Beyond Beans, The Anatomy of Enlightened IT Service Costing: The Third and Fourth Partitions, the Hands and Lifeblood

Written by David Crouch

Dear Reader,

A greater man than I once confessed, “I profess both to learn and to teach anatomy, not from books but from dissections; not from positions of philosophers but from the fabric of nature.”  Or as the ancients used to say, “beware the man of one book.”  But, it is not from books alone that we share our secret knowledge.  It is from years of toiling next to bean counters and technological troglodytes.  So let us put on our lab coats once again to learn about the Hands and the Lifeblood of IT Service Costing.

The Third Partition

The Hands: Direct Support Staff

No matter how much technology we use or how much automation we deploy, IT services just cannot be delivered without people.  Our direct support staff are the hands to carry out the work of service delivery day in and day out.

Direct support staff are employees whose primary responsibility it is to architect, deliver, or support the service in question.  This includes architects and engineers, systems managers and administrators, installation and customer support technicians, and hands-on technical staff.  It is easier to identify direct staff for some services than for others.  An imperfect way to determine direct staff is by using the phrase, “He/she is the __________ person.”  For example, “Paolo is the Telecom. guy” or “Francesca works on the virtual server team.”  To further develop the Landline Telephone Service example we introduced in our last segment, it is not difficult to identify the Director of Telecommunications, the Customer Service Manager and her customer service support staff, and the technicians who install phones and perform moves, adds, and change work.

Cost Type % Allocated Date Purchased
Hardware
IP Telephone Sets
Headsets
Switches
Cables
PBX
Call Server
Media Gateway
Voicemail Server
Software & Licenses
VoIP Application
Licenses (specify quantity)
Monitoring Software for NOC
Voicemail Software Licenses
Shared Infrastructure
Network Infrastructure/Cables  50%
3rd-Party/Vendor Services
Local Telecom. Service
Long Distance Telecom. Service
Direct Support Staff
Telecom. Service Owner/Director
Technician Supervisor 1  100%
Sr. Telecom. Tech  100%
Telecom. Tech 1  100%
Telecom. Tech 2  100%
Telecom. Customer Service Manager  100%
 Telecom Customer Service Specialist  100%

 

To reach an accurate service cost, it is important to understand approximately what percent of
a staffer’s time is really dedicated to a particular service.  For example, in some organizations, a telecommunications customer service specialist may spend 100% of their time answering customer questions about landline service.  However, in a different organization, the same specialist may be tasked with answering questions about landline telephones, mobile phones, and conference calling.  In this case, it would be appropriate to estimate how much time the specialist spends working on each service.  To be clear, I am not suggesting that the specialist keep detailed timesheets or start a stop-clock each and every time they pick up the telephone to answer a call.  A heuristic or best effort estimate based on several conversations usually suffices.


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The Fourth Partition

The Lifeblood: Shared Staff

People are the lifeblood of IT services, and “no one thinks of how much blood it costs.”  Put simply, if you were to make a list of all the people it really takes to deliver your IT services . . . even those with minimal interaction with them, the list would probably be a lot longer than you imagine.  And, quite often, the employees are not always in the same functional department or they work to deliver multiple services.

Even a fairly straightforward service like Telecommunications often relies on employees who cross functional teams.  For example, one of our clients upgraded their telephone systems from “plain old telephone service” (POTS) to a voice over IP service (VoIP).  In the POTS days, a telephone technician did not need to have knowledge of the data network or infrastructure.  However, as the client entered the VoIP world, the Telecommunications department increasingly depended on the knowledge of network technicians.  In turn, the network technicians spent most of their time installing network jacks and troubleshooting network issues.  They only dedicated part of their time to assisting Telecommunications.  Nevertheless, an accurate service costing exercise means that their time must be accounted.

Cost Type % Allocated Date Purchased
Hardware
IP Telephone Sets
Headsets
Switches
Cables
PBX
Call Server
Media Gateway
Voicemail Server
Software & Licenses
VoIP Application
Licenses (specify quantity)
Monitoring Software for NOC
Voicemail Software Licenses
Shared Infrastructure
Network Infrastructure/Cables  50%
3rd-Party/Vendor Services
Local Telecom. Service
Long Distance Telecom. Service
Direct Support Staff
Telecom. Service Owner/Director
Technician Supervisor 1  100%
Sr. Telecom. Tech  100%
Telecom. Tech 1  100%
Telecom. Tech 2  100%
Telecom. Customer Service Manager  100%
 Telecom Customer Service Specialist  100%
Indirect Support Staff
Network Service Manager 10%
Network Tech. 1 30%
Network Tech. 2 30%
Administrative Assistant 20%

 

Perhaps the most often forgotten employees when performing service costing are shared administrative staff positions.  Yet, any executive who has been fortunate enough to have a great administrative assistant knows they are worth a treasure in gold.  As many businesses have roughed financial downturns over the last decade, administrative staff has dwindled.  At the same time, executive assistants are asked to do more and more.  It is not uncommon for one secretary to work for three or four or even five departments.  Once again, failure to account for these positions means undervaluing our service.  Similar to the network technician example above, the best way to account for shared administrative positions is to heuristically estimate how much effort goes into supporting each department and/or each service, always careful not to under-count or double-count.  Initial estimates may need to be refined as you become better at performing service costing.

But, reader, so far we have counted beans and put them in the right buckets.  We still do not know how much the beans cost.  We will dedicate the next segment, Partition 5, to the Brain of IT Service Costing, the Financial Accounting System . . . characteristics of a good system and the way we can get the most from it.


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Originally published April 04 2017, updated January 01 2019
ITIL/ITSM