About cookies on this site Our websites require some cookies to function properly (required). In addition, other cookies may be used with your consent to analyze site usage, improve the user experience and for advertising. For more information, please review your options. By visiting our website, you agree to our processing of information as described in IBM’sprivacy statement. To provide a smooth navigation, your cookie preferences will be shared across the IBM web domains listed here.
Conference paper
Forecasting service profitability: Connecting services engagement with service delivery
Abstract
This paper describes ways to connect ledger cost behavior of a service delivery project with cost estimations derived at the time of contractual agreement. The purpose of this connection is to improve the management of the service life cycle, providing long range forecasting of the profitability of various service offerings. We emphasize cost, but our methods apply also to revenue, and consequently to profit. In a perfect financial world the connection between the cost estimate and the actual costs would be maintained in a tight feedback loop. The complex real world of multi-year and multi-country service delivery projects requires accommodation of (1) historical changes in accounting practices and (2) missing data. We describe the content of a cost case, the content of the ledger, and methods for forecasting profitability of parts of delivery projects using both the cost case and historical ledger experience of other similar projects. This paper reports a work in progress. We limit discussion of accuracy measurements to one benchmark, and we discuss potential improvements we have not yet implemented.