; write the communications plan - what will people be told at each stage of the implementation and how; develop the detailed project plan: o the place to start o the details of each phase of each stage o the timing of the stages and how much the second will overlap the first collect baseline data to measure success against. Project Structure FFIT standard project methodology will be adopted, including cost tracking against milestones, risk and reporting. The proposed sponsor is the Head of Service Management, who will assume responsibility for cost, adherence to milestones and the delivery of the proposed quality and business benefits. Page 5

6 The Schedule Date Milestone Deliverables Benefits realised 1 Dec 2014 Project launch Raised awareness of intended benefits Phase zero start Detailed project plan, process, training, communications and stakeholder plan 1 Mar 2015 Stage 1 phase 1 Implement for head office 1 July 2015 Stage 1 phase 2, first benefits target 1 July 2015 Stage 2 phase 1 1 Oct 2015 Stage 2 phase 2 1 Nov 2015 Second benefit target 1 Jan 2016 Stage 1 phase 3 1 Jan 2016 Stage 2 phase 2 1 Mar 2016 Third benefit target 1 Mar 2016 Stage 2 phase 3 Stakeholders and Communications Sample stakeholder list: FFIT team Service customers Support team leaders Service managers FFIT team members infrastructure and web teams Consolidate for head office infrastructure and web teams, 5% reduction in incidents compared to baseline Implement for on-shore and offshore development and support, regional offices Consolidate for on-shore and offshore development and support, regional offices 10% reduction in incidents compared to baseline Mature problem in place for head office infrastructure and web teams Consolidate for on-shore and offshore development and support, regional offices 20% reduction in incidents compared to baseline Mature problem in place for on-shore and off-shore development and support, regional offices $221,500 increased revenue and $7,750 cost reduction $445,000 increased revenue and $15,500 cost reduction $735,000 increased revenue and $25,000 cost reduction Page 6

7 Communications plan - what messages, what media, who to, when and how often: Communication Type Audience Channel Frequency Announce problem IS organisation News article, home page announcement, segment at an allstaff 'town hall' Once Show support Launch problem Implementation progress updates Announce wins and successes Formal reporting IS organisation Staff in the target group or location IS organisation or limit to target group (depends on organisational culture) IS organisation or limit to target group (depends on organisational culture) Management, however defined (also share all reporting with your problem team) meeting 'Talking head' video by a senior manager 'Road show' or face to face briefing session, backed up by web-ex or similar (less effective) Yammer bulletins, newsletters, scorecard on department web site, briefings at an existing forum Yammer bulletins, newsletters, news item on department web site Initially, existing forums and established reporting structures. By phase two, through dedicated problem reporting forums as well Once for every phase one of the project Once for every phase one of the project Minimum of every two weeks As often as possible, every time a major problem is solved or a breakthrough is made in an investigation Weekly or monthly, depending on what is already in place 5. Approval Approval is sought to proceed to the planning phase of this implementation, the allocation of the initial $294,000 and an ongoing budget of $158,000. This will enable the recruitment of the problem functional lead and for planning to commence. In return, problem will deliver the financial benefits outlined above of $760,000 by the end of year one, by delivering a 20% reduction in service interruptions, with a further 20% by the end of year two. Increased sales and recovered IT costs will deliver a payback period for this business investment of less than 1 year. Page 7