Does this represent “Value for Money?” is the the perennial question asked when making any large purchase. This is often a difficult question to answer and the response will be viewed differently by individuals.
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. In the digital world of ever evolving technology, value is complicated to measure.
However, in-house, outsourced and hybrid delivered services can be measured for VFM. The delivery options present unique challenges, whether they revolve 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 definition
ImprovIT with their heritage in benchmarking have developed the following 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 it’s Value for Money definition in mind, 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.