Blog Archive The ROI discussion for Software Support – 2
Recently I wrote about The ROI discussion for Software Support to both understand and utilize software maintenance offerings (such as SAP Enterprise Support) better. In continuation, I am embarking on a series of blogs on various major Key Performance Indicators (KPIs) that seem to have biggest impact on software support Return On Investment. These blogs, I hope, will bring to life the value of software support. The impact of the selected KPIs are in some cases financial, in some cases strategic and in several cases, both.
Bread and butter KPI – Downtime
Lets tackle the low-hanging fruit first – downtime. To state the obvious, this is IT’s highest priority. This “downtime” KPI, in most cases, also happens to be an exclusive responsibility for IT – business expects nearly zero downtime but typically provides minimal support to make it happen! However, even a cursory look at downtime showcases the criticality to business – lost revenue, lost productivity, customer dissatisfaction and investor concerns. Especially in emerging markets like SaaS and cloud computing, the perception of potential downtime can turn customers and investors off as we have seen in recently reported incidents at many big name companies including Amazon, FourSquareThe IDC report “Cost of Downtime and the IT landscape” elaborates on the various measures organizations take to control both planned and unplanned downtimes.
In the case of both planned and unplanned downtime, reducing the frequency of the incidents and the duration are critical to manage. Many SAP customers have minimized planned downtime using SAP Enterprise Support services and tools such as the GoLive checks and downtime assessment report. In case of unplanned downtime, several customers have been able to reduce the frequency of incidents as well as able to resolve the incident faster. Tools such as Business Process Monitoring and Early Watch Alerts proactively help identify risk areas. 24×7 production down support with Service Level Agreements (SLAs) ensure immediate attention from SAP Active Global Support.
The IDC article on SAP Solution Manager specifically discusses ways in which downtime can be controlled. The article mentions a average reduction in downtime incidents by 8.4% and hours per incident by above 50%.
Downtime – does it matter?
Going back to the software support ROI discussion, it is necessary for any company to estimate frequency and duration of their planned/unplanned downtime based on history as well as future projects. It is also critical to estimate the cost of a downtime hour for your company – this can vary. A company that uses SAP for non mission-critical processes may be able to afford some downtime versus companies whose backbone is their SAP platform.
For example, cost of one downtime hour for a manufacturing company that relies on SAP for their production and supply chain can be high – every hour of lost production may lead to delays in completing orders and causing customer pain – could cost several tens of thousands of Euros. Cost for an online trading or e-commerce company can be high since downtime might lead to immediate customer revenue loss – as customers in a non-functioning website can easily go to another. What is the cost of downtime per hour for your company?
Following questions can be probed into – How much planned/unplanned downtime have we had in the past? Are there new projects/changes that will make this worse? Is this downtime something our company can afford? What is the cost of one hour of downtime – in terms of lost revenue, lost productivity, customer satisfaction, market perception? If I can cut my downtime by 10% or 30%, will it make a substantial difference to my company? What are the financial as well as strategic benefits of reducing downtime for my company?
This is the starting point of the ROI discussion around software support. I will continue our discussion with other metrics such as support costs, costs for supporting business processes, etc, in our subsequent articles.