This is a follow-up post to Estimating the Cost of Incidents. I wrote then that if you are going to make such an estimation, you need to look at costs to the business, and the costs of resolving the Incidents (i.e., the cost of the IT function). The previous post dealt with costs to the business, so this post will address something not often mentioned - the cost of the Incident Management and resolution service.
Factors to Consider
Throughput (t) - either the number of Incidents logged or resolved in a month. Take a typical or average figure.
Team composition - The people involved in Incident Management and Resolution.
Time Spent Estimate (p) - Each member of the team might have a percentage to indicate the amount of time they spend on Incident management activities. Some staff will be 100% devoted to this task, others not.
Capital Expenditure (c) - The Incident Management team will have a degree of capital expenditure associated with them - computers, desks, ITSM system and so on. This expenditure will generally depreciate, and you can use this annual depreciation in your calculations. You can usually obtain this information either internally from the Helpdesk/Service Desk itself if you have a functioning Asset Management function, or from your accounts team. Use an annual depreciation figure.
Average Salary (y) - The average salary of those involved in IT management will be needed. Don't try estimating different worker levels, just use an average figure. If in doubt use your own salary as a guide. Use an annual figure.
Overheads - When employing any group of workers, you have to pay for a bunch of other stuff like office accommodation, training and so on. If you don't know what figure to choose, make it 30% (this is the figure I've used) of your salary, as this is a generally accepted guide. Again, use an annual figure.
Blending all of the above into the mix brings us to a formula you can use as a cost-per-Incident-per-month (CPI) for delivering the Incident resolution service. I've broken the formula down into two parts to make it easier to read.
1. Staff Costs, pa
This is easiest if you use a spreadsheet. Make one row per Incident Management employee as follows. The numeric figure is (p) from above - percentage of time spent in Incident management and resolution.
2. Cost per Incident
This is the figure we're after, a cost per Incident
CPI = ( s + (s * 30/100) + c) / (12 * t) )
Odd things thrown up by this formula
1. The cost per Incident will almost certainly go up if you have a quiet month with fewer Incidents, as most of your costs will be fixed or semi-fixed. This may be offset by a reduction in impact costs associated with Incidents, as mentioned out in the previous post. Whether or not you can measure that so directly is difficult to tell.
2. It may be that the cost of Incident impact is dwarfed by the cost of the Incident resolution service. However, no rational person would jump to the conclusion that it is cost effective to close or diminish the Incident management service - would they?