Tuesday, April 26, 2016

CIO Master Tuning XVIII: Three Steps for IT Performance Improvement

IT is a key enabler to build almost all differentiated digital capabilities nowadays.

When you think of “IT performance,” what comes to mind? Operational excellence such as IT effectiveness or efficiency, or strategic value such as competitive advantage, leadership competency, culture agility or customer satisfaction? What is your understanding about IT performance measurement? Is it an economic measure, or competitive measure or other perceptive values? How are you monitoring quantifying IT department value in your organization? And what are the logical steps for IT performance improvement?

Define a compelling vision, strategic plan and detailed roadmap for the IT organization: IT is an integral part of the business, and IT strategy is an important subcomponent of business strategy. Develop a strategy that is focused on building capability and closing the gap in your success measures over time. And ensure this is well aligned with the purpose of the total organization. Simply put, the strategy is how you plan to win. IT does not just support a strategy but is part of the strategy. IT is about defining an overarching way to differentiate your plan of uniqueness against your opponents to increase your ability to achieve the goals and improve IT and overall performance continually.

CIOs need to develop a sound IT management framework to optimize IT performance in a structural way: Effective IT management means understanding every part of the operation and every workflow process. It is through this comprehensive understanding that IT can help to improve organizational effectiveness and efficiency. After making a strategic plan, and communicate with the business, a detailed action plan is drawn with all key activities taken as inputs. The detailed action plan should carry the important things like the timeline, individuals responsible for carrying out the tasks, any shortfall in the completion of tasks and what stretch targets are taken to compensate the shortfalls. That responsibility should be committed enough to ensure that the tasks and assignments are completed on time. Provide whatever training and support your team needs to develop the skills. Automate routine tasks, provide structured information, knowledge sharing. A CIO would be able to identify true cost savings, workflow optimizations, and additional revenue. IT is about using technology to lower costs, improve operations, and increase revenue. A CIO must also be able to develop and optimize the IT operational function within itself. It is one thing to have the IT resource aligned with the business strategies/ objectives (IT Effectiveness); it is also something to have the IT resources (people and operational IT processes) refined to the point that they are nimble, can adapt to changing business demands in a timely fashion, can be reapplied to altering business priorities and be effective with little down curve via IT Efficiency. When a CIO is able to position and maintain the IT organizational performance to ensure it addresses both "IT Effectiveness" and "IT Efficiency," they have earned their stripes. Select an IT service framework which can provide a roadmap to enhance efficiency and effectiveness of IT services. It could be implemented gradually with priority to high-risk areas, and play a very important role in providing guidance and a common focus and language for the team.

Define how you will measure success in meeting that purpose and vision: Ensure that IT performance measures are quantitative, and implement whatever mechanisms you need to be able to gather the data. There are two different sets of metrics. (1) The first set is the metrics internal to IT and used to run the operation. Things such as IT spending distribution and spending as a % of revenue, labor usage and distribution, operational stability, development status and quality, security posture, supplier performance, demand pipelines, audit findings, and internal budgets. (2) The second and more important sets of metrics are those used to inform the business of IT value and performance. These should all be presented in business terms such that they are directly aligned with operational factors a business executive would find important to be familiar with and tracking. Your measures should cover all areas that contribute to value creation including service quality, employee engagement, customer satisfaction and financial outcomes.

IT is a key enabler to build almost all differentiated digital capabilities nowadays. IT should work with stakeholders to develop the right set of measurement that show how IT is improving business and enforcing business capabilities. The senior leadership team should ask every department how much IT services/solutions are worth to them. Measuring the right things and measuring them right will improve the actual performance of the IT function, provide transparency into IT and close the gaps between IT and business, and reinvent IT reputation as a value creator.


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