Thursday, October 27, 2016

Assessing IT Performance vis Multidimensional Lenses

Keep in mind, measurement is not just numbers, but stories.

IT metrics need to evolve to something that matters to the business audience, at the same time that "business sentiment" needs to get put into something more tangible, such as optimize processes, or improve productivity. The various activities needed to manage performance— STRATEGIC and OPERATIONAL plans, innovation METRICS, day-to-day decisions. Selecting the right key performance indicator is one of the most important steps in measurement because this process includes to answering why you are choosing that, how you will use them and whether you have enough resources to manage data. Always attempt to identify areas in which measurable improvements can be realized, providing demonstrable value is essential, in some instances, these areas have been low-hanging fruit. Your measures should cover all areas that contribute to value creation including service quality, employee engagement, customer satisfaction, innovation benefit, and financial outcomes.

Effectiveness: In order to demonstrate IT value, organizations need to first know wherein lies the IT value: If you understand that upfront by doing the right strategic questioning, you can later go back and ask if you achieved the value that had been set out to attain. The best way to demonstrate the value of IT is to know who you are showing the value to. Obviously, you are demonstrating the value of IT to business. Looking at it from the point of view of "What's in it for me?"  The business would like to know what's in it for them. So the IT needs to first understand what the business is, what their pain points are, identify areas for improvement and then those that can be improved with IT.

Efficiency: The cost breakdown provides insight into where the most money is being spent, which in turn identifies opportunities for bottom line improvements. Chargeback can be done on a more equitable, actual usage basis, rather than assuming everyone is using the same amount. The detailed data becomes a base from which statistical analysis can be performed to do far more accurate financial budgeting projections, based on natural growth rates at a fine-grained level, and capacity planning is more accurately predicted too. Dysfunction and inefficiencies do not develop overnight, they creep in slowly. Hence, collecting and acting on business feedback is the most important project each year for every IT department. The goal of cost breakdown is to provide a clear, measurable view of the business’s top IT priorities, and continue optimizing cost and improving business efficiency.

Quality: Quality is defined by a number of factors, and to effectively lead an organization into good practices to focus on quality attributes takes work and a level of credibility within the organization. IT products/service quality begins with the quality of the requirements. It is impossible to deliver an acceptable application to a business without a clear understanding of what is to be delivered. A better user interface can make high-quality software even more qualified. And what you measure gets cared about and only focus on defects is too limiting, perhaps the good approach is to measure the 'health' of software projects, trending the well-defined metrics to see how you're managing rework, defects, automation, documentation and customer satisfaction, to name a few. So the measure is not about counting defects. Knowing what the quality of the product to be delivered will be, and take action if that quality will be insufficient early at lower costs.

Optimization: IT plays a crucial role in optimizing business and improving organizational agility. The metrics of the process should reflect the business outcome executives care about: Like most other aspects of business, business processes must integrate with and support the final outcome to produce a product or service and generate revenue. To fully optimize these processes, a business must establish KPIs and use business intelligence tools like balanced scorecards and forecasting, predictive analysis, 'what if' analysis and sensitivity analysis to determine how changes to a process might negatively or positively affect the business, with the lenses of business management.

Outcome: Outcome-based measurement practices are important to focus on the performance of the entire organization. One of the biggest pitfalls for performance measurement is measuring the “part” with ignorance of the “whole.” In other words, what are the organization's rewards and recognition structure perpetuating? The problem stems from the way outcomes are being measured. When the collective outcome is the focus, the silo walls collapse. When individual and departmental outcomes are measured, the walls go up. Differentiated performance metrics and rewards systems tend to bring this shift in perspective about, but they too are a necessary aspect of how an organization operates until they become counter-productive and have to be changed.

Keep in mind, measurement is not just numbers, but stories. The problem with measurement is that more often, the metric is very subjective. That is, from a scientific methods perspective, there is no way to run a real experiment to try one process against another. Historically, performance measurement systems for most businesses have been financing driven. However, in many business situations, financial indicators only cover part of the story. Your measures should cover all areas that contribute to value creation including service quality, employee engagement, business competency, customer satisfaction, and financial outcomes If you think through these concerns properly, the rest will just fall in their rightful places.


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