Financial Management - Return on Investment
Return on Investment (ROI) is a concept for quantifying the value of an investment. Its use and meaning are not always precise. When dealing with financial officers, ROI most likely means ROIC (Return on Invested Capital), a measure of business performance. This is not the case here. In service management, ROI is used as a measure of the ability to use assets to generate additional value. In the simplest sense, it is the net profit of an investment divided by the net worth of the assets invested. The resulting percentage is applied to either additional top-line revenue or the elimination of bottom-line cost.
It is not unexpected that companies seek to apply the ROI in deciding to adopt service management. ROI is appealing because it is self-evident. The measure either meets or does not meet a numerical criterion. The challenge is when ROI calculations focus in the short term. The application of service management has different degrees of ROI, depending on business impact. Moreover, there are often difficulties in quantifying the complexities involved in implementations.
While a service can be directly linked and justified through specific business imperatives, few companies can readily identify the financial return for the specific aspects of service management. It is often an investment that companies must make in advance of any return. Service management by itself does not provide any of the tactical benefits that business managers typically budget for. One of the greatest challenges for those seeking funding for ITIL projects is identifying a specific business imperative that depends on service management. For these reasons, this section covers three areas:
- Business case - a means to identify business imperatives that depend on service management
- Pre-Programme ROI – techniques for quantitatively analysing an investment in service management
- Post-Programme ROI - techniques for retroactively analysing an investment in service management.
Other ITIL Processes
In order to have a good understanding of ITIL and the importance of configuration management, we first define what ITIL is: ITIL is literally a collection of documentation.
This documentation can help IT organizations implement the best practices. The documentation grows and grows as more successful techniques are documented and guidelines established for what can make others successful. The latest ITIL resources are published by the UK Office of Government Commerce (OGC).
Integrated service delivery refers to the need for Configuration Management, Change Management, Incident Management, Problem Management and Release Management processes that are linked together in a meaningful manner. For example, the process of releasing components to the live environment (the domain of Release Management) is also an issue for Configuration Management and Change Management whilst the Service Desk is primarily responsible for liaison between IT providers and the Users of services. This section highlights the links and the principal relationships between all the Service Management and other infrastructure management processes.
ITIL processes fall under Operational Layer or Tactical Layer, as follows:
| Operational Layer: | Configuration Management - Service Desk Management - Incident & Problem Management - Change Management - Release Management |
| Tactical Layer: | Service Level Management - Availability Management - Capacity Management - Continuity Management - Financial Management |