Thursday, January 18, 2018

The Promises and Perils of IT Performance Management

IT leaders need to be fully aware of the promises and perils of performance management, play the number game wisely.

"Continual improvement" is the IT mantra in the digital era; there is never "enough" to optimize operations and improve business efficiency. To reinvent IT reputation from a cost center to a business value creator, it is important to shift IT performance from inside out - IT lenses with the metrics only IT care about to outside-in customer lens; start with the noble business purposes of IT, and then, select the right set of metrics for measuring the right things and measure them right. Digital leaders need to understand the promises and perils of IT performance management in order to improve the organizational performance and maturity.

CIOs need to keep a measure and periodicity at which the measure is reviewed against setting targets and business goals: An effective CIO’s job is to improve operations to reduce the burden on the company while trying to stay current with ever-changing technologies and business dynamic. Typically, CIOs would need to remain on top of various parameters such as costs, production issues -especially business-critical applications, risks, technologies, customers, long-term business transformation, etc, that includes reducing costs, improving system efficiency, streamlining processes and providing continually expanding services or business solutions. Thus, it is important to select the right set of measures and leverage metrics that substantiate the ROI. The promise of IT performance management needs to be able to map to the business objectives and strategic business goals, and track the progress of IT portfolio management to ensure on-time and on-value delivery. Selecting the right key performance measurement is a crucial step in IT measurement because the processes include answering why you are choosing that, how you will use them and whether you have enough resources to manage measurement data, can you present them persuasively; how they've been able to impact the top and bottom-line and facilitate growth and competitiveness, etc? To keep improving IT management maturity, IT metrics have to evolve from being a cost center to become a revenue generator. The right metrics can be helpful to track progress in business improvement initiatives. IT should continue to review the ROI of existing IT investment, whether the depreciated life cycle is completed or not; or whether new technologies/products mature enough in the business market to adopt.

Another promise of IT measurement and performance management is to help stakeholders understand what is going on: It is important to practice strategic thinking - keeping the end in mind for managing IT performance. Identify the purpose of the information and the stakeholders who will be interested in the measurement. Then, ensure IT raises the bar on a continual basis to ensure the stakeholders getting a real picture of how well IT management, such as business optimization efforts, are bearing desired results. Ask whether the metrics can reveal anything meaningful for the identified purpose and varying stakeholders. Contextually, the measurement method is to persuade management the progress of strategy execution. Companies are highly dependent on IT executives who make the proposal to change or replace the technology based on the need for the business. Continually accelerating changes in IT consumption and production require faster responses and better performance metrics. IT metrics have 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 top executives between IT efficiency and productivity/ top-line revenues. Focuses on corporate performance and management practices should be based on a sound and understandable vision and company strategy. This is an important step to building IT reputation as a strategic business partner and growth engine.

The peril of IT performance management is about how to avoid vanity metrics: Don't collect metrics for the sake of collecting metrics, or measure things from IT lens only, or based on convenience, look only at cost, schedule or quantitative numbers only. Metrics are not just numbers, they should tell the stories. Give those responsible for collecting the metrics a reason for doing so. Ensure management buy-in for the metrics collection process, and really focus on key metrics that correlate to better business outcomes. The peril of IT performance management such as, the wrong metrics selection or ineffective measurement practices perhaps mislead or cause management conflicts in what value is as it does not address the portion of value without telling the full story. Without appropriate measurements, it is hard to tell whether attempted improvements make the situation better or worse objectively. The well-selected set of metrics are those used to inform the business of multidimensional IT performance and value. It is important to set the criteria for metrics selections and performance practice development to achieve qualitative business objectives: Measuring IT performance for improving revenue (enable the business to gain market share, enter new markets, etc). Measuring how well you are delivering to your customers is relatively easy but developing a true measure of how well you understand the customers is the hard part. IT value can also be measured by optimization and consumption of IT assets in support of the business solutions.

IT leaders need to be fully aware of the promises and perils of performance management, play the number game wisely, to present IT value proposition on how to increase revenue, reduce cost, improve service/solutions, manage risks, accelerate business performance and realize digital potential seamlessly.


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