Three Levels of IT Performance Management

Highly effective IT leaders have to be prepared to constantly realign technology against the enterprise's business needs and measure things really matter to the business's success.

IT is an enabler of current and future business capability for both the organization and its ecosystem, It should be framed in respect of the organizational activities and practices, contribute both strategically and operationally to capture both short-term gain and long-term win of the business. As there are different target audiences who are interested in IT value presentation such as IT staff, business leaders or customers, and each has a different focus. It is a very good idea to make IT metrics transparent to the varying departments. It’s also important to develop a systematic measurement approach to assess its multi-dimensional value beyond just monetary benefit. Here are three levels of IT performance management.

The first level of IT performance is related to functional size, a measurement of the products/services/software in terms of the amount of functionality it delivers: IT needs to take care of chronic operational issues to stop the pain and deliver requested upgraded services or technical solutions to meet customers' satisfaction. Thus, IT needs to expand business capacity and capability by improving operational efficiency or productivity with the right set of performance metrics for keeping track of progress, such as the increase in the number of problems resolved successfully or the improvement of the project success rate. Every new technology adopted must facilitate businesses but also bring down the incremental cost of growth and the time to market. Both quality and quantity measures are important because shipping the wrong products on time and within a budget doesn’t benefit anybody, particularly the organization. Quality is quantity measured from both technical view vertically and user view horizontally. This level of IT performance measurement helps IT executives continue to review upon ROIs of existing IT investment and improve IT management effectiveness and efficiency. Ideally, a well-defined set of IT performance indicators should show a clear link to C-level executives between IT efficiency and top-line business revenue generation. The measurable IT performance also allows wider business knowing IT value-proposition and improve IT department visibility.

The second level of IT performance is related to business changeability: With the increasing pace of changes and frequent disruptions, business today need to provide or utilize systems and technologies that will facilitate the delivery of changes. IT performance directly impacts the entire company’s competency and speed to changes. IT performance can be measured through how effectively IT effort is put to improve business processes or systems, affect time to market, and adapt to changes. Dysfunctions and inefficiencies are easier to uncover if there is a good measurement system put in place for keeping track of business changeability and management improvement. Though often measuring change is difficult, improving speed or business agility is increasingly important for the business’s surviving and thriving. The management needs to clarify how you can design metrics to measure what changes and how these changes are measured. What are the relevant metrics of IT performance related to changes and how can they be quantified and validated? Whatever the measurement system is, it needs to be consistent, repeatable and as unbiased as possible.

The third level of IT performance is about digital transformability: Run, growth, and transform. Ultimately, IT needs to get involved with, or even proactively drive business transformation and present tangible performance result. Because business initiatives and digital transformation today nearly always involve some form of technology implementation and information facilitation in order to solve problems efficiently, automate business processes or systems, and improve the business responsiveness and manageability. To refine IT reputation, "measuring up" is intriguing but it is crucial for IT to be perceived as a strategic business partner and relentless “digital transformer.” It is an IT responsibility to identify opportunities for business transformation wherever analysis and assessment indicate the potential benefits of transformation efforts. Continually accelerating changes in IT consumption and production require faster responses and better performance metrics. IT leaders have to be able to demonstrate in very tangible ways that IT contributes to the large scale of business transformation and develop a systematic measurement approach to assessing its multidimensional IT value. The measurement should cover all areas that contribute to business value creation including financial outcome, business competency building, customer satisfaction, or employee engagement, etc. At this level, the performance metrics are not just number but telling data-support stories, and the good measurement aids setting direction, rhythm, and pace for the digital transformation journey.

Every IT organization is at a different stage of the business cycle, and every company has a different strategic focus. They will also set different criteria to select key performance indicators and focus on a different level of performance measurement. Highly effective IT leaders have to be prepared to constantly realign technology against the enterprise's business needs and measure things really matter to the business's success. Measurement is never for its own sake, it’s always about making the business improvement. Thus, put effort into taking the correct measurement, collecting or obtained useful data carefully, analyzing information timely, evaluate measurement results objectively, determine what needs to be improved, assign the right people with the right capabilities to take actions for performing the improvement and improving IT organizational maturity consistently.

Posted in: IT Performance Management,Performance Master