Tuesday, July 25, 2017

The Digital CIO’s Scoreboard

IT Executive scoreboard needs to be information rich for helping IT leaders make effective decisions and enhance data-based communication.

Due to the overwhelming growth of information and the disruptive nature of technology, IT becomes more and more significant in driving organizational changes and catalyzing business transformation. Digital IT leaders today must have the right mindset, skillset, and toolset to lead change in a structural way. From an IT performance management perspective, You can only manage what you measure, IT Executive scoreboard is an effective tool to enable executives and leadership team to improve management of IT via quantifiable and qualitative data. IT Executive Scorecard should have pre-built key performance indicators that reflect best practice measurement areas across IT holistically. But more specifically, how to build an effective IT management scoreboard and set the right performance indicators for evaluating overall IT management health and improving IT organization maturity?

Operational excellence: “Keeping the lights on” is still fundamental. Achieving IT operational excellence helps IT build credibility for doing things right, and improving business efficiency. Every new technology adopted must facilitate the business but also bring down the incremental cost of growth and the time to market. IT needs to expand the capacity and capability by improving operational efficiency and effectiveness with the performance indicators to resolve incidents and problems, increase in the number of problems successfully resolved and an increase in the number of IT products/services delivered without increased staff. IT cost optimization is also on the top priority list of the CIO's agenda. IT has to deliver the business solutions that provide the business competency in the marketplace with minimum cost and on time. Through a well-designed IT Executive Scoreboard, IT leaders can capture both quantitative hard number about cost savings and qualitative perspective of IT management health. Another reason to leverage IT executive scoreboard is to help IT leaders improve strategic communication because the well-defined metrics help stakeholders understand what is going on. Without measurements, it can be hard to tell whether attempted improvements make the situation better or worse. An effective IT executive scorecard helps IT leaders make effective decisions based on data, not just guts feeling, and improve overall IT manageability.

IT Innovation: At the higher maturity level, IT has to go beyond just keeping the lights on. IT leaders should put more effort into managing innovation beyond just commodity management and show high-level strategic value and dedicate more resources to innovation. A well-designed IT executive scorecard should include IT innovation performance indicators which include measuring IT innovation capacity vs. innovation performance. Innovation performance measurement focuses on measuring the quantitative business benefit and profitability from IT innovation and optimization. It helps IT management make effective decisions about innovation, change or digital transformation. It is also important to evaluate the soft variables (such as risk tolerance level, ideation, and creative capacity) which impact innovation capacity and help to build the innovation capability of business for their long-term success.

Customer satisfaction: Digital is the age of customer-centricity. IT needs to transform from an operationally driven support function into an outside-in, customer-focused business partner. Hence, the IT executive’s scorecard should also showcase the customer (both business users and end users) satisfaction scores. (Retention, Efficiency, Acquisition, and Penetration) metrics are a powerful way to manage the business REAP dashboard which provides four core measures applicable to the entire customer base. Besides using standard metrics, you can build your own custom metrics that suit your organization. The overall customer satisfaction is based on information from multiple sources, departments or markets. Business needs to understand the maturity of customer-centric practices at the overall organizational scope (quantified across all measures) and at specific section levels, with the objective to develop the related business capability to improve customer satisfaction across all areas.

Future orientation: IT investment and management are crucial for the business’s future success as well. Thus, it is important to define the strategic level performance indicators which take into consideration the possible implication on the organization as a whole and the future orientation. The balanced scoreboard is a concise report about strategy execution. A scorecard with well-defined performance indicators assesses the progress to strategic goals. It provides the business management a holistic view about the progress of digital transformation, and it offers a way for a corporation to gain a wider perspective on its strategic decisions about the future performance of the business. A well-defined scorecard should contain a good mix of outcome measures, or the long-term strategic value along with performance drivers to track the progress in the short term (operational value) in spite of capturing multiple perspectives, the balanced scorecard must still retain a strong emphasis on financial outcomes.

IT Executive scoreboard needs to be information rich for helping IT leaders make effective decisions and enhance data-based communication. It should also have an intuitive graphical display that is well laid-out and easy to navigate and to display the information that can be customized and categorized to meet the CIO’s specific needs. KPIs are grouped into different buckets to reflect financial, service level agreement, people-centricity, and innovation measurements. It is an important tool inside IT leaders’ toolbox to improve their management efficiency and leadership effectiveness.


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