Business Transaction Management Blog

Putting a Price Tag on BTM

August 25, 2009 at 11:31 pm Assaf Amit Leave a comment

The best things in life are free, but BTM solutions are not among them.  After all, managing complex business transactions requires many talented people to dedicate many months of their valuable time to making it happen.  So how much should it cost?  What is the “sweet spot” that balances the investment in bringing a BTM solution to market with the value that the users are getting out of it?

As a vendor of BTM solutions, we know what our costs are, so that part of the equation is fairly simple to figure out.  Trying to put a dollar amount on the value of BTM is where things get trickier.

The common way of quantifying the value is breaking it down into value points that derive from the different ways customers use BTM.  For example, practically every user who deployed a BTM solution in Production has been using it, among other things, to prevent application outages.  If we can determine the monetary cost of an outage – and we can – and if we can show that BTM has reduced outages by a certain percentage (or eliminated them entirely), we will be able to calculate how much money was saved by deploying BTM for outage avoidance.

And outage avoidance is just one of the many use-case scenarios for BTM.  Virtually everyone who implemented BTM has also discovered how useful it can be for problem isolation and resolution.  Just like with outages, it is possible to measure or estimate the cost of the problem determination and resolution cycle.  If it can then be demonstrated that the Mean Time to Repair (MTTR) for performance issues dropped by 70% since a BTM solution was implemented, we can add this windfall as another component in the total value of BTM.

We can come up with more use-case scenarios for BTM and estimate how much money was saved in each one of them.  BTM can cut costs by improving processes such as application optimization, QA testing, SLA management, capacity planning, activity-based costing, application consolidation, and more.  Each one of these cost savings can contribute nicely to the bottom line value of BTM in an organization, but does this total really represent the value of BTM for the organization?

I hereby propose that it does not.

If we examine all the different scenarios in which BTM is used, we can see one common element and that is that BTM provides a new level of visibility that did not exist beforehand.  BTM allows IT to see things that they could not see before.

Consider this analogy: Nine year-old Jack is a vision-impaired kid who, for the first time in his life, gets a pair of glasses that allows him to see clearly.  How much are the glasses worth to him?  We could point out that with his new glasses on, Jack successfully avoided an incoming car as he was crossing the street and saved himself from being badly injured or worse.  Also, Jack now spends only 30 minutes a day doing homework whereas before it used to take him well over two hours.  Furthermore, Jack’s family can finally move out of their expensive house, which has special amenities for the vision impaired, and into a regular house.  This will cut down their rent by almost 20%.

Each one of these observations can be translated into a dollar amount, but is this getting us any closer to determining the true value of glasses for nine year-old Jack?  What about the fact that for the first time, Jack can see what his parents and sister look like?  His amazement when he found out that his cat actually has one blue eye and one green eye?  His pride at finally being able to read books and watch TV just like the other kids?  Isn’t Jack getting far more value out of these simple discoveries and accomplishments than from having to spend less time doing homework?

BTM is a game-changing technology. Being able to see transactions clearly enables IT to stop “flying blind” and start making informed decisions that take service management to the next level.  Just like Jack with his new glasses, once IT starts using BTM regularly, they can no longer manage without it even for one day.  What, then, is the real value of BTM for an organization?  The question will remain open for now, but I can tell you that much – it goes far, far beyond just being able to avoid outages and fix problems faster.

Entry filed under: Uncategorized. Tags: BSM, BTM, BTM "Business Transaction Management" "Transacton Management", Business Model, Business Service Management, Business Transaction Management, Change Management, Cost, Incident Management, ITIL, ITSM, MTTR, ROI, Transaction Management, Value.