Cost Benefit Analysis in ITBM

[juliaoliveira]

Hello,

We would like to be able to perform cost benefit analysis of a project in ServiceNow. The challenge we're facing, is the following:

When costs are planned for the project CBA part, operations costs are also included for a few years after the project end - however these costs are not part of the project budget, and shouldn't be calculated in the total project cost (they are also not considered part of the project, but the operations afterwards)

We can't find an easy way to exclude the cost plans related to operations costs, as out of the box they are automatically rolled up on project level, and we don't need that. We also wouldn't like to change the behavior of the OOB total project cost field.

Until now we were discussing some options for a workaround - for example to have a demand related to the project, and calculate the CBA there so that the project total cost stays only calculated from the project cost plans, but this will make it harder for the users, as they are creating schedules to be able to identify all the costs, and we can't have schedules in the demand record.

Hoping to find another suggestion.

Thanks for the help

[Brian Gadeberg]

HI juliapetrova

In London you are able to see Total, OPEX and CAPEX cost for a project when you create project costplan. (Detail view for Project)

When you set the targets and budgets you are able to both OPEX and CAPEX (Portfolio Workbench)

When you want to select demands and projects for execution, you are able to look at the targets as Total, OPEX or CAPEX (Portfolio Workbench)

I do believe that the funding for OPEX and CAPEX is from two different budgets - so I hope that the above will answer your question

Brian

[juliaoliveira]

Hi Brian,

Yes, the two different budgets you are talking about are the one of the Portfolio, and the project funding.

The issue we are having are regarding the project total cost. In the project level, Total, Capex, and Opex are generated from Cost Plans if i'm not wrong. A project budget will have both Capex and Opex, however we have additional Opex which will be incurred after the project end. If it's included as a Cost Plan on a project level, it gets included in the Total, and we are trying to avoid this behavior as we need this additional Opex only for the CBA, but it's not part of the project budget itself.

Example:

Project for ServiceNow implementation:

1. Let's say project budget is:

• Capex 10000 - for implementation
• Opex 30000 for ServiceNow licenses for the first year
• Total project cost - 40000

2. When we do a CBA, we need to present not only the project costs, but the operational costs related to ServiceNow after the project is closed for specific period (let's say 3 years after SN is implemented and the project is closed). In our case, we have additional Opex of 90000 for the on-going operations after go-live for 3 years

We can't find a way to keep the 90000 from point 2, as they are not part of the project and shouldn't be included in the baseline. At the same time, they are needed to be able to conduct a CBA and see when actually we'll have a ROI from the implementation.

[Brian Gadeberg]

Hi Juliapetrova,

Total cost - agree. Thats why I showed the opportunity to see the Opex and Capex separated. And yes the sum is created from costplans. 

In my oppenion, cost not related to the project - should not be created as costplans on the project.

But I would suggest all cost Opex and Capex should be presented on the project before approval, to give the Project Sponsor an idea of - not only the initial investment budget - but also the budget for operation over an agreed period of time. Both the Capex and Opex budget needs to be approved before starting the project - otherwise you will end up with a delivery with out the funds to operate it. 

I would also suggest to create ServiceNow as an Application in the CMDB and relate all cost to it - e.g. from projects, changes, enhancements, defects, incidents etc. - then you will have the “full” picture, at least from the expenses you choose to log.

The baseline functionality also shows Opex and Capex and Total

Another way could be looking at the investment portal 

If you want to have reports showing the Capex, Opex and or Total Cost Planned - you can use platform reports to create.

As you, I don't like the solution where you sort out some costplans from the sum - its not intuitive.

Hope the above helps

Brian

[Brian Gadeberg]

Hi Juliapetrova,

Did you find a solution or do you need more feedback?

Brian