Value-based maintenance takes full benefits from your valuable services
In the rapidly evolving digital landscape, businesses need to update their approach to maintenance. The traditional approach, looking only for the cheapest price tag, has been the norm for years. However, this method often overlooks a critical factor – value created and internal costs.
Value-based maintenance helps you in two ways. It helps clarify service value and uncover hidden costs, making it easier to increase the former and decrease the latter. It also helps identify and eliminate activities that do not contribute to the core business value, thus freeing up time and enabling the business to focus on activities that matter most.
Every digital service must produce value
Creating and maintaining digital services is not cheap. All services must produce more value for the company than the costs of the service. Value service produces changes over time. If no actions are taken, usually it decreases. Either the world (or company) around changes and updates are needed just to keep it at the same level as before or the value decreases because of system deterioration.
Cost-effective maintenance is a delicate balance: value service creates vs investments required to keep/improve value vs costs. Driving down costs has been a common way of dealing with this equation but it is not always the optimal way.
Actual value vs potential value
The value of service needs to be monitored not only as the potential value service brings if it works perfectly, but also the current value it brings when it works as it works.
For example, a new service is created for employees to purchase mobile phones for work. This saves IT lots of manual work. The value of service is clear. However, the service is maintained poorly. It crashes often and the orders get stuck. IT has to do manual work to restart the service and answer employees' tickets about why they haven't received their new phone. Thus the actual value of the service is lower than the potential value.
The actual value can decrease gradually. If new changes or bug fixes are hard to implement because of poor or lacking maintenance, the service's actual value keeps on dropping.
External costs vs all costs
The term "total cost of ownership" is used when calculating service lifetime costs. It also includes the maintenance and recurring costs, which are the biggest portion of total costs. But what about internal costs? "Internal costs" are work needed or wasted because of the service and its maintenance.
For example, the company has outsourced maintenance of its critical master data service to a vendor. Uptime requirements are tight and the vendor performs well. But almost every new business solution built will have to integrate with the master data service and getting required access, integration documentation, or any support for development is non-existent. Expensive development teams waste weeks or months because the maintenance partner doesn't help them.
Or a new employee starts but getting all the required accesses takes weeks, multiple tickets, and email ping-pong. Every time. Lots of work hours are wasted.
Some companies try to use SLAs to avoid this, but SLAs are not the best tool for this. SLAs define the minimum required quality of service that has to be fulfilled but the vendor is not rewarded to do more. Or automate things. Or decrease the need for tickets in the first place by implementing self-service functionality.
How to implement Value-based maintenance?
Identify Value
The first step is to clearly define what "value" means for your business. It could be improved customer experience, time used at the site, increased uptime, cost reductions, or any other metric that directly impacts your business objectives. There can be more than one.
Measure Value
Measure the value of your service, both the potential value and the actual value. KPIs are good for measuring potential value and Service Level Objectives (SLOs) for the actual value. SLOs help you to understand the effectiveness of your maintenance activities and identify areas for improvement.
Prioritize Tasks
Once you've identified your value parameters, prioritize the maintenance tasks based on their potential impact on these values. This approach will help you focus on the tasks that offer the highest return on investment. Sometimes it is a new feature, sometimes reducing technical debt, building automation, or increasing self-service functionality.
Continuous Improvement
Value-based maintenance is not a one-time activity but a continuous process. Incorporate feedback, learn from your successes and failures, and constantly look for improvement.
Select the right partner
Instead of just selecting a maintenance partner with the lowest external cost, find a partner who can lower your internal costs, increase service value (both potential and actual), and help you measure value. This will lead to better ROI and also increase employee and customer satisfaction. A good maintenance partner can take the value to the contractual level, ensuring that there is an incentive to bring great value instead of just maximizing the amount of tickets.
Switching to a value-based approach can be a game-changer for your business maintenance strategy. It allows for strategic decision-making, efficient use of resources, and ultimately, a better bottom line. The best part of this transition is a clear understanding of your business objectives and customer needs. It makes your organization more customer-centric.
Joonas KorpelaVP, Head of Managed Services
