Where is IT leading the business? Your KPI’s should tell you

It used to be that all CIO’s had to worry about was email deliverability, network connectivity and application functionality.  Now, no matter your company’s size, CIO’s are confronted with a variety of demands and pressures.  To be successful, they need to act more the like CEO of their IT organization, balancing their internal customer needs and expectations with shrinking resources and increased governance.  So, how do you know if you and your IT organization are pointed toward success?

On any given day, we interact with a variety of technology professionals and leaders from a wide range of companies and industries.  This has provided the opportunity to see first-hand how effective IT organizations are managed.  The common thread isn’t that they all manage by KPI (Key Performance Indicators).  Instead, we’ve found that the difference is which KPI’s they choose to track and how they relate to the business objectives.

Measure what matters

Within the technology field, IT management and information workers can appreciate the effort behind such metrics as WAN availability, server downtime, network throughput and capacity utilization.  Outside of IT, business leaders don’t understand how these types of metrics impact their business objectives.  What they do understand, however, is the cost of IT.  If this is the business’ only focus, IT will be under continuous pressure to reduce costs.

Align metrics with the company’s goals

To get out of the vicious cycle of budget and resource reductions, metrics tracked by IT should demonstrate how IT initiatives contribute to business outcomes.  This isn’t as easy as it sounds.  An obvious disconnect was uncovered when Forrester and TBM (Technology Business Management Council) found 2/3 of IT budgets at large companies are set aside for maintenance.  Their goals are focused around safety and security and are communicated in terms of operational and transactional level metrics.  On the other hand, business leaders concentrate on innovation and their ability to quickly respond to volatile market pressures and ever-changing customer demand.  Their main objectives are finances, agility and customer satisfaction.

TBM recently published a KPI framework to help IT leaders more closely connect their objectives with those of their companies.

  • Delivery:  Tracks the ability of IT to deliver on its promises to internal and external stakeholders.  Help Desk services is a great example.  KPIs associated with measuring the effectiveness of Help Desk services could include weekly or monthly new ticket volume, submission method, percentage of tickets resolved, reply and wait times, and resolution time.
  • Outcome:  Identifies and measures IT contribution to business outcomes.  These could include: % variance in annual budget, % of hours by business initiative.
  • Health:  Measures the effectiveness of existing controls.  Examples of performance indicators include application down time, average application response time, average system login time, peak infrastructure utilization %, % downtime and max downtime.
  • Agility:  aims to predict the ability of current IT investments in people, processes, and technology to respond to changing business needs quickly and flexibly. KPIs for IT could include schedule variance, % costs for value added services, client satisfaction, timeliness to business’ change order requests.

IT’s contribution to the business

We are inundated with data and the ability to measure many things.  That doesn’t mean they should all be tracked and measured.  For IT to be seen as a partner in the business’ success, IT leaders and CIOs must demonstrate their contribution to the business.

Source:  http://www.computerweekly.com/news/2240206657/CIOs-are-underselling-IT-to-business