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Cost vs. quality: It’s a perennial issue in technical service and support. Drive your costs too low, and you risk sacrificing the quality of service. Conversely, if you push quality too high (yes, that’s possible!), then you drive your costs through the roof. Understanding the cost/quality tradeoff is the most critical step toward optimizing your support model. Using data from more than 300 benchmarks worldwide, Jeff Rumburg will illustrate how top-performing service and support organizations strike an appropriate balance between the cost of service delivery and the quality of support provided. He’ll share simple yet powerful techniques that will enable organizations to pinpoint their position on the cost vs. quality curve, determine if higher (or lower) quality is justified, reduce costs without sacrificing quality, and improve quality without increasing costs. Finally, he’ll share an interactive scorecard that organizations can use to determine whether service and support has been optimized, and, if it hasn’t, to identify the tangible steps needed to achieve an optimized support model.
Citation preview
Optimizing the Tradeoff:
Cost vs. Quality in IT Support
Jeff Rumburg
Managing Partner
MetricNet, LLC
2
27 Years of IT Service and Support Benchmarking Data
More than 3,000 IT Service and Support Benchmarks
Global Database
70+ Key Performance Indicators
More than 120 Industry Best Practices
3
10 Industry MegaTrends The rise of the Strategic Service and Support Organization
Holistic use of KPI’s
Benchmarking to Improve Performance
User Self-Help
Marketing Service and Support
Understanding TCO and Shift Left Strategies
First Contact and First Level Resolution
Process Rationalization (ITIL, ITSM)
Knowledge Management and Remote Diagnosis
Service Optimization: Cost vs. Quality in IT Support
4
Competing Objectives: Cost vs. Quality
Doing Things Right….
Vs.
Doing the Right Things!
Lower Cost Higher Quality
Doing Things Right!
6
Some Common Service Desk KPI’s
• Cost per Contact
• First Level Resolution Rate
Cost Productivity
Service Level
Quality
Call HandlingAgent
• Average speed of answer (ASA)
• Call abandonment rate
• % Answered within 30 Seconds
• Average hold time
• Average time to abandon
• Percent of calls blocked
• Contacts per Agent per Month
• Agent Utilization
• Agents as % of Total FTE’s
• Customer Satisfaction
• Call Quality
• % Escalated Level 1 Resolvable
• Agent Occupancy
• Annual Agent Turnover
• Daily Absenteeism
• New Agent Training Hours
• Annual Agent Training Hours
• Schedule Adherence
• Agent Tenure
• Agent Job Satisfaction
• Contact Handle Time
• First Contact Resolution Rate
• User Self-Help Rate
• IVR completion Rate
• Percent of calls transferred
And there are hundreds more!!
7
KPI’s: Which Ones Really Matter?• Cost per ContactCost
Productivity
Quality
Call Handling
• Agent Utilization
• Customer Satisfaction
• First Contact Resolution Rate
Agent • Agent Job Satisfaction
Read MetricNet’s whitepaper on Service Desk Performance Metrics. Go to www.metricnet.com to get your copy!
Aggregate • Balanced Scorecard
TCO • First Level Resolution Rate
8
A Summary of the Major KPI Correlations
Cost/Contact Customer Satisfaction
Agent
Utilization
First
Contact
Resolution
Agent
Satisfaction
Coaching Career Path Training Hours
Call
Quality
Handle
Time
Agents/
Total FTE’s
Absenteeism/
Turnover
First Level
ResolutionScheduling
Efficiency
Service Levels:
ASA and AR
9
Cost (Cost/Contact)
Qu
ality
(C
usto
mer
Sati
sfa
cti
on
)
HigherLower
HigherBEST-IN-CLASS
PERFORMANCE CURVE
AVERAGE PERFORMANCE
CURVE
The Cost vs. Quality Tradeoff
10
Another View: Cost vs. Quality
Lower CostCost (Efficiency)
Qu
ality
(E
ffecti
ven
ess
)
Top Quadrant
Efficient and Effective
Lower Quadrant
Middle Quadrants
Effective but not Efficient
Middle Quadrants
Efficient but not Effective
Higher Cost
Lower
Quality
Higher
Quality
n = 12
n = 24n = 36
n = 25
11
Characteristics of a World-Class Service Desk
• Service desk consistently exceeds customer expectations– Result is high levels of customer satisfaction
– Call quality is consistently high
• Costs are managed at or below industry average levels– Cost per contact below average
– Minimizes Total Cost of Ownership (TCO)
• Service desk follows industry best practices– Industry best practices are defined and documented
– Service desk follows industry best practices
• Every transaction adds value– A positive customer experience
– Drives a positive view of IT overall
12
HigherLower
HigherA World-Class Service Desk
An “Average” Service Desk
BEST-IN-CLASS
PERFORMANCE CURVE
AVERAGE PERFORMANCE CURVE
The World-Class Service Desk Defined
Cost (Cost/Contact)
Qu
ality
(C
usto
mer
Sati
sfa
cti
on
)
13
Cost (Cost/Contact)
Qu
ality
(C
usto
mer
Sati
sfa
cti
on
)
HigherLower
Higher
Four Cost/Quality Scenarios
1. Lowest Cost, Lowest Quality
4. Highest Cost, Highest Quality
2. Lower Cost, Lower Quality
3. Higher Cost, Higher Quality
14
Key Performance Indicators: Four Scenarios
Key Performance Indicators
Four Scenarios
Scenario 1(Lowest Cost/
Lowest Quality)
Scenario 2(Lower Cost/
Lower Quality)
Scenario 3(Higher Cost/
Higher Quality)
Scenario 4(Highest Cost/
Highest Quality)
Cost/Contact $9 $12 $18 $30
Customer Satisfaction 70% 82% 90% 95%
Agent Utilization 65% 60% 55% 50%
First Contact Resolution 60% 72% 78% 82%
Average Speed of Answer 90 sec 60 sec 30 sec 20 sec
First Level Resolution 75% 85% 90% 95%
15
Cost (Cost/Contact)
Qu
ality
(C
usto
mer
Sati
sfa
cti
on
)
HigherLower
Higher
The Ideal Operating Range
1
2
34
Costs too High!
(only rarely)Quality too Low!
(only rarely)
Ideal Operating
Range
16
KPI’s in The Ideal Operating Range
Key Performance Indicators
Performance in the Ideal Operating Range
Scenario 2(Lower Cost/
Lower Quality)
Scenario 3(Higher Cost/
Higher Quality)
Cost/Contact $12 $18
Customer Satisfaction 82% 90%
Agent Utilization 60% 55%
First Contact Resolution 72% 78%
Average Speed of Answer 60 sec 30 sec
First Level Resolution 85% 90%
17
Optimizing the Cost/Quality Tradeoff
Getting there is a Two-Step process
1. Benchmark your Service Deskto maximize Efficiency and Effectiveness
2. Fine Tune your Service Desk performance to achieve the ideal operating point
18
Your Service Desk Performance
Performance of
Benchmarking Peer
Group
Determine How Best in Class
Achieve Superiority
Adopt Selected Practices of
Best in Class
Build a Sustainable Competitive Advantage
The ultimate
objective of
benchmarking
COMPARE
The Benchmarking Methodology
Your Service Desk Performance
Performance of
Benchmarking Peer
Group
19
Cost/Contact HigherLower
HigherAFTER BENCHMARKING
STARTING POINT: BEFORE
BENCHMARKING
BEST-IN-CLASS
PERFORMANCE CURVE
AVERAGE
PERFORMANCE CURVE
Step 1: Benchmarking
20
Cost (Cost/Contact)
Qu
ality
(C
usto
mer
Sati
sfa
cti
on
)
HigherLower
Higher
Step 2: Fine Tuning
Ideal Operating
Range
Moving To Lower Cost
Moving To Higher Quality
21
Moving to Higher Quality: Key DriversQuality
(Customer Satisfaction)
First Contact Resolution
(The Most Important Driver)
Training Hours
Call QualityTechnology
– Knowledge Base
– Remote Diagnostic Tools
The Bottom Line
Every 1% Increase in First Contact Resolution Improves Customer Satisfaction by Approximately 1%!
Agent Job
Satisfaction
22
First Contact Resolution Drives Customer Satisfaction
20%
40%
60%
80%
100%
20% 40% 60% 80% 100%
First Contact Resolution
Cu
sto
me
r S
ati
sfa
cti
on
23
New Agent Training Hours vs. First Contact Resolution
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 50 100 150 200 250 300 350
New Agent Training Hours
Fir
st
Co
nta
ct
Res
olu
tio
n R
ate
24
Veteran Agent Training vs. First Contact Resolution
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 20 40 60 80 100 120 140
Veteran Agent Training Hours
Fir
st
Co
nta
ct
Res
olu
tio
n R
ate
2525
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Ne
t F
irs
t L
ev
el R
es
olu
tio
n
Remote Diagnostic Software No Remote Diagnostic Software
The Effect of Remote Diagnostic Tools on FCR
Average = 77.8% FCR
Average = 61.4% FCR
© 2013 MetricNet, LLC, www.metricnet.com
Fir
st
Co
nta
ct
Reso
luti
on
Rate
2626
The Effect of a Mature Knowledge Base on FCR
© 2013 MetricNet, LLC, www.metricnet.com
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
0 1 2 3 4 5 6
KBase Maturity
Ne
t F
irs
t L
ev
el R
es
olu
tio
nF
irst
Co
nta
ct
Reso
luti
on
Rate
27
Cost (Cost/Contact)
Qu
ality
(C
usto
mer
Sati
sfa
cti
on
)
HigherLower
Higher
Step 2: Fine Tuning
Ideal Operating
Range
Moving To Lower Cost
Moving To Higher Quality
28
Moving to Lower Cost: Key Drivers
The Bottom Line
Every 2% Increase in Agent Utilization Reduces Cost per Contact by Approximately 1%!
Cost
(Cost/Contact)
Agent Utilization
(The Most Important Driver)
Training
Hours
First Level
Resolution
Handle
Time
Service Levels:
ASA and AR
Scheduling
Efficiency
Technology
Tools
29
Agent Utilization Drives Cost per Contact
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
20% 30% 40% 50% 60% 70% 80%
Agent Utilization
Co
st
per
Co
nta
ct
30
Agent Utilization Defined
Agent Utilization is a measure of the actual time agents spend providing direct customer
support in a month, divided by total time at work during the month
It takes into account both inbound and outbound contacts handled by the Agents, and
includes all contact types: voice, voice mail, email, web chat, walk-in, etc.
But the calculation for Agent Utilization does not make adjustments for sick days, holidays,
training time, project time, or idle time
By calculating Agent Utilization in this way, all Service Desks worldwide are measured in
exactly the same way, and can therefore be directly compared for benchmarking purposes
Agent
Utilization
((Average number of inbound Contacts handled by an Agent in a month) X (Average inbound handle time in minutes) +
(Average number of outbound Contacts handled by an Agent in a month) X (Average outbound handle time in minutes))
(Average number of days worked in a month) X (Number of work hours in a day) X (60 minutes/hr)=
31
Example: Service Desk Agent Utilization Inbound Contacts per Agent per Month = 375
Outbound Contacts per Agent per Month = 225
Average Inbound Contact Handle Time = 10 minutes
Average Outbound Contact Handle Time = 5 minutes
Agent
Utilization
((375 Inbound Contacts per Month) X (10 minutes) + (225 Outbound Contacts per Month) X (5 minutes)
(21.5 working days per month) X (7.5 work hours per day) X (60 minutes/hr)= =
50.4%
Agent
Utilization
Agent
Utilization
((Average number of inbound Contacts handled by an Agent in a month) X (Average inbound handle time in minutes) +
(Average number of outbound Contacts handled by an Agent in a month) X (Average outbound handle time in minutes))
(Average number of days worked in a month) X (Number of work hours in a day) X (60 minutes/hr)=
3232© 2014 MetricNet, LLC, www.metricnet.com
Agent Utilization: Benchmarking Results
26.0%
28.0%
30.0%
32.0%
34.0%
36.0%
38.0%
40.0%
42.0%
44.0%
46.0%
48.0%
50.0%
52.0%
54.0%
56.0%
58.0%
60.0%
62.0%
64.0%
Ag
en
t U
tilizati
on
High 63.3%
Average ----- 45.4%
Median 46.3%
Low 30.0%
Key Statistics
Agent Utilization
33
ASA Drives Cost per Contact
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
0 50 100 150 200 250
Average Speed of Answer (sec)
Co
st
per
Co
nta
ct
34
ASA vs. Customer Satisfaction
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
0 5% 10% 15% 20%
ASA as a % of Total Handle Time
Cu
sto
mer
Sati
sfa
cti
on
35
Call Abandonment Rate Also Drives Cost per Contact
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
$45.00
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%
Call Abandonment Rate
Co
st
pe
r C
on
tac
t
36
Call Abandonment Rate vs. Customer Sat
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0%
Call Abandonment Rate
Cu
sto
mer
Sati
sfa
cti
on
37
Cost and Quality: Where Does Your Service Desk Land?
Lower CostCost (Efficiency)
Qu
ality
(E
ffecti
ven
ess
)
Top Quadrant
Efficient and Effective
Lower Quadrant
Middle Quadrants
Effective but not Efficient
Middle Quadrants
Efficient but not Effective
Higher Cost
Lower
Quality
Higher
Quality
n = 12
n = 24n = 36
n = 25
Doing the Right Things!
39
The Paradox of IT Support
Less than 5% of all IT spending is
allocated to end-user support
Service desk, desktop support, field
support
This leads many to erroneously assume
that there is little upside opportunity in
IT support
The result is that most support
organizations are managed with the
goal of minimizing costs
But the most effective support
strategies focus on maximizing valueCorporate IT Spending Breakdown
4%
96%: Non support functions
End-User Support
Application
Development
Application
Maintenance
Network
Operations
Mainframe and
midrange Computing
Desktop Computing
Contract Services
(e.g., disaster
recovery)
40
World-Class Service and support organizations recognize and exploit three unique sources of leverage:
1. Minimizing Total Cost of Ownership (TCO)
2. Improving End-User Productivity
3. Driving a Positive View of Corporate IT
Creating Economic Value in Service and Support
41
Cost of First Level vs. n-Level Resolution
Support Level Cost per Ticket
Vendor
Level 2: Desktop Support
Field Support
Level 3 IT
(apps, networking, NOC, etc.)
Level 1: Service Desk
$471
$196
$85
$62
$22
42
Shift Left Cost Reduction Strategies
43
The Tao of SPOC (Single Point of Contact)
User CommunityLevel 1
Service Desk
Desktop
Support
Field
Support
Level 2 IT
Support
Vendor
Support
44
The Tao of SPOC (Continued)
Key SPOC Principles Enterprise takes an end-to-end view of user
support
User/Customer has a single point of contact for
all IT-related incidents, questions, problems,
and work requests
The Level 1 Service Desk is the SPOC
Level 1 is responsible for:
Ticket triage
Resolution at Level 1 if possible
Effective handoffs to n level support
Resolution coordination and facilitation
Ticket closure
Desktop “Drive-bys”, “Fly-bys”, and “Snags” are
strongly discouraged
45
SPOC Support Reduces Total Cost of Ownership
0%
5%
10%
15%
20%
25%
30%
35%
40%
% R
eso
lved
Level
1 C
ap
ab
le
% Resolved Level 1 Capable with SPOC % Resolved Level 1 Capable without SPOC
Average = 22.8%
Average = 15.3%
46
Driving Contacts into Lower Cost Channels
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
6 Months 1 Year 2 Years 3 Years 5 Years
Time from Implementation
% o
f A
ll C
on
tacts
% Live Agent
% IVR
% Web Chat
% Web Self-Service
47
0
10
20
30
40
50
60
70
0 1 2 3 4 5
Pro
du
cti
ve H
ou
rs L
ost
per
Em
plo
yee p
er
Year
Returning Productivity to End Users
1 (top) 2 3 4 (bottom)
Customer Satisfaction 93.5% 84.5% 76.1% 69.3%
First Contact Resolution Rate 90.1% 83.0% 72.7% 66.4%
Mean Time to Resolve (hours) 0.8 1.2 3.6 5.0
Customer Satisfaction 94.4% 89.2% 79.0% 71.7%
First Contact Resolution Rate 89.3% 85.6% 80.9% 74.5%
Mean Time to Resolve (hours) 2.9 4.8 9.4 12.3
Service Desk
Desktop Support
Performance QuartileSupport Function Key Performance Indicator
37.4 46.9Average Productive Hours Lost per Employee per Year 17.1 25.9
Performance Quartile n = 60
48
84%
47%
31%29%
22%19%
8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Service Desk Desktop
Support
Network
Outages
VPN Training Enterprise
Applications
Desktop
Software
Factors Contributing to IT Customer Satisfaction
% S
ayin
g V
ery
Im
po
rtan
t
n = 1,044
Global large cap companies
Survey type: multiple choice
3 responses allowed per survey
84% cited the service desk as a very important factor in their overall satisfaction with corporate IT
47% cited desktop support as a very important factor in their overall satisfaction with corporate IT
Support Drives Customer Satisfaction for All of IT
49
Some Final Thoughts• Optimizing the Cost/Quality Tradeoff is a two-step process
1. Benchmark Service and Support to maximize Efficiency and Effectiveness
2. Fine Tune Service and Support performance to achieve the ideal operating
point
• Benchmarking will move your Service and Support to the Best-in-Class
performance curve
• From there, you can optimize cost and quality
– Improve First Contact Resolution to improve Customer Satisfaction
• Don’t “buy” too much Quality!
– Improve Technician Utilization to reduce Cost per Contact
• Don’t sacrifice quality for the sake of reducing costs!
Questions?Jeff Rumburg
Managing Partner
MetricNet, LLC
51
Thank you for attending this session.
Don’t forget to complete an evaluation form!
Optimizing the Tradeoff:
Cost vs. Quality in IT Support
Jeff Rumburg
Managing Partner
MetricNet, LLC
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