IT leaders must keep in mind which KPIs best measure IT ability to deliver business value.
"If you can't measure, you can't manage," legendary management guru Peter Drucker once asserted. He was right -- just not right enough. The fact of the matter is it's a lot easier to get metrics wrong than right, and the damage caused from getting them wrong usually exceeds the potential benefit from getting them right. This is particularly insightful to measure modern IT performance, it’s no longer a single discipline to measure efficiency anymore, how to measure IT effectiveness and business innovation effort is more crucial than ever.
1. Modern IT Key Focus Areas
An effective CIO is a true business partner! Placing a higher priority on the development needs and customer relationship management skills that align with the organization's strategy helps to drive engagement throughout the enterprise. On one hand, to establish IT credibility is to do a few things well than try to do a lot of things and under deliver. Doing a few projects swiftly and in greater depth to meet the most critical needs of the business is much harder than agreeing to do many niche projects and moving slowly on all of them; on the other side, doing few things may not always the answers, modern CIOs are also not just technologists to manage IT for technology’s sake, but need wear multiple hats to create a positive working environment for the IT staff, with a manageable set of well-defined projects and engaged customers..
- Customer Relationship Management: It is critical that the CIO focus on relationship management - The metrics which matters may include some well-defined for measuring customer satisfaction, or even constructive dissatisfaction, with potential to optimize IT service.
- Strategic Communication: It means a lot, such as a translator (technology to business), self-promoter ( through clear metrics as IT need transform from traditional back-office to front office); the influencer (thought leadership); and negotiator (vendor relationship)
- Project Management: Delicately balance project portfolios, available resources and governance.Programs and projects are undertaken and prioritized as per business needs. Demand management is a critical element of being successful in a CIO role. The fundamental aspect of portfolio management in establishing priorities with the business and focusing on the big impact items first is to apply Jim Collins' "Flywheel Principle" of incremental success to achieve big results
- Talent Management: CIOs should also sharpen the key leadership skills such as developing their people, providing talent with challenging work, and recognizing them for good work. All of these elements drive employee engagement and retention
Thus, IT needs to build those measurable metrics around these key focus areas. CIO's metrics should clearly define how they are contributing to business success.
2. IT Metrics are not One-Size Fit All
IT metrics must get focused on the end-user: The end-user continues to be the key component of any bottom-line-driven business. This is where the metrics for a CIO should rest – the end-user experience. You may have the best infrastructure, network and other components in place, but if the end user's experience is impacted in the least, it could consequently result in loss of business – a direct impact on the top and bottom line.
- Cost Optimization Metrics: Every new technology adopted must facilitate businesses but also bring down the incremental cost of growth and the time to market. That should be the true metric for a CIOs success – how has he/she been able to impact the top & bottom-line and facilitate growth & competitiveness. These are undoubtedly dynamic times, though; the fundamentals of a business seldom change.
- IT Metrics has to evolve from being a cost center to becoming a revenue generator. The only way to do this is to show a clear link to CEOs and CFOs between IT efficiency and either productivity or top-line revenues. This increasingly put emphasis on the complex personal interactions required to make IT function as a clear partner in business - in addition to an ever greater strategic element to the business.
- The 'Scope' of the CIO in what he or she can manipulate and influence: The different CIO Characteristics which need to be understood and communicated to meet the different business models out there, there is no one size that will fit all and it will depend a lot on the 'scope' of the CIO in what he or she can manipulate and influence. The baselining performance will, therefore, depend on the type of the CIO you are: an innovative CIO may have freedom and not tied down to service desk metrics and volumetric analysis.
- Agile Reinforcement: CIOs (or for that matter any business leader) don't just need to stay in tune with the times rather stay ahead of the curve, and be able to allocate/align their capabilities to what the business really needs. And if one looks at it in reference to the ever changing market needs, it calls for the CIOs to be true "Agile" and deliver only what's required, when required. Publishing the strategically aligned metrics and outcome measures with your business partners fosters transparency and can enable an adaptive & responsive culture.
- As for success metrics, any metrics - new or old - for success will be predicated on the strategy and sourcing model. If the business strategy is an early adopter and rewards innovation then the metrics have to accommodate service outcomes that may have a higher level of support than that of a laggard who is frugal and harvests every dollar.
3. Select KPIs to Best Measure IT Ability to Deliver Business Value
- IT leaders must keep in mind which KPIs best measure IT capability to deliver business value. Continually accelerating changes in IT consumption and production requires faster responses and better performance metrics. Scorecards that consolidate and visualize IT performance data, and make it available for comparison with peers, are a way to keep up with this rapid pace of change.
- Track the right metrics and know what to do with them to see improvement. Tracking KPIs and benchmarking are essential to IT transformation. But you need to do it wisely. As IT is no longer just the back-office infrastructure, it need take front-office leadership such as business growth, innovation., etc, the new thinking about IT KPIs/metrics can be categorized into infrastructure performance metrics, key process optimization metrics, key innovation measurement., etc. the leverage point is to keep the light on, also maximize the business growth.
- Follow "SMART" Principles: SMART is a popular goal-setting technique. It stands for (with some variations): specific, measurable, actionable, relevant, and time-bound. Successful prevention is also indistinguishable from absence of risk
- Four different ways to do metrics wrong. You can:
-Measure the right things badly.
-Measure the wrong things, either well or badly.
-Neglect to measure something important.
-Extend measures to individual employees
For the new year, CIOs need to understand not only technology trend, they need to understand what is the current business trend and emerging trend, they also need to learn how to measure IT performance with right reasons through the right metric or executive scoreboard. By doing this, IT can be a real innovation/value driver for the company and the IT team are able to prioritize their resource and catalyze business growth.