Optimizing service delivery costs and operating models through process-based benchmarking

By Aristide Toundzi Dzouankeu, Senior Manager, Sunil Rajan, Senior Manager, and Bob Reinhold, Principal, at EY

For IT executives, optimizing costs and improving service delivery are perennial objectives that require constant rationalizing of resources: how many people are required to support or deliver specific services to meet business objectives? CIOs have to view their answer to the issue of resources in the context of ROI: can the organization improve the value delivered to the business by optimizing the number of resources aligned to the highest-value services and processes?

To find the answers, executives often look to external benchmarking studies. While these studies offer insight into what their peers are doing, the data may not always be applicable, given that every organization has unique industry pressures, objectives, strategies, technologies and employee populations. Additionally, studies use different criteria or varying interpretations of leading frameworks, such as Control Objectives for Information and Related Technology (COBIT), in assigning costs or resources.

To gain better visibility into what actions need to be taken, process-based benchmarks need to be added to product-based benchmarks. As IT organizations move from traditional product-centric to service-centric models, an effective resource optimization framework is critical to the success of the transformation. Process-based benchmarking can enable a shift toward an optimized model for service delivery.

Moving to service-oriented benchmarks

IT leaders want data that is sufficiently robust to make fact-based decisions about staffing and cost-of-delivery objectives. A useful step forward is to map resources to a process framework. From there, it is possible to identify opportunities for resource rationalization and performance improvement. However, CIOs seeking to undertake the journey need to recognize that it’s an iterative process. It is a matter of drilling down and then rolling up. By layering a process-based benchmark over COBIT-based or other types of benchmarks, organizations can begin to improve their operating models through more intelligent resource allocations.  Figure 1 depicts a process-based framework; Figure 2 depicts a product-based framework.

Figure 1 – Process-based Framework

Process-based Framework

Figure 2 – Product-based Framework

Total FTE by product

There are three steps to this approach. First, the biases of external benchmark data that will be used must be accounted for and then refined for specific teams in ways that reflect the unique structure of the company. Second, resources must be aligned to an agreed-upon operating model with clearly defined responsibilities. Questions to ask include:

  • How many different roles can an individual employee play?
  • What level of granularity is appropriate for benchmarking roles? For example, is there a meaningful distinction between defining “network monitoring” as a role versus “problem management for routers at the network operations center”?

Third, compare the organization’s data to the data from the aggregated set of benchmark studies, and determine if there are meaningful variances.

Important considerations

It is important to note that even the best custom benchmarks are only reflective of the conditions at the time of collection of benchmark data. Staffing considerations must take into account changes that can meaningfully influence resource demand, such as economic considerations, technological shifts, or changes in business strategies.

“Right” answers are always relative; the models make clear where the percentage distributions reside, not which resources are superfluous. For instance, a model might outline that an optimum distribution assigns 5% of resources to the governance domain in COBIT and 25% to the operations domain, but not a specific number and type of resources that should be allocated to one or another.

Process-based benchmarking needs to be repeated as part of a continual-service-improvement (CSI) program. Such a program will improve the quality of data collected and reduce the error tolerances and assumptions required for benchmarking activity.

Process-Based Benchmarking

The bottom line

By layering a process-based benchmark over a product-based benchmark, such as can be seen in Figure 3, organizations can begin to optimize their operating models through more intelligent resource allocations. CIOs can leverage process-based insights as a capability map for the organization. As such, a process-based orientation can be used as a basis for major transformation initiatives and a guide for continuous improvement.

For more information, please contact:

Aristide Toundzi Dzouankeu, Senior Manager at EY (Aristide.ToundziDzouankeu@ey.com)

Sunil Rajan, Senior Manager at EY (sunil.rajan@ey.com)

Bob Reinhold, Principal at EY (bob.reinhold@ey.com)

EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

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