Cost

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In ITIL 4, it is important to define cost. The cost of something is the amount of money that is spent on a particular activity or a particular resource. Commonly, cost is expressed financially but it can also be expressed otherwise. In the case of online training provider, DionTraining.com, they measure the cost of their courses, like the one available on Itil.diontraining.com, by measuring the number of hours spent creating it. A typical course might require 400 or 500 hours’ worth of effort across their entire staff. This usually is described using as FTE or full-time equivalent. FTE is a measurement based on a single employee, who works 40 hours per week, for an entire year. This equates to roughly 2,000 hours’ worth of work. Let’s say DionTraining.com needs to run a web server to host all of their courses. That activity might require half of an FTE or one-half of a person's annual available work hours for the entire year. This describes the number of FTEs, or Full Time Equivalent employees that are required in order to undertake a particular activity. Now, while organizations can measure things from an hours of effort perspective, this ultimately translates back to financial cost. Each member of a business organization earns a salary. If it takes somebody half of their entire year to run the organization’s web server, that means half of their salary is tied up in keeping that web server up and running. So, it does end up going back to cost eventually. But, when the Dion Training team looks at their reports, they're actually more concerned with the amount of time things take rather than the amount of money they have spent on the activities such as creating courses. Now, depending on your organization, you may choose to measure things based on the FTEs, or using actual dollar and cents spent. Either way, the service provider is aiming to reduce or remove costs, when they provide a service.

So, if a service provider can save their customer more money than their service is going to cost, the consumers will certainly look at using that provider’s service. For example, your internet service provider has varying speeds available that you can choose from. You can choose to spend $50 per month for a 100 megabit per second connection. Or, $100 a month for a 1,000 megabit per second connection. Depending on your need, you would have to balance your desired outcome and cost. If you were to do a lot of uploading large files paying twice as much money per month for a 10x increase in speed would be well worth it. The increased speed might save personnel and staff a lot of time uploading those large files and would make them much more productive. The higher level of service will save your organization from a lot of wasted labor hours and eventually will make up for the additional cost in the labor savings in the long run.

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