Metrics to Manage IT | Leis Network

IT projects are essentially components of strategic Business initiatives that have paybacks. Use the Business portfolio and its ROI to guide IT. Develop 4 IT scorecards that support and add detail to the portfolio.

The Slings and Arrows of Outrageous Spending

IT Server banks

IT spend is alluringly tempted by change, new innovations, ad hoc queries, and in general the chirping babies syndrome. It is also common to find IT spend a jumbled unmanaged mass of projects ungovernable by the IT department for the simple reason that upper management has vetoed their objections in favor of a myriad of pet projects.

On the other side of the coin, organizations determined to bring out of control departments under rein can find themselves starving important and valid projects. More than one company has flourished after escaping a corporate umbrella starving them of the investment needed to flourish.

But if ad hoc and total spend and its variations are not recipes for successful IT management, what is?

Force IT Dollar Alignment

The first mistake is viewing IT as another administrative function like Finance or Accounting. It is not. It is an enabler or tool.

Align IT budgets with key strategic objectives, ongoing and new. Scale all initiatives according to the size of the strategy. View all IT initiatives as components of the larger business initiative.

Of course all business initiatives have a payback. If there is no payback, there is no project. Payback demands measurement, either in increased sales, profits, channel development, etc. Mandatory and discretionary IT budgets can then be drawn and exercised and tracked within the prism of the organization’s strategies. The project portfolio is prioritized and trimmed according to ROI.

With these changes in place, we are now managing total IT cost by project rather in total. As long as the IT portfolio is returning ROI without threatening the organism’s cash flow, why worry?

Notice the portfolio, in exacting ROI, is not technically composed of IT projects as traditionally envisaged. It is a business proposition with an IT component. Instituted well, this portfolio can change the IT culture to view all activities within an added value paradigm.

Cardinal rule: Exercise the idea of sunk cost.

Measure Maintenance vs. New

Divide the portfolio above into two sections; maintenance and new. The distinction is more important than total spending.

As with any bureaucracy, maintenance of existent functionality has an almost irresistibly seductive way of consuming 100% of resources. If maintenance gets over 60% in today’s changing world, consider it a red light calling for action. Combining the two points above, you now have the cohesive report that leads you to decision making.

Cardinal rule: IT departments, like any support function, will never come back into line or develop ‘religion’ on their own.

The Whips and Scorns of Measurement

IT departments are often adept at producing any number of metrics. The issue is that they are an ocean apart from business management. Server uptime, delivery response, availability, or problem resolution time delivers nothing in the way of actionable data. The problem is that these are measurements describing service delivery, not business value.

Compounding issues include metrics written in a language or jargon impossible for others to understand, or in isolation of the business initiatives they support.

Customer Scorecard

Assuming the organization already has instituted the business ROI portfolio as described above, minimizing at least some measurement frustrations, what other measurements are needed?

We need measurements about the customer. With all projects, develop measurable service agreements (just like the professionals do) with internal and external customers as part of the development of the project. Then when the project is completed and implemented, insist on using them. Here are some guidelines and signposts:

End of period processes that require manual intervention should be viewed with extreme prejudice. Something is fundamentally wrong. It is not only dangerous to have people manually intervening in product and accounting files at the end of periods; it threatens security, viability and in some cases may contravene the law. Better yet, why are there period end processes anymore? If you need an honest answer, ask an external consultant to give their honest opinion.
Measure satisfaction.
Defer lagging indicators in preference to leading indicators. As an example, it is popular practice for help desks to measure customer satisfaction. It is more informative to link customer satisfaction with the percentage of successful resolutions of segmented problems.
Measure customer involvement along the project life cycle encouraging self-management and implementation.

Operational Scorecard

This is the area IT innately understands and often shines. The operational mission is to describe the effective delivery of IT. Here are some guidelines:

Software development timeliness and efficiency.
Maintenance operational efficiency.
1. Response times.
2. Hardware and network availability.
3. Issue resolution descriptions.

Planning Scorecard

IT especially requires investment in future technologies and the added value they can bring. The mission is to remain abreast of developing technologies in an environment of innovation. Planning scorecards should include education and emerging technology investigation with formal reviews which summarize practical potential uses of new technology and estimated benefits. These papers can be disseminated through the organization for awareness and inspiration.

Insert Goals as a Management Tool

Effective measurement a priori has beneficial effects on groups and cultures. Almost anything that communicates and clarifies common direction is an aid. The golden rule is that if the organization wonders if they are communicating enough, they probably are not.

But measurement is truly effective as a management tool if it includes targets or budgets for improvement. Automated scorecards with improvement goals will inevitably be used daily, often by the entire organization.

Targets or goals should be SMART (Specific, Measurable, Attainable, Realistic, and Timely).