The IT Skeptic - Comments for "Refining the Five Percent Club"

how good does a cmdb need to be to deliver value

Tim Coote — Sat, 16 Apr 2011 19:35:27 +0000

Fwiw, I had a customer who looked at the basic concepts behind CMDBs in the following way, which I think is the sensible approach. Whatever the CMDB is in a particular situation, it provides data that is used to drive the ITIL processes that depend on it (whether that be simple billing, change management, to prioritise the event management process based on impact of the failure of some subcomponent or some other ITIL (sub) process. In order for the CMDB to be useful, the data within it must be of sufficient quality that the supported processes 'work', on balance.

The gut estimate was that unless the relevant data needs to be >97% accurate for the process that it supported to 'work'. If the quality drops below this level, it ceases to be trusted and people just run around checking the data. In this context, 100% is the union of the set of data that represents the real world and the data that's contained in the CMDB. 97% represents 1.5% false positives (a record for an asset or relationship that doesn't really exist) and 1.5% false negatives (missing records for an asset/relationship).

If this view is correct, then it's pretty easy to ensure that the data quality is managed for the specific processes that are being supported and then to measure how much it costs to keep the data quality up.

I've measured the data quality of many CMDBs, and >90% is really tough and expensive, except to support the very simplest of processes. I've also seen plans for building CMDBs where just managing the data schema (let alone the data in the schema) would cost a comparable amount to managing the services that the CMDB models.

Most of my customers in this space started with the vision of building some sort of bottom up view of how their IT supported their business processes. That's really hard and expensive.

A few comments

aroos — Fri, 08 Apr 2011 06:38:03 +0000

I did think about the ROI but it is really not realistic to measure it. Or put it in other words. There is no ROI in measuring the ROI of ITSM. Proper measuring can be harder than testing. Many activities are related. My results indicate that the CMDB supports good change management and reduces disruptions to the service, but it does not show that it is is necessary to have a perfect CMDB to get good results from change management.

The people who have gone through the process of implementing it think that it was worth the effort. Nearly all, who are in the process of implementing it, want to put more effort to it. I think they know what they are doing.

About the size of companies, this is Finland. The largest Finnish financial group is about 5% of Wells Fargo so we are not talking about Fortune 500.

Aale

PS Thanks Rob for the guest post.

The lower limit

skeptic — Fri, 08 Apr 2011 02:37:00 +0000

Incidentaly I checked ITIL Small Scale Implementation written by Ivor Macfarlane (co-author of ITIL V3 Service Transition which defines CMDB/CMS) and Sharon Taylor (Chief Architect of ITIL V3) and it says (p47)

In many small organisations... the overheads of establishing and maintaining the configuration links will be too great

and they ought to know. Regular readers will know that this blog uses "establishing and maintaining the configuration links" as the formal definition of a CMDB/CMS, and it is hard to imagine what else Ivor and Sharon were referring to.

If ITIL should only be applied to larger organisations then let's please have that in large red letters on the cover of every book. if ITIL is to be more general, then let's make clear which components are essential and which depend on factors of scale and complexity.

The boundary

skeptic — Fri, 08 Apr 2011 02:20:33 +0000

I wonder if that old "general ledger has no ROI" is a myth. Try running a business with no GL. the VOI is clearly identifiable in terms of reduced losses, controlled risks, and the decision-making value of information. Note i carefully said "value" not "return". VOI is a standard term for trying to quantify value other than direct dollar value. And i think every artifact and procedure a business builds has, or should have, VOI. That's clear and that's what i referred to. But I even think that so long as you are willing to accept avoided losses as a real $ return, then all business constructs have a ROI.

As for the scope of the population, yes I do think when we talk about ITSM we should talk about more than just the Fortune 500. Is there a lower limit beyond which the discussion is absurd? Of course. Can i crisply define that limit? No. But I have two clients who have less than fifty employees in the whole organisation and zero staff whose sole responsibility is IT. They both have clearly defined IT practices including configuration, incident and change, and a clearly defined function of IT Management. And they both - bless them - are prepared to spend real money on ITSM advice. I don't think they are below the "absurdity limit".

Define the population PLEASE

Charles T. Betz — Fri, 08 Apr 2011 01:36:48 +0000

Rob, if your population of interest is all economic entities from single person proprietorships to the Fortune 25, I think 5% is probably overstated if anything.

If your population of interest is the economic entities big enough to have IT specialists who would find your blog of interest (or mine, or Aale's), I think Aale's results are probably a good conservative read.

The 5% figure is meaningless until you put more parameters around it. Global 5000? IT spend larger than $100m? You could define the population as "organizations big enough to have full time professionals who self-identify as 'IT specialists.'" Another alternative would be "what % of self-identified IT specialists work in organizations big enough to have a CMDB."

That % I would expect to be much higher, and would have more explanatory power as to why it's such a popular topic, your efforts notwithstanding :-).

And ROI is not the point. What is the ROI on the general ledger? The HR database? The legal matters management system? The records retention system?

Charles T. Betz
http://www.erp4it.com

normalising the results I'm still at 5%

skeptic — Thu, 07 Apr 2011 20:19:00 +0000

I think 22% in your survey is highly compatible with 5% as the "true" number who need a CMDB.

If we normalise that number we can reduce it because:

- as you say those who you know are already a self-selecting sample of those interested and active in ITSM
- it is also a self-selecting sample in that those with a positive experience with CMDB, with pride in their CMDB, will be more inclined to answer
- even those who did not get a good result from the CMDB will be inclined to give a more positive assessment of the outcome

Finally 22% say that have a good working CMDB but that says nothing about
a) did they actually get a nett positive value returned on their investment?
b) even if they got positive VOI, was the right project portfolio decision made? i.e. did the tech bias for cool toys skew them to work on a CMDB when there were better uses of the money that were left begging?

Taking all those into account, I'm still at 5%