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Last updated on 2024年10月16日

How do you measure the value of service delivery cost modeling?

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Service delivery cost modeling is a process of estimating and analyzing the costs of delivering services to customers, both internal and external. It can help you optimize your service delivery strategy, improve your profitability, and align your resources with your value proposition. But how do you measure the value of service delivery cost modeling? In this article, we will explore six aspects of service delivery cost modeling that can help you assess its benefits and challenges.

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Garry McCallum

Regional Sales Manager - BT Portfolio Business - BT Redcare.
Amit P.

ITIL?4 Certified | Service Delivery | Infrastructure Management | Project Management | IT Operations

1 Define your objectives

Before you start modeling your service delivery costs, you need to define your objectives and scope. What are the goals of your service delivery? Who are your customers and stakeholders? What are the key performance indicators (KPIs) and service level agreements (SLAs) that you want to achieve and monitor? How do you allocate and track your costs across different service categories, channels, and locations? By clarifying your objectives, you can create a cost model that aligns with your business strategy and customer expectations.

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Garry McCallum

Regional Sales Manager - BT Portfolio Business - BT Redcare.
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Any technology used by your organization, specifically the tools used to manage and operate IT, ultimately need to help reduce costs. For many, this is the overriding decision when making a purchase—understanding the total cost and the return on investment. Your service management solution is no different. That being said, your IT organization is the central point in creating, developing, maintaining, and delivering technology-enabled services—whether it be to your workforce, your customers, or both. As such, there is a necessity to move beyond thinking solely in terms of “total cost of ownership” and start focusing on the “total cost of service delivery.”

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2 Choose your methodology

There are different methodologies and tools for service delivery cost modeling, depending on the complexity and granularity of your service delivery processes. Some common methods include activity-based costing (ABC), time-driven activity-based costing (TDABC), and service value analysis (SVA). Each method has its advantages and disadvantages, depending on the level of detail, accuracy, and flexibility you need. You should choose a methodology that suits your data availability, cost drivers, and analytical needs.

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Garry McCallum

Regional Sales Manager - BT Portfolio Business - BT Redcare.
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The most common costing methods are process costing, job costing, direct costing, and Throughput costing. Each of these approaches can be used in various production and decision-making situations.

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3 Collect and validate your data

The quality of your service delivery cost model depends largely on the quality of your data. You need to collect and validate data from various sources, such as financial systems, operational systems, customer feedback, and benchmarking studies. You also need to ensure that your data is consistent, reliable, and up-to-date. You should establish a data governance framework that defines the roles, responsibilities, and processes for data collection, validation, and maintenance.

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4 Analyze and optimize your costs

Once you have your data and methodology in place, you can start analyzing and optimizing your service delivery costs. You can use various techniques, such as cost-benefit analysis, variance analysis, scenario analysis, and sensitivity analysis, to identify and quantify the drivers, components, and trade-offs of your service delivery costs. You can also use your cost model to compare your performance with your competitors, industry standards, and best practices. By analyzing and optimizing your costs, you can find opportunities to improve your efficiency, effectiveness, and value creation.

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5 Communicate and implement your findings

After you have analyzed and optimized your service delivery costs, you need to communicate and implement your findings and recommendations. You should use clear and compelling visualizations, reports, and dashboards to present your cost model and its implications to your customers, stakeholders, and decision-makers. You should also use feedback loops, change management, and continuous improvement techniques to implement your cost model and monitor its impact on your service delivery outcomes.

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6 Review and update your model

Service delivery cost modeling is not a one-time exercise. It is a dynamic and iterative process that requires regular review and update. You should evaluate your cost model periodically to ensure that it reflects the changes in your service delivery environment, such as customer demand, market conditions, technology innovation, and regulatory requirements. You should also update your data, methodology, and assumptions to maintain the validity and relevance of your cost model.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Amit P.

ITIL?4 Certified | Service Delivery | Infrastructure Management | Project Management | IT Operations
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Measuring the value of service delivery cost modeling involves several key approaches. First, conduct a cost analysis to evaluate total service delivery expenses against industry benchmarks. Establish key performance indicators (KPIs) like service level agreements, customer satisfaction scores, and response times to assess service quality impacts. Calculate return on investment by comparing implementation costs to financial benefits, and use scenario analysis to identify potential cost-saving opportunities. Gather stakeholder feedback and regularly update the cost model based on performance data to ensure its relevance, leading to informed decision-making and improved service outcomes.

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How do you measure the value of service delivery cost modeling?

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1 Define your objectives

2 Choose your methodology

3 Collect and validate your data

4 Analyze and optimize your costs

5 Communicate and implement your findings

6 Review and update your model

7 Here’s what else to consider

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