Monday, December 19, 2016

Three Performance Indicators for Keeping IT and the Business on the Same Page

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.

Forward-looking IT organizations are on the journey of digital transformation. To improve IT management effectiveness and efficiency, keep in mind of this management mantra -”You can only manage what you measure.”CIOs need to keep a measure and periodicity at which the measure is reviewed against setting targets. Then ensure IT raises the bar on a continual basis to ensure the stakeholders get a real picture of how well the IT efforts are bearing desired results and keep IT and the business on the same page via the following indicators for accelerating digital transformation.

IT Improvement Indicator: "Continual improvement" is IT mantra in the digital era, CIOs with improvement mindset continually look to optimize processes and improve customer satisfaction. Identify the key performance indicators of the company and detail how your initiatives will drive improvements in the current state. An effective CIO’s job is to improve operations to reduce the burden on the company while trying to stay current with ever-changing information and technologies. That includes reducing costs, improving systems, streamlining processes and providing continually expanding services/solutions. There is never an "enough" to optimizing operations. However, optimization of technology should not be the "be-all and end-all" at the expense of the health of the overall organization. Improvement programs are always underway, talent gaps constantly break out as staff leave or as the business moves in new strategic directions. The objective is to recognize what needs to be done, to assess how well things are being done, to assign and reassign priorities to what needs to be done and to invest in improvements in a mindful way.

IT Innovation Indicator: CIOs with the growth mindset will keep looking for the new opportunities to improve end customer retention and revenue growth. Focus on the vision set out by the Board - draw a picture of how and what the CIO’s doing will help achieve the vision. Leading only with operational considerations is not the way forward. It needs to be accomplished by working with business partners to leverage opportunities for changing how the business competes in the marketplace. Rather than wait for the business to tell IT what they want, IT needs to proactively work with the business and partners upon the great new digital technologies which can change the business. It means IT has to experiment the better way to do things, encourage creativity because digital transformation efforts need to be undertaken as the means of getting to a defined differentiated capability to accomplish a defined goal. Align IT innovation (ultimately the business innovation) with desired corporate strategic outcomes, by implementing excellent IT financial, demand, and asset management processes, prioritize innovation initiatives in alignment with corporate strategy and then measures that the IT portfolio is being optimally maintained through effective benefits management programs.

IT Investment Indicator: Visionary IT leaders also focus on the long-term vision vs. quick win etc. It takes a strong CIO to convince management to continue IT investment to maintain the nimble state. Unfortunately, many executives see that once IT reaches that state of "can do it," now want to start to milk the process but stop the IT investment. IT efficiency and effectiveness is an ever-evolving state and sometimes it takes larger and not incremental investments to reach desired positions. Like any C-suite members, CIOs have to participate in forming the organization's strategy, its implementation, and assessing its performance. They have to make sure that all IT investments are aligned with the organization's strategy and the approved priorities. The three keys to presenting IT value are financial returns, return timeline and risk. Just like any other investment. If you can present IT portfolio in a manner similar to an investment portfolio, it makes instant conceptual sense to board and C-level folks. Once you start prattling on about IT-centric metrics you've lost your audience. If you can show the objective of the investment and the three elements above, you can present IT as a value generator rather than a cost center.

CIOs need to be able to listen to a wide range of opinions and approaches and understand how that might benefit the business. Select the right set of indicators of Improvement, Innovation, and Investment, and measure them effectively; also include a broad range of monitoring, performance measurement, performance reporting, make sure IT and business are always on the same page. 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.


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