SERVICE MANAGEMENT, SIAM, SMAAS11 November
The MED of reporting
The term ‘minimal effective dose’ (MED) was invented by pharmaceuticals to indicate the smallest dose of medicine that will produce a desired outcome. Anything beyond the MED is wasteful.
If you have a headache and take 1 or 2 aspirins your headache will disappear. If you take 8 aspirins, it will not disappear any quicker. Sometimes less is enough.
Tim Ferriss, one of my favorite authors, extended the concept of MED to other areas like acquiring skills or a person’s work. In his book ‘The 4 hour workweek’ he states that in your workweek, in only 4 hours you do things that really make a difference, the other hours are wasteful. So these 4 hours are the MED of work. If you discover what you should do in this MED, you can take the rest of the week off because working more hours will not make a difference.
One area of service management could really use the introduction of MED: Reporting. Over the years I have seen zillions of dashboards featuring the most exotic metrics one can think of. More data suggests more insight, but this is rarely true. 20 different metrics do not tell you what actions to take next. Maximum 5 (and probably less) of those metrics, combined with your common sense and experience, tell you what to do. So these 5 metrics will be your reporting MED.
How are we going to identify the metrics that we really need? And what targets are we going to use so that we can transform these metrics into KPIs?
Let’s focus on the metrics first. Your relevant metrics will depend on your role. An Incident manager will use different metrics than a Change manager. So your role will determine your reporting MED.
Many people argue that your goals will also influence the metrics that you will need in your dashboard. On our website we describe 5 value drivers that help to classify and determine the goals of a service organization. These are: optimize costs, demonstrate transparency, increase business value, manage risk and assure quality of service. Do you need different metrics for each value driver or does a value driver determine how you look at (and interpret) these metrics and the relative importance of each metric? I think the latter is true. Let me use an analogy to explain why.
Let’s say that you are driving in your car. The dashboard of a car has a MED of 4 metrics: Speed, distance traveled, the current time and fuel left. When you are in a hurry, speed, remaining distance to your destination and time will matter the most. But you cannot simply ignore your fuel level. There might be just enough fuel left to get to your destination without stopping at a gas station, but you need a metric (fuel level) to support this decision.
When you have plenty of time and decide to drive as efficiently as possible to limit fuel usage, you will look at the same metrics but apply different logic to the values. Speed should be as constant as possible and close to the optimal speed of the car. The clock will confirm that you still have more than enough time to arrive at your destination.
What if you are in a hurry, but still want to drive as efficiently as possible? In this case you will combine time and remaining distance to determine the minimal required speed and drive at this speed with minimal variations if possible.
We can draw 2 conclusions from this example:
- Depending on your goal, some metrics are more important than others
- In all cases you need all metrics
So we discovered that there is a minimal dose of 5 necessary metrics, independent of your goals. To make this dose effective we should turn the metrics into KPIs. A metric is just a number, a KPI compares this number to a target or threshold. How do we identify the target for each metric?
In the car analogy this was simple. Speed limits are imposed by local law, fuel levels are expressed as a percentage between full and empty and your appointments determine the target time to arrive. Knowing the time to arrive, the remaining distance and your car’s average fuel consumption, you can easily calculate targets for speed and minimal fuel level.
In service management such absolutes do not exist. There is no industry-wide target for backlog, throughput time or first contact resolution rate. Targets from a SLA do not easily translate into targets for other metrics, like backlog, throughput time and first contact resolution rate. The best you can do, is set realistic targets and monitor if your performance increases or declines. So you need targets specific for your organization and current performance. The question remains: how to identify these targets?
Athletes have solved this problem ages ago. They use 2 personal targets: season best and all time best. Season’s best is the first goal to achieve, it is the most realistic goal of the two given your current performance so let’s focus on this target. In service management, season’s best could translate to the best score for a certain metric in the last 6 months. Season’s worst would then be the lowest score for this metric in the same timeframe. What if we take season’s best and season’s worst and express the current performance as a percentage of these 2? What would that look like? Let’s say the best score was 100 and the worst score was 40. How would a current score of 80 fit in?
My favorite calculation is: (worst score - actual score) / (worst score - best score) * 100 e.g.
(40-80) / (40-100) * 100 = 67%. A score higher than 100% means a new season’s best, a score lower than 0% means a new season’s worst. This calculation will also give correct results when lower scores are better like time to solve. Using 100% as a target ensures that your goals are achievable and automatically adjust when performance improves.
We can take this one step further and combine all metric scores into an overall performance index. An overall index of 100% will be achieved when you score 100% for each metric. As mentioned before the relative importance of each metric depends on your value driver(s). You can take this into account by assigning a relative weight to each metric in the overall calculation.
An example for an Incident manager with a focus on quality of service:
First contact resolution rate
Solved within SLA
Cost per request
So the overall performance index for this timeframe would be 70%
Same results for an Incident manager with a focus on efficiency:
First contact resolution rate
Solved within SLA
Cost per request
So the same scores with a different focus lead to a performance index of 56%.
By using this method you have a performance index that is relevant, targets that are reachable and take your value drivers into account. It is easy to determine if performance increases or decreases and how close you are to the best you did this ‘season’.
In a next blog on reporting I will discuss the actual MED metrics per role in a service organization. For now, start rethinking your existing dashboards and look for your MEDs. To quote Tim Ferriss: ‘Being able to quit things that don't work is integral to being a winner’.
About the author;
Frank de Jong, Product Director at InfraVision with strong Service management and business consultancy skills. His purpose is to help customers achieve their targets through creativity, quality and enthusiasm and in making complex things very simple.