by Michael Costigan
In planning for combat, generals need estimates of the supplies (rations, ammunition, etc.) that the troops will need for the operation. So the generals ask the colonels, who ask the majors, who ask the captains, who ask the lieutenants, who ask the sergeants. Now, the sergeants know what a soldier can carry in combat, so they come up with pretty good estimates. They provide their estimates to the lieutenants, who add 15-25% for good measure. The captains get the estimates and add another 20-30% just to make sure there’s enough for contingencies.
Similarly, the majors and colonels add their “fudge factors” to the estimate, completely unaware of the previously added margins, and dutifully report to the generals, who approve the requisitions. When the supplies arrive and get doled out to the troops, the poor soldiers are so overburdened with extra food and ammunition that they can barely walk.
In working with over fifteen government and commercial organizations on ITSM over the past eight years, I have found that many of these organizations struggle with capacity management and planning. Traditional techniques, which rely heavily on trend analysis, often leave organizations with far too little capacity. Then, when capacity- or performance-related incidents occur, the capacity manager is the “bad guy” for not properly planning for and acquiring enough capacity. To protect himself, the capacity manager initiates a bottom-up estimate, much like my military logistics example above, resulting in far too much capacity, which burdens the fiscal and support staff resources of the organization.
So, what’s the state of your capacity planning?
- Do you seldom have enough capacity for your IT services?
- Are you unsure about how much capacity you really need?
- Are you having trouble justifying your capacity needs?
- Do you overprovision just to “make sure” you have enough capacity?
- Do your vendors penalize you for last minute capacity surges?
If you answered “yes” to any of these questions, risk-based capacity planning may be able to help you.
Risk-based capacity planning is an innovative approach that expands upon traditional capacity planning techniques. This technique uses simple statistics to develop patterns of business activity (PBAs) with probability distributions, and then weights these PBAs against your tolerance for risk to predict capacity requirements.
Risk-based capacity planning works. I am using this approach to help FDIC plan for enough capacity with less risk of overprovisioning. Further, this risk-based approach is making it easier to justify capacity requirements and is providing us a stronger negotiating position with our vendors for elastic capacity.
This session will help you compare and contrast traditional vs. risk-based capacity planning techniques and decide whether a risk-based approach can help your capacity planning. You should come away understanding the statistical and risk management principles behind this risk-based approach and be able to apply risk tolerance in your capacity planning. Finally, I will help you understand the challenges of implementing risk-based capacity planning and how to overcome them.
I look forward to seeing you at on Friday morning at FUSION 16!
Michael Costigan is speaking at Session 706: Risk-Based Capacity Planning at the FUSION 16 conference.