Prioritise the most useful metrics to demonstrate the business value of IT

Strategy clinic: Our panel of experts offer advice on IT management dilemmas

The issue: Deciding which IT activities to measure to provide meaningful insights

The question: I have always believed in 'doing' rather than self-monitoring, but reluctantly agree that the IT department needs to provide meaningful metrics on its activities. We have no shortage of things to measure, but how do we decide which are the most effective use of our time and energy?

Consult your users to discover what is important to them
Ben Booth, Elite Group

Metrics can be a useful way of finding out in an objective way how you are doing, and of communicating this both internally and to your users.

If you do not know already, I would start by consulting your users and stakeholders on what it is that really matters to them about your service.

This might include helpdesk responsiveness, system availability, tracking of development projects against plans and financial performance.

Once you have decided what is important, look at how it can be measured and reported in a way that is both meaningful and not too complex to collect.

My suggestion would be to have half a dozen measures, and to report them by a traffic light system of green, amber and red.

Do not try to be too sophisticated, and do not fall into the trap of reporting "techie" measures, which are of no significance outside of the IT department.

On a regular basis you should do a reality check with users and stakeholders to ensure that the metrics are still valid.

Ben Booth is chairman of BCS Elite, a forum for IT directors and senior managers to discuss how to manage IT to achieve business objectives.

Look at metrics that demonstrate the effectiveness of IT
Robin Laidlaw, Computer Weekly 500 Club

There are some metrics you have to provide to ensure compliance, for example, but there is concern being expressed in the industry that there is an unnecessary proliferation of such measurements.

Try looking at metrics that will indicate how successful the IT directorate is in helping your organisation improve its profitability and reduce its costs.

Also look at those measurements that indicate your effectiveness in helping your organisation meet its other business needs and obligations.

Always remember that IT is integral to the business, and the business' success or failure may well depend on the effectiveness of its IT operations.

Reluctantly agreeing to provide some metrics does not sound like an IT director who considers themself a fully participating member of the company's senior management team.

Robin Laidlaw is president of the Computer Weekly 500 Club, a networking forum for CIOs. He was formerly IT director at British Gas.

Find out what matters in terms of reporting to the business
Roger Rawlinson, NCC Group

You need to be able to demonstrate that you are delivering to the requirements of the organisation, so it is important that your measurements are linked to business outcomes.

The fact that you are not sure what to measure suggests that you do not know what that your priorities are.

Having plenty of things to measure is fine, but you really should know what actually matters in terms of reporting to the business.

I suggest that you consult with the user community, speak to the senior managers, canvas their staff, and find out what they need in terms of delivering to the requirements of the business.

This will also assist you in updating and maintaining an IT strategy.

One way to help this process is to consider what metrics you would want from a supplier if you were outsourcing your IT to them - what metrics would you require in order to measure their ability to meet business outcomes.

Roger Rawlinson is director of IT consultancy at NCC Group, an independent provider of IT security, assurance and consultancy services.

Fewer, simple measures are better than complicated approach
Andrew Whiter, Ernst & Young

Measuring IT’s contribution to the business is to everyone’s benefit and is a really positive step towards raising the profile of IT in the boardroom, as well as a powerful tool for day-to-day IT management.

It is only through clear goal setting and appropriate measurement that you can demonstrate and communicate, unequivocally, the value  that IT delivers to the business. The alternative is misunderstandings and frustration.

Choosing what to measure should be driven first and foremost by overall business priorities and goals.

IT measures should then be developed and worked on and agreed between IT and the business, as getting buy-in, common understanding and commitment is critical to getting IT measures that are aligned to relevant business measures. 

In general, fewer measures are better that many, and simpler, easy to understand ones are better than complex ones.

Be prepared to approach the business with an outline measurement framework.

Business drivers of IT generally fall into a few typical categories: regulatory compliance, risk management, business process delivery/improvement, and IT cost effectiveness.

Do not fall into the trap of measuring only what you can – ie what is available instead of what you want – or articulating measures in IT terms.

Remember, the primary purpose of measurement is to facilitate communication and understanding.

Focus on how IT is supporting strategic business objectives
Chris Potts, Dominic Barrow

This is a golden opportunity to demonstrate to yourself and others the extent to which you see yourself as a core member of the company’s management team, or simply as a provider of IT services to everyone else.

Primarily, you should be measuring the company’s performance in exploiting IT investments through their contribution to the business strategies and operating plans, and the costs of that contribution.

For example, to what extent is the company achieving its strategic business objectives for IT investments? How effective are business innovations using IT to create new value? And are the future bottom-line costs of IT being effectively managed and exploited?

Of secondary importance, and probably only of real interest to the IT organisation, are “supply-side” measures. These are about the provision of IT services and are founded on industry standards and benchmarks such as the IT Infrastructure Library.

If you focus on, and publish, supply-side measures, it will seem obvious to people that you value yourself primarily as a quasi-supplier and they will probably treat you accordingly.

Whatever balance you choose to strike between exploitation and supply-side measures, no business executive I know wants measurement to be a “cottage industry” in itself.

Therefore it is vital to find the fewest and most economical set of measures that give an end-to-end picture of performance.


Implement a balanced scorecard for evaluating performance
Sharm Manwani, Henley Management College

You say that you “reluctantly agree” that some meaningful metrics are needed, however, it is not clear where the push is coming from or why. Hence a good place to start would be to ask why you want to have measures.

One potential reason is to establish metrics that assess your internal efficiency and productivity. 

Here you might look at how many standardised system tests you can perform per individual, or how many helpdesk calls you handle per individual.

By comparing productivity measures over time, and potentially with other organisations through benchmarking, you can assess whether your internal performance is improving. If there are cost pressures, you are likely to get support from the finance director for this type of measure.

Alternatively, the pressure may be more on metrics for responsiveness to internal customer demands. For example, how long does it take to complete customers’ calls to their satisfaction? Or how many projects are delivered to specification on time within budget?

One way of responding to multiple demands for measures is to implement a balanced scorecard which is a business tool for evaluating both financial and non-financial performance. Here you can combine financial, customer, process and learning objectives in one assessment tool.

Whichever measures you select, you should be clear on your target audience and their goals, as well as your own.

Ask the experts

Computer Weekly has put together a panel of experts whose specialist knowledge you can draw on to solve a problem. E-mail your questions (or your solution to this question) to

computer.weekly@rbi.co.uk

This was last published in October 2006

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