How to Do Call Volume

Forecasting for Service Desks

• font size
• Print
• E-mail
• 5 comments
Rate this item

• 1
• 2
• 3
• 4
• 5

(4 votes)
Related articles

• Top Lean Six Sigma IT Trends to Come in 2011

• Scorecards Help South African Bank Reap Savings
• Software Survey: Six Sigma, ITIL Produce Fewest Discontinued Projects
• How Billing Delays Can Correlate with Call Volumes
• Planning Ahead with Project-Specific Software Process Models

Setting appropriate staffing levels for a service desk requires a way to forecast
call volumes. While there are many forecasting techniques, one that is simple,
easy to implement and can be applied to any size service desk is the best place
to start.

By Krishna Murthy Dasari

Defining full-time staffing levels for a service desk is very difficult without a
definitive way to predict the demand for service. Workload forecasting is the
basis of any good staffing plan. While there are many forecasting techniques
available, one that is simple, easy to implement and can be applied to any size
service desk is the best place to start.

The forecasting process is a combination of using judgment and application of

mathematics. The mathematical process takes past history and uses it to predict
future events. Both these components should be used in order to come out with
an accurate forecast. A working knowledge of the statistical techniques
discussed here will make the process understandable. Even for organizations
which use time series analysis software, it is critical to understand these
calculations as it helps in correctly interpreting results and verifying the accuracy
of the results generated by the software.

Introduction to the Methodology

There are two main approaches to forecasting. One is the explanatory method
which is based on an analysis of factors which are believed to influence the call
volume; the other is the exploration method where the prediction is based on an
inferred study of past general call volume behavior over time. Even for a modest
degree of accuracy the former method is more difficult to implement and validate
than the latter approach. For this reason, the focus here is on the exploration or
time series approach to forecasting.

This approach is scientifically valid yet easy to follow and implement.

For an IT service desk whose primary purpose is to coordinate and resolve

incidents as quickly as possible, an optimum level of staff numbers is required. A
forecast of volume of calls helps the service desk in computing the optimum
number of staff numbers. As a first step the forecast requires the past data of call
volume. Table 1 gives the data for the years 2004, 2005 and 2006. In this case, it
is believed that the recent three years reflect the current business situation and it
is expected these patterns to continue into 2007.

This data is adjusted for variation to eliminate certain spurious differences which
are caused by peculiarities of the calendar. For example, the call volume for the
month of February may be less not because of any real drop in activity but
because of the fact that February has fewer days. The data is plotted in Figure 1.
The red line represents the original call volume. Within each year a decline in call
volume is observed in the beginning and an increase in the middle of the year
and again a decline during the end of the year. Between the given years call
volume seems to generally increase overall.

Table 1: Call Volume for 2004, 2005 and 2006

Month 2004 2005 2006

January 57,776 71,328 85,637

February 61,866 73,650 86,128

March 52,993 70,658 90,530

April 53,096 66,371 80,283

May 67,789 79,350 94,169

June 75,203 87,445 99,654

July 62,831 78,539 95,303

August 75,547 87,846 99,880

September 76,905 83,774 90,153

 October 70,446 82,878 96,010

November 71,952 79,947 89,092

December 62,712 65,325 67,517

Data in this table is adjusted for calendar variation. Method:

Divide each month's data by number of days in the month to
find the daily average. Multiply daily averages by 30.4167
(average number of days in a month) to obtain monthly data.

Figure 1: Call Volume - Original, Deseasonalized and Trend Effects

Decomposing the Call Volume Data

General analysis of the Figure 1 time series plot shows that a variety of things
are likely influencing the call volume. It is important that these influences be
decomposed out of the raw call volume data shown in Table 1. Generally there
are four types of patterns, movements or components of time series. They are:

1. Seasonal variations: The fluctuations which are repeated from year to

year with about the same timing and level of intensity.

2. Secular trend or simply trend: The general tendency of the data to grow

or decline over a long period of time.

3. Cyclical variations: Long-term movements that represent consistently

recurring rises and declines in activity. These are not caused by seasonal

effects.

4. Irregular variations: Variations in business activity which do not repeat in

a definite pattern.

To be able to make a proper call volume forecast, one must know to what extent
each of the above components is present in the data. To understand and
measure these components, the forecast procedure involves initially removing
the component effects from the original data. This is called decomposition. After
the effects are measured, making a call volume forecast involves putting back
the components on new call volume estimate. This is called as recomposition.

Deseasonalizing the Call Volume Data

This step explains the removal of seasonal effects in the data. Without
deseasonalizing the original call volume, one may incorrectly infer that the
observed growth patterns will continue indefinitely when actually the increase is
just because of the time of the year. To measure seasonal effects, a series of
seasonal indexes should be calculated. A practical and widely used method to
compute these indexes is the ratio to moving average approach. These indexes
quantitatively measure how far above or below a given period stands in
comparison to the expected call volume.

Procedure for calculation of seasonal indexes is:

1. Compute a centered 12-month moving average.

2. Compute the ratio of actual call volume in each month to the moving

average.

3. Average the above ratios for Months 1 through 12 for all given years.

4. Correct the averaged ratios from Step 3 for possible round off error to get

the 12-month seasonal index set.

5. Divide the original call volume by the seasonal indexes to get the

deseasonalized call volumes.

The computation is shown in Tables 2 and 3.

The removal of seasonality from the original data is depicted in Figure 1 by

the blue line. Note that the deseasonalized call volumes do not oscillate as
widely as the original call levels. The remaining up and down movement must
therefore be due to trend, cyclic and irregular effects.

Table 2: Ratio to Moving Average Calculations for Selected Months

Month Call 12-Month Ratio to Moving

in 2004 Volume (A) Moving Average (B) Average (C = A/B)

January 57,776

February 61,866

March 52,993

April 53,096

May 67,789

June 75,203
July 62,831 66,324 94.73

August 75,547 67,380 112.12

September 76,905 68,607 112.09

October 70,446 69,896 100.79

November 71,952 70,931 101.44

December 62,712 71,923 87.19

Table 3: Seasonal Index and Deseasonalized Call Volume for Selected Periods

Seasonal
Ratio to Moving
Index % (D) Year 2004
Average

{Calculated Original
Deseasonalized
by Call
2004 2005 2006 Call Volume
Averaging Volume
Month (A) (B) (C) Month (F = E/D)
A, B and C]* (E)

Jan 97.59 100.45 99.02 Jan 57,776 58,348

Feb 99.19 95.57 97.38 Feb 61,866 63,531

Mar 94.14 99.61 96.88 Mar 52,993 54,702

Apr 87.49 91.19 89.34 Apr 53,096 59,430

May 103.44 105.85 104.65 May 67,789 64,779

Jun 113.34 111.42 112.38 Jun 75,203 66,917

Jul 94.73 100.88 97.81 Jul 62,831 64,241

Aug Aug
112.12 111.24 111.68 75,547 67,647
Sep 112.09 104.30 108.20 Sep 76,905 71,078

Oct 100.79 101.41 101.10 Oct 70,446 69,681

Nov 101.44 96.41 98.92 Nov 71,952 72,734

Dec 87.19 77.72 82.46 Dec 62,712 76,054

* Total of Seasonal Index % is 1199.81 which is very close to 1200. No correction

factor is required.
Measuring the Call Volume Trend
Measurement of trend component is done by fitting a line to the data given in
Table 1. This fitted line is calculated by the method of least squares which
represents the overall linear growth over time. The trend line equation is:

Y = A + BX

Where Y = Predicted call volume occurring in the period X due to the trend effect
A = Vertical intercept of the trend line equation
B = Call volume growth rate per month, i.e., the slope of the trend line
equation

The trend line parameters are calculated by use of mathematical formulas or

Excel. The trend line equation for this case is found to be:

Y = 77,516 + 946(X)

To illustrate how the above equation is used, suppose the organization's interest
is in the predicted call volume accorded by trend for January of 2006. This period
corresponds in the equation to X = 6.5. Thus the predicted call volume for
January 2006 is 83,665.

The trend line is depicted in Figure 1 by the blue line.

Measuring the Cyclic Effects

To measure how the general business cycle affects call volume, a series of cyclic
indexes are calculated. The deseasonalized data still contains trend, cyclic and
irregular components. Also the predicted call volume using the trend equation do
represent pure trend effects. Thus, it stands to reason that the ratio of the
deseasonalized call volume and the call volume derived from the trend line
equation should provide an index which reflects cyclic and irregular components
only. The cyclic index calculations are shown in Table 4.

Table 4: Cyclic Index and Smoothed Cyclic Index for Selected Months

Month Deseasonalized Predicted Call Cyclic Index Three-Period

Call Volumes Volume/Trend Percent Index Smoothing
in 2004 (A)* (B)** (C = A/B) (D)

January 58,348 60,961 95.71

February 63,531 61,907 102.62 95.12

March 54,702 62,853 87.03 94.27

April 59,430 63,799 93.15 93.41

May 64,779 64,745 100.05 98.36

June 66,917 65,691 101.87 99.44

July 64,241 66,637 96.40 99.45

August
September
October
November
December
* Calculated similar to Table 3. ** Calculated by using trend line equation.

The business cycle is longer than the seasonal cycle and it should be understood
that cyclic analysis is not as accurate as seasonal analysis due to complexity of
general economic factors over long periods of time. Thus a general
approximation of the cyclic factor is what is required to forecast the call volume.
To study the general cyclic movement rather than precise cyclic changes, the
cyclic plot must be smoothed out by replacing each index calculation with a
centered three-period moving average. This is shown in Table 4. Both the cyclic
index and the smoothed cyclic index are depicted in Figure 2.

Figure 2: Cyclic Index and Smoothed Cyclic Index Plot

In Figure 2, it can be noted that cyclic peaks occurring in Periods 11 and 27, and
Periods 5 and 24 are approximately of the same magnitude and may thus be
parts of different business cycles. From this, it can be infer that the cyclic length,
i.e., the elapsed time before the cycle repeats is approximately 20 months. In
 order to make call volume forecasts, the approximate continuation of this cycle
curve is projected into the next few months of 2007 in the figure.

Making the Call Volume Forecast

At this point of time, the study of the past data to understand the different
components of the time series analysis is completed. Now an attempt can be
made to forecast volumes for the first two months of 2007. The procedure is:

Step 1: Compute the future call volume trend level using the trend
line equation
Step 2: Multiply the call volume trend level from Step 1 by the period
seasonal
Step 3: Multiply the result of Step 2 by the projected cyclic index to
include cyclic
effects and get the final forecast result

Table 5: Call Volume Forecast Calculations for January and February 2007

Forecast
Adjusted
Estimated for
Call Calendar
Call
Volume Projected Variation
Volume
w/Trend Cyclic (F =
Forecast
& Seasonal Index E/30.4167
(E = C x
Effects (D)*** [Average
D)
Predicted Call Seasonal (C = A x B) Number
Year Volume/Trend Index % of Days in
2007 (A)* (B)** Month]

January 95,017 0.99 94,085.8334 0.99 93,145 94,931

Februar
95,963 0.97 93,448.7694 1.01 94,383 86,884
y

* From trend line equation Y = 77516+946(X). X values for January and February are
18.5 and 19.5 respectively.
** From Column (D) of Table 3.
*** Estimated by inspection of cyclic projection in Figure 2.

The actual call volumes for January and February 2007 were 94,530 and 87,224
respectively.

Summary: Math and Firsthand Knowledge

This call volume forecasting procedure can be applied to any service desk which
has data for the past few years. The advantage of the procedure is that it is
simple to understand and implement and at the same time a fairly accurate. An
effective combination of the mathematical calculations with management's
firsthand knowledge of the situation is required to achieve accurate forecasts.
There are other more complex forecasting techniques, but organizations should
go through an evolutionary progression in adopting them. Start with a simple
forecasting method, gain knowledge and move towards more sophisticated
methods if necessary.