Financial Management - Return on Investment
Return on Investment (ROI) is a concept for quantifying the value of an investment. Its use and meaning are not always precise. When dealing with financial officers, ROI most likely means ROIC (Return on Invested Capital), a measure of business performance. This is not the case here. In service management, ROI is used as a measure of the ability to use assets to generate additional value. In the simplest sense, it is the net profit of an investment divided by the net worth of the assets invested. The resulting percentage is applied to either additional top-line revenue or the elimination of bottom-line cost.
It is not unexpected that companies seek to apply the ROI in deciding to adopt service management. ROI is appealing because it is self-evident. The measure either meets or does not meet a numerical criterion. The challenge is when ROI calculations focus in the short term. The application of service management has different degrees of ROI, depending on business impact. Moreover, there are often difficulties in quantifying the complexities involved in implementations.
While a service can be directly linked and justified through specific business imperatives, few companies can readily identify the financial return for the specific aspects of service management. It is often an investment that companies must make in advance of any return. Service management by itself does not provide any of the tactical benefits that business managers typically budget for. One of the greatest challenges for those seeking funding for ITIL projects is identifying a specific business imperative that depends on service management. For these reasons, this section covers three areas:
- Business case - a means to identify business imperatives that depend on service management
- Pre-Programme ROI – techniques for quantitatively analysing an investment in service management
- Post-Programme ROI - techniques for retroactively analysing an investment in service management.
Other ITIL Processes
- Configuration Management
- Service Desk Management
- Incident & Problem Management
- Change Management
- Release Management