Presented by Alvin Goh, Senior Consultant, UXC Consulting at ISS-UXC Seminar: Move IT from Cost to Value Centre using IT Service Management and COBIT on 25 July 2014.

1. Measuring ROI and rewarding IT executives based
on their contribution to profits
Alvin Goh
July 2014

2. The following best-practice frameworks are/may be referenced during
this presentation:
ITIL®
ITIL® is a registered trademark of the Cabinet Office
The Swirl logo™ is a trade mark of the Cabinet Office
COBIT®
COBIT® is a registered trademark of ISACA
Copyright Acknowledgements

3. Agenda
ROI – How to measure?
Tool – Don’t be a fool
Reward – A part of Governance

4. Terminology
o Incident Management – Restore service as quickly as possible
following an unplanned interruption.
o Problem Management – Stop incidents from reoccurring.
o Change Management – Prompt, efficient & risk-aware handling of
changes requested by the business.

5. Company A (Incident Management)
o Last year, 4 Major Incidents caused total of $100,000
in opportunity costs.
o Mainly due to confusion on who does what, when,
where, how.
o After implementing ITIL, 4 Major Incidents only caused $40,000 in
opportunity costs.
o Savings due to Incident Management,
= (cost of business impact before) – (cost after ITIL implemented)
= $100,000 - $40,000 = $60,000

6. Company A (Incident Management)
o Previously, average outage of Major Incident is 5
hours, 1,000 employees affected.
o After implementing ITIL, average outage reduced to
2 hours.
o Further savings due to Incident Management,
= (amount of downtime before) – (amount after ITIL implemented)
= (5 x 1,000) – (2 x 1,000) = 3,000 manhours saved
o Assuming average manhour is $100,
= 3,000 x 100 = $30,000 saved per Major Incident
= $30,000 x 4 = $120,000 saved per year
(4 Major Incidents a year)

7. Company B (Problem Management)
o Last year 5,500 Incidents per month, each taking an
average of 5 hours to resolve.
o After implementing ITIL, Incidents reduced to 4,000
a month.
o Savings due to Problem Management,
= (average duration of resolving an Incident) x (number of Incidents eliminated)
= 5 x (5,500 – 4,000) = 7,500 manhours saved
o Assuming average manhour is $100,
= 7,500 x 100 = $750,000 saved per month
= 750,000 x 12 = $9,000,000 saved per year

8. Company C (Change Management)
o In 2013, there were 3 Major Changes that failed and
needed to back out, causing the company $100,000.
o After implementing ITIL, there were less failed
Changes costing a total of $30,000, and the amount
of rework was reduced.
o Savings due to Change Management (due to failure & rework),
= (cost of failed Changes previously) – (cost of failed Changes after)
= 100,000 – 30,000 = $70,000

9. Agenda
ROI – How to measure?
Tool – Don’t be a fool
Reward – A part of Governance

10. Excel - Baaaad

11. Tool - Good
o Meticulousness – Remove human error.
o Automation – Reduce tedious work.
o Clarity – Easier to present a clearer view.

12. Our Expectations of a Tool…

13. A Fool with a Tool…

14. Tool Customisation…

15. Watchouts!
o Process dictates how tool should work.
o Configure, not customize.
o Use MoSCoW analysis for requirements.

16. Agenda
ROI – How to measure?
Tool – Don’t be a fool
Reward – A part of Governance

17. IT Governance
© 2012 ISACA® All rights reserved.

18. Stakeholders

19. Benefits of Happy Employees

20. Gainsharing
o Gainsharing measures performance through a pre-determined
formula and shares the savings with employees.
o Works best when company performance levels can be easily
quantified and in a work environment that is based on openness and
trust.
o Rewards only performance improvement and payouts are self-
funded from savings generated.

21. Benefits of Gainsharing
o Fosters a culture of continuous improvement
o Enhances employee focus and awareness
o Increases the feeling of ownership and accountability
o Enhances the level of involvement, teamwork and cooperation
o Supports other performance improvement efforts and helps
promote positive change
o Promotes morale, pride, and more positive attitudes toward the
organization

22. Take Away
o Always try to measure IT in a way that the business understands.
o Tools help. But be careful.
o Reward your folks!

23. Thank You!
For further info on related course/s, please see:
http://www.iss.nus.edu.sg/ProfessionalCourses/CourseCatalogue.aspx
Alvin Goh
Senior Consulting
a.goh@uxcconsulting.com