Measure Things Matter to Drive IT Digital Transformation

 Irrelevant measurement indicator will waste time, increase management complication, and decrease business effectiveness.

Forward-thinking IT organizations reach the inflection point of digital transformation. A strategic inflection point is a time when the business fundamentals such as people, process, technology, or cultures are about to change with accelerated speed. A measurement system is a necessary foundation for continuous improvement. CIOs need to understand how to measure IT performance with the right reasons, identify the right measurement and measure them in the right way to drive IT transformation smoothly.

Assuming an organization believes that metrics can lead to continuous improvement: Continually accelerating changes in IT consumption and production require faster responses and better performance metrics. IT leaders must keep in mind which performance metrics best measure IT capability to deliver business value - both for improving the bottom line efficiency and achieving the top line business growth. The measurement should help to evaluate whether IT creates revenue opportunities; whether IT helps the business develop competitive advantage, or whether IT helps to solve business needs or meeting customers’ expectation. More specifically, IT performance metrics can be categorized into infrastructure performance metrics, process optimization metrics, innovation measurement., etc. IT must contribute to or facilitate and accelerate organizational performance. Thus, the measurement should cover all areas that contribute to value creation including service quality, employee engagement, customer satisfaction, and financial outcomes. Businesses are looking for identifying systemic issues and addressing the causes and corrective actions. Inaccurate measurement data will distract the management from making a true improvement. Due to change dynamic and strategic shift, even if you choose the right KPIs, you must change them from time to time accordingly. Every metric should have a good reason for being measured; the output should be an input to something else, these metrics increasingly put emphasis on measuring things that business care about, lead to continuous improvement, and making IT function as a trustful value-adding business partner.

Develop and track internal and external benchmarking are essential to IT transformation: Every organization is different with different requirements, technologies, and workforce. Comparing to external benchmarks is a healthy exercise for CIO to assess the company from both internal and external perspectives. CIOs should do some benchmarking not only to justify the dollar amounts spent but also to make sure that the company is spending a reasonable portion of its revenue on IT relative to other companies in the industry to be able to keep it in business in the long run. Benchmarking often provides good data and highlights issues and its incumbent. It’s like a quick health check which highlights the areas where improvement or a quick fix might be required. The reliable benchmark should come through a detailed metrics analysis of variables, help management understand cost variables. On a more micro level, benchmarks can help procurement understand what the appropriate cost of goods and services in the market should be able to stay on top of purchasing contracts. It’s about spending the money right and getting the right results.

Address measurement findings and focus on results: Measurement is never for its own sake, it’s about making the improvement. Thus, put effort into taking the correct measurement, collecting obtained data, analyzing information, evaluating measurement results, determining what needs to be improved, assigning the right people with the right capabilities to take actions for performing the improvement, continue to measure the results and make proper adjustments in the improvement plans. The best IT managers are focused on success at all levels, from the success of their own team to the success of the organization, and the entire business. The data-oriented and metrics-wise engagements are leading IT to be much more proactive in proposing, as opposed to responding to ideas, and take new ways to improve current products or services deliveries, or actually create new business revenue. IT management needs to properly understand and evaluate all elements of value that are translated to the organization, and how all the pieces and parts of the organization are ultimately impacted, for good or bad, by each new business initiative tangibly. Use hard numbers if you can, measure the right things, and measure them right. The IT Return On Investment value proposition should be an overall measurement based on the combination of cost, schedule, quality, performance, and satisfaction of the customer, users, and stakeholders.

IT delivers the multidimensional business value, but that value is sometimes within a context, and difficult to quantify. Irrelevant measurement indicator will waste time, increase management complication, and decrease business effectiveness. Also, the measurement is the means to the end, not the end itself. CIOs need to understand different measurement, play the number game wisely, be it mature and sustainable and hence shows the solid return on investment and a profit back to the organization.

Posted in: IT Performance Management,IT Transformation,KPIs