The Productivity Potion

Hello and welcome to the ALC School of IT Service Wizardry and this specific module, The Dark Arts of Financial Management.

Today we are going to describe how to create a productivity potion.

Productivity Potion Ingredients

Five special ingredients are needed to create this potion.



Calculate the effect of price inflation on the previous year’s budget.  This is done by calculating the uplift that changed prices have on the previous year’s budget.  Increased prices mean more money is required to deliver the same output.

In a similar fashion calculate the effect of business volume growth on the previous year’s budget.  After all if you are selling more products you need more finance to deliver increased output.

Then calculate the increased operational spend approved as part of the justification for each new or improved service delivered through the year.

Now add each of these results together and this indicates the amount of increased spend required to deliver services in the next budget year.  This gives you the required spend without productivity.

Independent to the above activities, calculate the amount of money that you believe is necessary to deliver the services as agreed.  This gives you the required spend including roductivity.

Report the difference between the two numbers as your productivity gain.

Worked example:

 Previous year’s budget 50,000  wizard tokens
 Price change increase assuming 4% inflation  2,000  wizard tokens
 Business volume growth of 10%  5,000  wizard tokens
 New Services increased operational cost  10,000  wizard tokens
 Forecast spend for next budget  60,000  wizard tokens
 Required spend without productivity  67,000  wizard tokens
 Productivity savings (67,000 – 60,000)  7,000  wizard tokens
 Productivity as a percentage (7,000/67,000)  10.44%


In this worked example a productivity improvement of 10.44% cam be claimed even though the annual spend has increased from 50,000 to 60,000 wizard tokens.

COBIT® Washes Whiter

Scene: Australian Cricket Team dressing room.

A view inside the Australian Cricket Team Dressing Room, ahead of the Second Ashes Test match, at Adelaide Oval on December 4, 2013 in Adelaide.  (Getty Images)

A view inside the Australian Cricket Team Dressing Room, ahead of the Second Ashes Test match, at Adelaide Oval on December 4, 2013 in Adelaide. (Getty Images)

“Dudes, COBIT works. We started implementation during that dismal time in England and look at the results”.  “We have washed the old England enemy white!”

“However, we should not allow ourselves to be complacent.  We can use the COBIT process MEA01 (Monitor, Evaluate and Assess Performance and Conformance) to initiate continual improvement of our performance.”

“Here are the documented findings of my research along with improvement recommendations.”

Like all COBIT processes MEA01 has a number of Management Practices that break down into activities.  COBIT also defines the expected outputs from each of these practices.  The following is a briefing on the 5 Management Practices of MEA01:

1. Establish a monitoring approach.

We need to establish our approach to monitoring our performance and agree our goals and metrics with our stakeholders.  Our primary stakeholder is pretty clear, it’s all Australians and our engagement with them occurs in a number of ways both on and off the field.  Beware the stakeholders who try to improve our performance by getting us inebriated.

2. Set performance and conformance targets.

Our public have set their expectations and we need to meet them.  Not surprisingly the target is world number 1 in all forms of cricket.  These have been published quite clearly and there is unlikely to be any requests to change these in the near future.

At the Test Match level we expect to inflict a St. Valentine’s day type massacre during the first test against South Africa.


Winning the 2015 World Cup is the unsurprising target for the One Day International (ODI) team.


3. Collect and process performance and conformance data.

This is easy to do, we just go to the officially published world cricket rankings on the internet.

We are currently:

Test Matches: World number 3
 One Day International: World number 1
 Twenty20: World number 6

4. Analyse and report performance.

We don’t need to report, the media does that for us.  What could be more efficient than getting a third party to do it for free? 

Analysis shows an improvement in our Test Match ranking following the recent Ashes whitewash victory.  At number 3, we still need to nail the South Africans and the Indians to get back to our rightful position.  Our ODI ranking cannot be improved but care is needed.  We dropped to number 2 after that shameful defeat in Perth but our fortunate win at Adelaide returned us to the top.  

Twenty20 is plainly still unacceptable even though the recent 3-0 whitewash of England has moved us up from 8!


5. Ensure the implementation of corrective actions.

Our coach has been told that they are responsible for improving our Twenty20 position.  This has started and the world cup will show that we are clearly number one whatever the rankings say.

Then we will instigate these improvements……

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