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8.4.1 Availability
8.4.2 UnAvailability
8.4.3 How much did that failure cost?
8.4.4 The benefit of understanding
the cost of UnAvailability
The level of Availability required by the business influences the overall cost of the IT Service provided. In general, the higher the level of Availability required by the business the higher the cost. These costs are not just the procurement of the base IT technology and Services required to underpin the IT Infrastructure. Additional costs are incurred in providing the appropriate Service Management processes, systems management tools and high Availability solutions required to meet the more stringent Availability requirements.
When considering how the Availability requirements of the business are to be met, it is important to ensure that the level of Availability to be provided for an IT Service is at the level actually required and is affordable and cost justified by the business. Figure 8.6 indicates the products and services required to provide varying levels of Availability and the cost implications.
Figure 8.6 - The relationship between levels of Availability and overall cost.
Where new IT Services are being developed it is essential that Availability Management takes an early and participating Role in determining the Availability requirements. This enables Availability Management to positively influence the IT Infrastructure design to ensure that it can deliver the level of Availability required.
The importance of this participation early in the design of the IT Infrastructure cannot be underestimated. The benefits of this early involvement are:
Changing business needs and consumer demand may require the levels of Availability provided for an IT Service to be reviewed. Such reviews should form part of the regular service reviews with the business undertaken by Service Level Management.
Where high levels of Availability are already being delivered it may take considerable effort and incur significant cost to achieve a small incremental Availability improvement.
A key activity for Availability Management is to continually look at opportunities to optimise the Availability of the IT Infrastructure. The benefits of this approach being that enhanced levels of Availability may be achievable but with much lower costs.
The optimisation approach is a sensible first step to delivering better value for money. A number of Availability Management techniques can be applied to identify optimisation opportunities. It is recommended that the scope should not be restricted to the IT Infrastructure, but also include a review of the Business process and other end-to-end business owned responsibilities.
| Validation The previous example of how a financial organisation raised ATM Availability levels without additional technology investment included a review of their business Process. The approach to identify the reasons for Customers being unable to obtain cash from their ATMs highlighted many IT component Availability root causes. However, it also identified weaknesses in business process. This led to a range of improvements that contributed significantly to improved end-to-end Availability of the ATM service to its Customers. Areas included: • improving cash replenishment procedures • increased frequency of cash replenishment at high usage ATM locations • improved 'cash out' detection and reporting • improved ATM hardware fault detection and reporting • improved cash demand forecasts to ensure sufficient cash available for peak demand periods. |
As illustrated in Figure 8.7, there is a significant increase in costs when the business requirement is higher than the optimum level of Availability that the IT Infrastructure can deliver. These increased costs are driven by major redesign of the IT Infrastructure and the changing of requirements for the IT support organisation.
Figure 8.7 - Going beyond optimum Availability significantly impacts costs
(See Section 8.9 for guidance on how to apply a range of approaches to further optimise Availability for a given service.) Information relating to Changes in Availability requirements and the associated costs should be included in the Availability Plan. If the business has an urgent need to progress this enhanced level of Availability an exception report should be produced as the basis for an initial business case.
The overall costs of an IT Service are influenced by the levels of Availability required and the investments required in technology and services provided by the IT support organisation to meet this requirement. Availability certainly does not come for free.
However, it is important to reflect that the UnAvailability of IT also has a cost .....therefore UnAvailability isn't for free either. For highly critical business systems it is necessary to consider not only the cost of providing the service but also the costs that are incurred from failure. The optimum balance to strike being the cost of the Availability solution weighed against the costs of UnAvailability.
The cost of an IT failure could simply be expressed as the number of business or IT transactions impacted, either as an actual figure (derived from instrumentation) or based on an estimation. When measured against the vital business functions that support the business operation this can provide an obvious indication of the consequence of failure.
The advantage of this approach is the relative ease of obtaining the impact data and the lack of any complex calculations. It also becomes a 'value' that is understood by both the business and IT organisation. This can be the stimulus for identifying improvement opportunities and can become a key Metric in monitoring the Availability of the IT Service. This approach is recommended as the basis for enhanced SLA reporting (see Section 8.7).
The major disadvantage of this approach is that it offers no obvious monetary value that would be needed to justify any significant financial investment decisions for improving Availability.
Where significant financial investment decisions are required it is better to express the cost of failure arising from System, application or function loss to the business as a monetary 'value'.
The monetary value can be calculated as a combination of the tangible costs associated with failure, but can also include a number of intangible costs. The monetary value should also reflect the cost impact to the whole organisation, i.e. the business and IT organisation.
These can include:
These costs are often well understood by the finance area of the business and IT organisation and in relative terms are easier to obtain and aggregate than the intangible costs associated with an IT failure.
These can include:
It is important not to simply dismiss the intangible costs (and the potential consequences) on the grounds that they are difficult to measure.
The major benefit provided is that it provides a true financial cost on the consequences of UnAvailability and therefore provides an objective view of any 'cost versus benefit' assessment. In organisations where decision-makers invariably have to consider the 'bottom line' this provides them with information that should facilitate sensible and informed decisions.
The importance of understanding the cost of UnAvailability should be highlighted as a key performance indicator within the design and operational phases of Service Level Management.
There are however some problems to consider and overcome with this approach, namely:
A pragmatic approach is recommended and the level to which an attempt is made to quantify the monetary cost of a failure is invariably influenced by the cost investment to be justified.
An example of a calculation to be used in quantifying the cost of a failure can be found in Paragraph 8.9.5.
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