Information Technology Reference
In-Depth Information
ty survey occurs beforehand, the opportu-
nities selection will be a lot more accurate
because the consultant has more precise
information about each ITIL process's ma-
turity. Nevertheless, the ITIL maturity sur-
vey artifact is an optional input.
of a decision-making point. If at least one
process, from the ones that were chosen in
the first activity of the estimation process,
has not been processed yet, then the next
phase is to analyze the next process on the
waiting list. Otherwise, the next phase is to
quantify the project's costs.
•
Choose the project's risk level: the consul-
tant chooses the project's risk level based
on a risk analysis, which impacts greatly
the benefits quantification process and in-
vestment analysis further ahead. The high-
er the risk is, the lower the benefits will be,
and the investment is influenced as well,
i.e. the higher the risk is, the higher the
value of the investment will be. So, there
is a downward revision of the benefits
and an upward revision of the investment
value, which is done on ad-hoc basis, for
instance: by decreasing 10% of the benefits
and increasing 10% of the value of the in-
vestment (Stæhr, 2006).
•
Quantify costs: the consultant defines the
discount rate and the percentage of oper-
ating costs that come from the investment
over the years and the value of the invest-
ment, so as to determine the project's costs.
•
Perform investment analysis: using the
data gathered in the previous two activi-
ties, a financial analysis is made in order to
assess the NPV, PBP and IRR of the invest-
ment. These values constitute the invest-
ment analysis report depicted as the output
artifact of this activity.
•
Select number of trials to run: in this ac-
tivity the consultant selects how many
scenarios will be used to perform a Monte
Carlo simulation.
•
Input general client data: the consultant
inputs general client data, for example:
the organization's revenue, number of em-
ployees and working hours per year.
•
Correlate variables: because some vari-
ables are correlated to others, i.e. “the state
of one variable gives us the information
about the likely occurrence of another”
(Rodger, Jason, 1999), it is important not
to ignore the correlations that exist be-
tween variables. Therefore, the consultant
has to define the correlation coefficients
between all the variables that enter the sen-
sitivity analysis.
•
Quantify benefits: “prior to implementing
any process improvement initiative, pro-
cesses should be measured and if possible
assigned a monetary value” (Tiong, Cater-
Steel & Tan, 2008). Therefore, in this sub-
process the benefits are quantified by ana-
lyzing the general client data gathered in
the previous activity, as well as KPIs spe-
cific to each process which can be found in
official literature (Brooks, 2006; Steinberg,
2006), for example: the total number of in-
cidents, estimated average time lost in an
incident per employee, etc.
•
Perform Monte Carlo simulation: to final-
ize the estimation process, a Monte Carlo
simulation on the project's ROI is per-
formed. However, discovering the estimat-
ed ROI by using the expected values for
the project's benefits and costs is generally
incorrect because of non-linearity between
the variables (i.e. they are correlated). In
order for the ITIL Value Estimator to be
more precise and, therefore, more reli-
able, it is important to perform a Monte
•
Compute total benefits: the benefits are
automatically quantified by the ITIL Value
Estimator through the analysis of the data
that is inserted in the “quantify benefits”
sub-process.
•
More processes?: this gateway consists
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