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Metrics that Make the Case for IT

Many CIOs excel at producing research and metrics -- they regularly keep track of network performance, network downtime, time to recovery, user response time, attempts to breach security, and many other types of data. However, often these metrics make little sense to other C-level peers. If the CIO presents data brimming with references to MTTR (mean time to recovery), MTBF (mean time between failure), and $/TPS (dollars per transaction per second), he or she may as well be speaking Greek. To make the most of the time-consuming task of gathering metrics, CIOs need to focus on producing the right metrics and communicating them in a way that furthers the cause of IT.

According to a recent Forrester Research survey, only 33 percent of respondents indicated they have a formal IT measurement framework. "My sense is that even for many of those that are using metrics, they are not measuring the right things," says Craig Symons, a principal analyst with Forrester. "There is an old saying, 'You can't manage what you don't measure.' I think that has never been more true for IT. Executive and business unit management want strategic alignment and demonstrated business value, yet I suspect most IT organizations are not trying to measure these things."

The first step, Symons says, is to determine the right data to measure and regularly monitor it. "It starts with the customer," Symons says, referring to the users of IT. "What's important to them, and how are they being measured? Ultimately, this leads to the strategic objectives of the organization."

In a recent report, Symons advises CIOs to focus on five main metrics that matter. These are: alignment metrics, value/financial metrics, user metrics, operational excellence metrics, and future orientation metrics. Forrester's practice is modeled upon the "Balanced Scorecard," a management system developed by Harvard Business School's Dr. Robert Kaplan and Dr. David Norton that is gaining traction in IT. According to a recent Forrester survey, 25% of respondents are using an IT balanced scorecard.

Business/IT alignment

Above all, the most important goal of metrics is showing that business and IT are aligned. "You can't deliver sustained business value if the IT strategy and the business strategy are not aligned and tightly linked," Symons says. Technology should enable business, and not be used in a vacuum. Yet most CIOs don't produce meaningful metrics to further this cause.

There are three main ways CIOs can show how business and IT are aligning, according to Symons:

  • Joint IT/business unit meetings In meetings between IT and business teams, strategy is formulated and alignment is carried out, Symons says. These meetings can help enterprises ensure they have the same goals and are working together toward those goals. CIOs should measure the number of meetings between IT and business teams. The ideal number of joint meetings is up to the CIO, but holding meetings monthly or quarterly is the norm, says Symons.
  • IT steering committee meetings Different from the joint IT/business unit meetings, IT steering committee meetings are held with IT staff. "IT steering committee meetings are typically used to review the IT portfolio and to make funding and priority decisions," Symons says. Senior managers in the business units of the company should attend these meetings, which should take place at least quarterly. The metric gathered is the number of meetings.
  • Projects directly linked to a strategic business goal A powerful metric is the percentage of current projects directly linked to a business goal. CIOs should analyze the project portfolio to see how many IT projects can be linked to a strategic business objective, Symons says. While this sounds obvious, Symons says CIOs -- are often surprised by the number of projects not linked to any business goal. CIOs should work toward having 100% of IT projects linked to business objectives.

Financial metrics

Since IT's portion of a corporation's budget is usually substantial -- anywhere from 1% to 10% of a company's revenues, Symons says -- it's crucial for CIOs to measure and demonstrate the value that IT is contributing. Further, awareness of the budget and costs should trickle down through IT management, so that all IT staff is aware of the value that their technological projects are contributing to the company. By having regular budget meetings with IT staff, CIOs can keep costs under control.

CIOs can demonstrate the financial value they're contributing to the company by providing a ratio of maintenance costs compared to new project costs. According to Symons, the majority of IT's budget is spent on maintaining IT services, compared to new initiatives. "Best practices companies have taken this ratio to 60/40, and some are actually driving toward 50/50," he says.

User metrics

IT provides services both to the company's employees and its outside customers. CIOs can measure how IT services are accomplishing the goal of servicing both types of customers in three main ways: by performing customer satisfaction surveys, conducting in-depth interviews, and holding quarterly focus groups.

Focus groups ideally should be performed by a third party. If crafted well, the surveys can offer a general indicator of performance, though they often don't provide specifics of what is working or not working, or how IT could perform better. To get more specific examples of areas in which IT can improve, the IT organization should also conduct in-depth interviews with a few key customers, as well as focus groups. These in-depth interviews can drill down on specific areas of IT service, such as applications, operations, or help desk, to gain more specific information on how IT is serving customers.

Operational metrics

CIOs have the most experience collecting operational data, Symons says. However, instead of focusing on operational metrics that are specific to IT, CIOs should focus on three main areas: how users are impacted by regular network outages, response time for external customers, and how security issues affect availability. Measuring and delivering acceptable IT performance helps the CIO maintain credibility among C-level peers.

According to Symons, availability is the most important metric CIOs should focus on. Therefore, CIOs should measure the percentage of time that customers can access IT services. Forrester suggests that IT organizations negotiate service level agreements (SLAs) with their customers, and then meet or exceed them.

Security issues also impact an enterprise's operations. Viruses, spam, denial of service attacks, identify theft, and other security-related problems have a direct effect on a company's business. These areas all must be measured, and it's up to the individual company to decide what number of security outages are acceptable.

Future orientation metrics

These metrics involve three areas: human capital, information capital, and organizational capital. Future orientation metrics should be put in place to ensure the company is making the necessary investments in people, process, and technology to sustain performance over the long term, Symons says.

Human capital is important because it's up to the IT staff to deliver on the organization's IT promises. Human capital can be measured by examining IT employees and their performance. CIOs can track IT staff's personal development -- such as their continuing education -- as one measure of human capital.

Information capital is typically the technology architecture and infrastructure, while organizational capital refers to the culture and values of the organization. Symons suggests that CIOs determine ways to measure information capital and organizational capital based on the unique needs and goals of the company.

The five metrics Forrester recommends are not the only metrics that should be addressed, of course. Each company has metrics unique to its business, and the CIO should review company objectives to identify the most important metrics. However, by tracking these five metrics and communicating their results in a way that other C-level peers can understand, CIOs can win support from peers and superiors, make the case for future projects, and garner the necessary resources to do their jobs and keep the network secure and available.

Jodi Mardesich writes about business and is a former staff writer for Fortune.

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