We all want to feel that we’re getting value for money from the things we buy. But when you control large budgets on behalf of demanding stakeholders, it’s always going to be your first (and arguably, most) important question.
The concept of “Value for Money” (VFM) is an important one to IT service provision, with more organisations questioning whether their IT delivery is good value. Unfortunately, in the digital world of ever-evolving technology, value can be really complicated to measure.
It is possible, however, to measure in-house, outsourced and hybrid delivered services for VFM. The different delivery options present unique challenges; whether they resolve around presumed (internal targets) or contracted (SLAs) obligations, the full value can only be determined and measured, when cost or commercial factors are combined with several aspects of service quality, resulting in a two-dimensional view of Value.
Value for Money – a simple definition
Using over 20 years of IT industry benchmarking experience, we’ve been able to develop the following simple definition for “Value for Money”:
The Price (Charge) or Cost for a defined set of service(s) is equal to or lower than the peer group
AND the Service Quality for these services is equal to, or higher than the peer group.
This removes any ambiguity from defining VFM and ensures subjective views are replaced with hard facts on whether VFM is achieved or not.
Defining an appropriate peer group is a whole separate challenge!
Determining Value for Money
With its Value for Money definition in mind, we at ImprovIT can very quickly determine if existing internally or externally delivered services provide value. This can also be applied to a future scenario where the service(s) required can be “modelled” against best practice to aid strategic decision making.