Moshav Bnei Zion P.O.Box 151, 60910 Israel Tel. 972-9-7907000 Reducing Help Desk Costs

IT service and support organizations (ITSSOs) can represent up to 10% of an IT organization's (ITO) operating budget. Such costs will continue to rise in organizations that do not deploy cost management practices. ITSSOs and potentially ITOs that do not manage operating costs efficiently will likely find themselves outsourced. True cost reductions are attained only if staff is decreased, through outsourcer's economics of scale, especially in more mature process areas like the service desk. Thus, organizations must "manage" operating costs to remain flat over time.

Most organizations are under pressure to reduce and manage operating costs down or flat, while growing the business (help desk spend as a percentage of IT spend has decreased in 2007 - see Worldwide IT Benchmark Report). ITOs have leveraged technology to automate business processes efficiently. However, they have not done as good a job at leveraging technology to automate the processes of the technology organization (e.g., self-service, integration between the help desk, asset and change). When considering outsourcing, ITOs have always balanced in-house technology costs against a market of similar services. Outsourcing has increased the pressure to consider an alternative cheaper resource for mature technology processes. Market comparisons are becoming more difficult to evaluate, as help desks evolve into full-service organizations managing service requests and business application service and support. As outsourcing processes mature in all industries, technology is applied to produce products/service customers more efficiently by reducing/managing costly resources. Outsourcing presents the interesting paradigm of applying technology to operate more efficiently by reducing ITOs staffs. ITOs must manage costly labor resources appropriately in line with the market competition of the outsourcers. It is undeniable that outsourcing costs are significantly less than current in-house ITOs competing for the work. The ITSSO is highly labor-intensive in its current state in most organizations. Service and support must become embedded within infrastructures creating a service-enabled infrastructure at the time of deployment, and labor must be managed more effectively. There are three underlying issues in managing ITSSOs’ driving labor costs:

• Deployment of service-enabling infrastructures

• Adoption and utilization of service-enabling infrastructures

• Labor resource career pathing The mismanagement of these three key areas leads ITSSOs’ operating costs to exceed those of the profit-driven market of service providers. Outsourcers are often brought into an organization to address the mismanagement issues of the organization where significant restructuring and transformation need to occur. ITSSOs must assess operating costs and processes to get in line with the market and manage them more efficiently over time. Service-Enabled Infrastructure We define service and support enablement as the embedded automation of routine workflow and the presentation of in-context knowledge, with the objective of reducing operational costs through outsourcing process efficiencies and end-user productivity, organizational compliance, and increased revenue generation. ITOs must begin embedding service and

support functionality at the time of design and implementation of new infrastructure, both in supporting the technical infrastructure and in enabling business process knowledge. Short term, the costs of instrumenting the infrastructure and the development of in-context knowledge will be significant, but such costs will be far outweighed by long-term cost management and the reduction of costly service and support (e.g., reduction of phone-based transactions, increased productivity, availability, customer satisfaction). Adoption and Utilization of Service-Enabling Infrastructures Organizations are pressured to reduce costs and are evaluating quick-hit labor-resource cost reductions via outsourcing domestically as well as offshore options. However, organizations are not addressing the root of the issues driving operating costs. Highly manual and labor-intensive processes, high-touch service and support, and high service-level requirements surrounding the technology infrastructure all contribute to high labor fees and operating costs. Personalized service requirements are contradictory to cost management/reduction efforts. Organizations must adopt and increase utilization of automated service and support to drive down and manage labor costs. Although this may be viewed as “pushing” service and support to the end user, it is a transaction that involves the end user regardless of whether a portal or person is the method of interaction. In most cases of outsourcing, the time spent and the quality of interaction is improved, while also complying with governing policies (e.g., security). The method of interaction must be targeted to the category of service and support. However, it is critical that the organization adopt at rates of 90% or greater when service-enabling methods are deployed and supported by deep levels of deployed knowledge. Labor Resource Career Pathing The final area that ITSSOs must address proactively in managing labor costs is the career rotation of service and support analysts. The ITSSO should be the entry into the ITO, and its staff should have a targeted maximum duration of 36 months, with the exception of those who promote into management. A high target is 36 months, with most rotating at 18- to 24-month marks. Those that remain slightly longer are specialists involved in deploying maturing processes or technologies. Many organizations have increased their cost structures by staffing entry-level positions with highly skilled resources or evolving the ITSSO into a career position. In both of these situations, the ITSSO out prices itself in the market in comparison to services offered by the outsourcers and most definitely in contrast to low-cost outsourcing resources. During tight economic times, organizations are evaluating short-term labor-cost reduction options without addressing the underlying causes. Transactions and resources must be proactively managed, leveraging the appropriate method of service and support based on transaction. It is also highly incumbent on the organization to adopt and utilize the appropriate method for service and support. Organizations that cannot manage resources and transaction costs efficiently will be outsourced, with the outsourcer bringing change to the environment. Bottom Line: ITOs must become committed to deploying and instrumenting infrastructures to manage labor-intensive, reactive, and routine maintenance activities as they mature, leveraging automation versus costly labor resources. Business Impact: Organizations committed to managing labor costs and reducing operating expenditures must become committed to deploying and adopting the use of service-enabling infrastructures as well as managing career paths of entry-level service and support professionals. ________________________________________________________________________