BMC Service Cost Management

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In providing IT services, the main focus of an IT organization is on  the services side of business, specially on the processes that deliver  services to the client. However it is equally important to focus on  determining the total cost or the full cost of all services provided by  an organization. The total cost involves products and services provided  to both internal and external clients.

For example, a team of IT personnel  may be designated to support IT infrastructure that is used to provide  services such as network connectivity, application hosting and e-mail.  The e-mail application in turn is used by multiple users and is  supported using mail servers and individual in-boxes. Therefore the cost  of providing the e-mail service to a client should consider not only  the software and hardware assets involved but the effort and time spent  by the IT personnel. The cost may also include any training requirements  and the time spent in managing the associated resources. The total cost  can then provide a true picture of IT budget requirement or usage  related to providing e-mail services.

Along with cost, an IT organization might determine the price of providing a service. The price of providing a service is usually based on the cost of the service. However unlike cost, the price amount can remain constant over a fiscal time period. For example, after analyzing that the average unit cost of providing the e-mail service is $100 per month, the IT department can set the price as $100 per month for an entire fiscal year. While the cost of providing e-mail service might vary from month to month, the price remains set to $100.00. This data provides the IT department the opportunity to compare any profit or loss they might incur at the end of fiscal year for a service. At the same time, the organizations using the service can forecast the demand and requirements for the service based on the price information.

Once calculated, the total cost and price can be used to define an organization's business by forecasting business volumes, defining staff, contractor and vendor requirements, the direct and indirect expenses they will incur and the capital investment required.

In addition to a budget for products and services, the total costs or  rates are the ideal benchmarks for competitive comparisons.
 The process of determining total or full cost of a business or  technical service is called service costing. Service costing helps in  managing expectations of all IT clients, builds a perception of the  value the business receives from the IT budget (or from allocations),  and engenders trust through transparency.

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provides the IT Service Cost Management application to effectively  model, manage and track cost of technical and business services.

You can use BMC Service Cost Management to perform the following tasks:

  • Architect a service portfolio
     Define and categorize services provided to lines of business. Automate  cost management practices associated with IT services. Store all  information related to your services in a common data repository.
  • Model and manage service cost
     Identify type of service and the service owner and create service cost models based on user specified data.
  • Manage service cost scenarios
     Perform what-if comparison of data related to cost model(s) for various business services. Using different scenarios of service costs, identify the best cost model(s) to use for your organization and provide strategic direction to the IT organization.
  • Manage and track service utilization
     Monitor utilization of service metrics and IT service consumption and supply this data towards calculation of IT service cost.
  • Provide cost analytics and bill of IT
     Allocate services costs to one or more business units based on unit cost  or unit price and consumption. Provide cost transparency to the  business in language of the business.
  • Provide chargeback and showback
     Analyze the chargeback amount for a service or for services provided by an IT organization. The showback information provides a way to showcase the cost analysis data, display comparison and benchmark data.
  • Benchmark costs
     Compare your service costs to IT industry benchmarks and make better IT business decisions.

 

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