Measuring modern IT performance is no longer a single management discipline but a multidimensional approach.
Performance evaluation of IT efficiency (keep the lights on) and effectiveness (top-line revenue growth, and transformative change): In reality, the IT environment is often fraught with information inconsistency, process redundancy, and platform/system overlapping. IT performance assessment helps IT management take a critical look at IT strengths and weaknesses, diagnose the early signal for dysfunctional areas, and keep improving IT efficiency and effectiveness. IT leaders must keep in mind which KPIs best measure IT capability to deliver business value. To transform IT from a cost center to a strategic business partner, a set of IT performance indicators needs to show a clear link between IT performance and top-line revenue generation, as well as the benefit/cost calculation - the tangible progress made for transformative change initiatives.
IT portfolio performance evaluation (on value, on time, on budget, etc): IT portfolio management is essential to build the strategic business competency. IT portfolio is a collection of programs and projects that are designed to help the organization achieve its targeted performance because economic cycles are getting shorter, and decision cycles are getting shorter as well. IT portfolio rationalization is an activity more critical than ever. IT applications blended with current digital technology trends can deliver significant benefit to business growth, such as real-time business insight, innovative products/services deliveries. Thus, it’s important to make an objective performance evaluation and track the progress of IT portfolio management to ensure on-value, on-time and on-budget delivery. Because the degrees of over-budget, late delivery or poor system performance conditions would reduce customer satisfaction. Dissatisfaction negatively impacts the overall value of products/services deliveries. Thus, the “on-value” evaluation of IT portfolio should be an overall performance measurement based on the combination of cost, schedule, quality, performance, and satisfaction of the customers or shareholders.
Innovation performance assessment: Innovation performance management is often different from many other types of business initiatives. The purpose of innovation measurement is to track innovation management effectiveness, not just about the quantitative results which sometimes can mislead the management with a short-term perspective. All innovation initiatives, hopefully, should achieve some business result directly or indirectly. To harness innovation, the innovation performance measurement should focus on the business goals and desired behaviors. Normally organizations look for KPIs measuring business results generated by innovation efforts. You choose those KPIs by deciding which are seen as critical to making progress in order to deliver more innovation benefits. Some factors that could be used to measure innovation score could be % of revenue from new products/services introduced, resources invested (human and financial), employees motivation, number of innovation initiatives being launched, process KPIs, or organizational innovative culture readiness, etc.
Cost optimization measurement: Generally speaking, IT cast can be categorized into: IT operational cost, financials (budget, expenses, service costs, etc), people cost, vendor cost, etc. . Some of the "long poles in the tent" tend to be labor; depreciation and new capital spending. The challenge is to have visibility and traceability between costs and the assets consuming those costs. When selecting the right set of metrics for cost optimization, ask whether the metrics can reveal anything meaningful for the identified purpose, and ensure the management buy-in for the metrics collection processes, such as.a calculation of the cost to fix structural quality problems. IT value is often measured by optimization and consumption of IT assets in support of the business solutions that are identified within the organization's revenue producing stream. The CIO's dashboard can highlight some significant IT cost and finance information and keep track of the overall IT financial health.
Innovation performance assessment: Innovation performance management is often different from many other types of business initiatives. The purpose of innovation measurement is to track innovation management effectiveness, not just about the quantitative results which sometimes can mislead the management with a short-term perspective. All innovation initiatives, hopefully, should achieve some business result directly or indirectly. To harness innovation, the innovation performance measurement should focus on the business goals and desired behaviors. Normally organizations look for KPIs measuring business results generated by innovation efforts. You choose those KPIs by deciding which are seen as critical to making progress in order to deliver more innovation benefits. Some factors that could be used to measure innovation score could be % of revenue from new products/services introduced, resources invested (human and financial), employees motivation, number of innovation initiatives being launched, process KPIs, or organizational innovative culture readiness, etc.
Cost optimization measurement: Generally speaking, IT cast can be categorized into: IT operational cost, financials (budget, expenses, service costs, etc), people cost, vendor cost, etc. . Some of the "long poles in the tent" tend to be labor; depreciation and new capital spending. The challenge is to have visibility and traceability between costs and the assets consuming those costs. When selecting the right set of metrics for cost optimization, ask whether the metrics can reveal anything meaningful for the identified purpose, and ensure the management buy-in for the metrics collection processes, such as.a calculation of the cost to fix structural quality problems. IT value is often measured by optimization and consumption of IT assets in support of the business solutions that are identified within the organization's revenue producing stream. The CIO's dashboard can highlight some significant IT cost and finance information and keep track of the overall IT financial health.
Measuring modern IT performance is no longer a single management discipline to measure efficiency anymore, how to measure IT effectiveness, profitability, transformability, and business innovation effort is more crucial than ever. The highly effective measurement and performance management can help IT leaders present information -based IT results which impact the top & bottom-line business result persuasively, drive business growth and build organizational competency effortlessly.
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