IT Service Availability and Business Cases

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Questions and Answers

What is the primary role of financial management in IT service provision?

It eliminates the need for business case preparation.

It focuses solely on reducing IT costs.

It prioritizes the selection of service providers based solely on cost.

It assists in quantifying IT’s value and contributions. (correct)

Why is quantifying anticipated costs and benefits important in a business case?

It provides detailed financial forecasts without any specific focus on business outcomes.

It aids decision-making and aligns with service improvement KPIs. (correct)

It is essential for regulatory compliance only.

It simplifies the portfolio management process without considerations of quality.

What is a key consideration in service portfolio management regarding service providers?

All service providers must conform to the same pricing structure regardless of service quality.

Only internal providers should be used to ensure quality.

The cheapest service provider is always the best choice.

Service assets and capabilities must determine who can provide the best value. (correct)

What should a business case incorporate when preparing for service decision-making?

Quantifiable costs and benefits corresponding to business value. Signup and view all the answers

How does quality play a role in selecting service providers?

Quality thresholds determine if the cheapest provider is the best option. Signup and view all the answers

What is the primary challenge in calculating the initial investment and maintenance costs for IT service assets?

Service assets can be shared among multiple services. Signup and view all the answers

How can the decision to invest in one service affect other services?

It may alter the NPV of the other services. Signup and view all the answers

What factor might justify the continued investment in a service even if it has high costs?

Intangible benefits such as customer trust. Signup and view all the answers

What is a 'loss leader' in the context of IT services?

A service provided at a loss to attract customers to other services. Signup and view all the answers

Why might it be problematic to assign the full cost of shared service assets to individual services?

It may misrepresent the NPV for each service. Signup and view all the answers

How does demand management play a role in services like Ben's booking facility?

It manages visitor numbers according to service capacity. Signup and view all the answers

What impact does an investment in a loss leader have on overall service offerings?

It allows the enterprise to cover costs of other services. Signup and view all the answers

What might happen if the calculation for the NPV of a new site does not account for shared hosting costs accurately?

The NPV could incorrectly appear to be negative or positive. Signup and view all the answers

Study Notes

IT Service Availability and Investment

IT services rely on shared assets (hardware, software, infrastructure, people)
Calculating service asset costs is complex due to shared resources
Investing in one service can impact the NPV of others
Service lifecycles require ongoing investment and potential retirement decisions
Intangible benefits (e.g., brand trust) may outweigh service costs
Loss leaders (services costing more than their revenue) can support other services
Examples: farm booking system that facilitates visitor numbers and other sales.

Business Cases for Services

Services need business cases to justify continuation or retirement
Business cases consider costs and benefits, often focusing on financial metrics
Business cases can quantify anticipated costs and benefits in financial terms
Quantifying benefits with key performance indicators (KPIs) enhances decision-making
The ITIL Service Strategy core book highlights financial management's ability to assess value and quantify opportunities created by IT services.

Service Provider Selection

Key aspects of service portfolio management: who delivers services?
External and internal service providers both can be considered when calculating service value.
Quality thresholds (requirements) must be applied in selecting providers
Best value involves a service provider with the capability to deliver the best customer outcome.
Business cases and financial assessments aid rational decisions about service provision and prioritization.

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Description

This quiz explores the complexities of IT service availability and the importance of creating solid business cases for services. It discusses shared resources, investment impacts, and the balance between costs and intangible benefits. Familiarity with key performance indicators (KPIs) and financial management practices is essential for making informed decisions.