Abstract
Cut IT Service Management costs by up to $1M annually. Learn the 5 key ITSM metrics that drive savings with automation and process improvement.
IT Service Management (ITSM) can consume 5–12% of a company’s IT budget, often translating to $5–10M annually for a $2B enterprise. Yet many organizations don’t measure ITSM performance effectively, leaving hundreds of thousands of dollars in savings untapped. By tracking just five core metrics, mid-tier firms can typically save $500K–$1M per year. In ITSM, you get what you measure!
Key IT Service Management Metrics
There are only a handful of metrics that an ITSM organization in a mid-tier company needs to focus on, that can save them between $500K and $1M per year. Think about that… Only 5 metrics that you need to focus on to improve your ITSM process and drive costs drastically down. These 5 metrics are:
- Rework Rate: Unresolved incidents following the first assignment may result in the reopening and reassigning of a ticket to new resources. Rework can drive up to 30% of all incident management costs.
- Mean time to Resolve (MTTR): MTTR is the average time from when a ticket is opened until its resolution. Longer MTTRs lock-up expensive IT resources for longer periods of time.
- First Contact (or Call, or Touch) Resolution (FCR): The percentage of incidents resolved by the first person in the incident chain (first agent, first call taker etc.). Therefore, any time you are solving the problem with the first touch, you are avoiding escalating it to higher cost resources.
- Automation Rate: The percentage of tickets that IT resolves that could be automated such as password resets, responses to frequently asked questions, scheduled maintenance events, etc. With AI this should go up significantly. Responding with human resources is much costlier than responding with automation.
- Ticket Deflection: This is similar to automation except that it is a means to guide customers to self-serve without IT resources.
How much can a company save using only these metrics?
Assume a mid-sized company that is $2B-$5B in revenue. A company of this size typically handles 25,000 – 30,000 tickets per year. Roughly a quarter of these are highest priority and cause operational disruption. Here are some typical costs for such a company:
- Average cost per ticket $50
- Average IT Labor Cost/Hr. $60
The table below shows some example savings for each of the above metrics.
| Metric | Baseline Measure | Target Measure | Estimated $ Savings |
| Rework Rate | 20% | 10% | $150,000 |
| MTTR for high priority tickets | 5 Hours | 4.5 Hours (10% Improvement) | $225,000 |
| FCR | 60% | 75% | $180,000 |
| Automation | 2% | 15% | $175,000 |
| Deflection | 5% | 15% | $135,000 |
| Total | $865,500 |
How to achieve IT Service Management Cost reduction?
Companies can achieve savings of 10-15% of annual ITSM spend with a singular focus on process improvement. Our advice to our clients is to first measure what you want to achieve. Surprisingly, many companies don’t have even a basic knowledge of their ITSM costs and don’t track core metrics. Once you know what you are measuring, then follow the simple steps below:
- Baseline your current performance against your metrics and establish your targets
- Assess the ITSM processes that affect your metrics using simple process improvement techniques focusing on high-volume, high-cost areas
- Build a process improvement plan identifying key tasks, resources, and timelines emphasizing quick wins from automation, knowledge bases, and self-service
- Execute your plan
- Re-measure your performance against the metrics
- If you haven’t achieved your target, update your process improvement plan and execute your new plan
Make sure you establish your cost basis for your baseline metrics and celebrate your cost improvements. You can also read about other IT cost reduction strategies in other blogs on our blog page on our company website.
What’s Next?
Are you measuring these five ITSM metrics today? If so, how close are you to best-in-class benchmarks? Share your experiences… we’d love to compare notes.
Explore more insights about ITSM strategy and costs on our QuantumVision-AI LinkedIn Page or visit quantumvision-ai.com to learn how AI can transform your ITSM strategy. You can also sign-up for a demo of our ITSM product or apply to be a Beta customer on our website.
What other approaches can help improve your ITSM Costs? I’d love to hear your thoughts or experiences.
Sai Balakrishna
Managing Partner & CEO
📧 info@quantumvision-ai.com
🌐 www.quantumvision-ai.com
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