IT departments are swimming in metrics meant to measure their effectiveness, but this compact collection of essential KPIs provides a true foundation for measuring IT success.
IT leaders are drowning in metrics, with many finding themselves up to their KPIs in a seemingly bottomless pool of measurement tools. The result is wasted time, confusion, and, in some cases, conflicting insights.
There are several聽important metrics聽that can be used to achieve IT success, says Jonathan Nikols, senior vice president of global enterprise sales for the Americas at Verizon. 鈥淭o name a few 鈥� products and services that are delivered on time and on budget, and overall IT ROI.鈥� The most effective approach to achieve success, he adds, is to study metrics across all adoption performance areas. 鈥淢etrics provide a means to monitor progress.鈥�
For the 娇色导航assembling an analysis package that enterprise leaders can use to glean IT鈥檚 impact on transformations and operations, metrics minimalism is key. Avoid clutter and confusion to instead focus on a core set of fundamental metrics that provide clear insight into critical issues and challenges. While additional analysis tools can be added over time to augment and illuminate important trends, it鈥檚 best to begin with just a few basic tools.
Here鈥檚 a look at the fundamental metrics that stand out for accurately measuring IT success and should have a home in every CIO鈥檚 analysis toolkit.
1. Return on investment
As it has for years, return on investment (ROI) continues to be the central metric associated with transformation. 鈥淭ransformation is all about doing business differently and generating value,鈥� says Lou DiLorenzo, US 娇色导航and CDAO program leader at Deloitte Consulting. Besides providing insight into value, ROI, when performed correctly, will highlight the joint ownership between business and IT that鈥檚 necessary to bring transformation to life.
Project ROI should never be defined by a single IT project manager working in a vacuum, DiLorenzo cautions. Planning should always be a joint effort. Under this arrangement, business users own the numerator 鈥� essentially the reason why the transformation project launched 鈥� to increase sales volume, optimize margin through pricing, and so on. IT, meanwhile, owns the denominator 鈥� the cost to deliver the work on time, on budget, and with high quality.
鈥淓ach side needs to deliver on their obligation for the project to be successful, and piling up a number of successful, value-creating projects will help transform a business,鈥� DiLorenzo says.
2. Business value delivered
Closely related to ROI is business value delivered. 鈥淭his is the most relevant metric for the business, and it helps to justify the investment needed by the IT organization to drive the transformation initiative,鈥� says Sameer Bhagwat, vice president and head of IT consulting firm Capgemini Americas鈥� Applications Managed Services Center of Excellence.
Specific IT transformation projects are frequently linked to overall enterprise聽digital transformation聽initiatives. But the success of these projects can still be measured by the traditional metrics of project costs 鈥� implementation timelines, functionality delivered, and so on. 鈥淭he true measure of success is based on the business value delivered,鈥� Bhagwat says.
According to Bhagwat, the ability to directly link IT transformation to business benefits will foster聽greater collaboration between business and IT leaders. 鈥淚t also enables better governance on transformation initiatives, since initiatives that drive higher value for the business get prioritized.鈥�
Business benefits can be quantified in three dimensions, Bhagwat says 鈥� revenue improvement, cost reduction, or working capital improvement. 鈥淭his allows for easy comparisons across initiatives to identify those that deliver the maximum transformation benefits,鈥� he states. 鈥淨uantifying the expected business value of an IT initiative forces the IT teams to better understand the implications and impact of the transformation initiative they are implementing.鈥�
3. Rate of change
鈥淭he most important metric for IT success is rate of change,鈥� says Nicolas Avila, CTO for North America at IT and software development company Globant.
Avila observes that many IT leaders will default to ROI as the most important metric because there鈥檚 strong belief that聽a good ROI聽is necessary to get the most out of the technology spend.
鈥淭hat鈥檚 key, but something that leaders don鈥檛 fully realize is that the speed in which we can create change not only allows us to react faster, but also helps reduce our fear of failing,鈥� Avila explains. 鈥淔ailing isn鈥檛 as critical when your IT department is going to quickly and constantly change and improve.鈥�
The rate-of-change metric helps destigmatize failure, and if failure is unavoidable, it鈥檚 important to fail fast, Avila advises. 鈥淢ost companies think of failure as something they want to avoid, but really fast-changing organizations understand failures as a step towards success.鈥�
Every leader and every team should use rate of change to determine how quickly they can turn around a particular change, Avila recommends. 鈥淢any managers are measured by their production rather than their speed of evolution, and that鈥檚 an issue in the modern world,鈥� he notes. 鈥淵ou have to have a good measure of which teams need to move fast and what they are really achieving.鈥�
Avila says it鈥檚 also important to understand that that the rate-of-change metric doesn鈥檛 only live within the IT department 鈥� it also informs business leaders. 鈥淏usinesses should work hand in hand with their IT department to pivot quickly in order to maximize success,鈥� he concludes.
4. Application delivery success
How well an IT organization can deliver critical business applications is an essential metric, says Song Pang, senior vice president of engineering at network automation technology provider NetBrain Technology. 鈥淢ost modern applications are comprised of many distributed services working together,鈥� he notes. 鈥淓ach micro-service must be able to be delivered as the enterprise architect designed.鈥�
Service delivery success聽relative to service usage volume is a directional metric, Pang states. 鈥淭his metric becomes more successful as increasing effort is expended to reduce problems before they are reported.鈥�
Discovering issues before they are noticed should be a fundamental goal any IT organization has, and comparing its value month after month will determine if IT is improving at delivering services.
5. IT and business team engagement
Matt Mead, CTO of tech consulting firm SPR, believes that IT and business team engagement is a powerful metric for measuring transformation success. 鈥淲e know teams experience psychological development through forming, storming, norming, and performing,鈥� he says. 鈥淲e also know it takes time for joint business and technical teams, typically created for an organizational transformation, to gel and get into a groove.鈥�
Mead notes that he frequently sees clients failing to allot sufficient time for transformative changes to settle into place. Instead, poorly engaged IT and business project leaders declare success and move on, prematurely, to the next transformation stage.
鈥淭he best metric, especially during the first year of a transformation, is to measure the engagement level from all team business and IT team members,鈥� he advises. 鈥淚f engagement is high, you have the foundation upon which to be successful,鈥� Mead says. 鈥淚f engagement is low, your transformation is flawed, and failure is likely.鈥�
6. Customer experience quality
While a digital transformation initiative may include a variety of goals, such as enhanced productivity, larger market share, or optimized operational costs, success is ultimately defined by a single thing: how do customers feel about the enterprise鈥檚 brand, product, or service, says Milind Damle, principle at digital-first technology services firm Apexon. 鈥淚f your digital transformation initiatives don鈥檛 improve the quality of the customer experience, are they really meaningful in achieving consistent top-line growth?鈥� he asks.聽
Damle notes that numerous reports over the years have discovered that customers place experience over price when making a brand decision.鈥�淭his makes customer experience the most important metric in measuring the success of any transformation initiative,鈥� he states.
7. End-user satisfaction
End-user satisfaction offers insight into how well IT services are aligning with user expectations, needs, and perceptions. High satisfaction leads to increased IT trust, reduces shadow IT, encourages collaboration with business leaders, and improves employee retention, ultimately leading to more efficient and effective operations, says Chris Karalis, a director with technology research and advisory firm ISG.
Ensuring end-user satisfaction begins with periodic surveys to collect user feedback. 鈥淭hese surveys should address multiple facets of a user鈥檚 IT experience, including satisfaction with technology devices, applications, connectivity, and support,鈥� Karalis, advises. Additionally, the surveys should be conducted across the entire user population to ensure that no one is overlooked.
ISG suggests administering surveys annually, along with periodic brief transaction canvasses following various user interactions, such as service requests, bug fixes, and incident resolutions, to continually monitor satisfaction trends. 鈥淚T then needs to analyze the data to identify potential issues in how IT services are delivered, and which user groups are most impacted,鈥� Karalis says. He adds that IT leaders need to address pain points with actionable results or users may stop providing input and, over the long term, become more disgruntled with IT services.
The end-user satisfaction metric鈥檚 strength lies in the fact that it touches all parts of the IT organization. 鈥淲hile some components face users more directly, all service areas have dependencies that impact users in some way,鈥� Karalis says. Satisfaction metric results should be shared with both IT and business leaders, and action plans should be developed by C-level executives and IT service leads.
8. Technical debt index
贰虫肠别蝉蝉颈惫别听technical debt聽can fatally damage even the most promising transformation initiative. When a project is developed and deployed in a rush, quality often suffers and the venture must inevitably be revisited to repair compatibility problems, security gaps, performance issues, and various other budget-draining headaches, says Shafqat Azim, partner, digital strategy and solutions at technology research and advisory firm ISG. Azim believes that technical debt is the biggest inhibitor to successful agility and transformation. 鈥淢anaging technical debt actively as part of operations ensures an organization can transform as needed, when needed,鈥� he states.
Azim suggests using a technical debt index to measure and track spending. 鈥淎t a strategic level, the most important metric is the percentage of the overall technology budget being allocated to transformation,鈥� he says. 鈥淚t鈥檚 imperative to measure the percentage of the technology budget being allocated toward three areas: running the business, enabling incremental innovation, and enabling disruptive innovation.鈥� At a tactical level, measuring transformation throughput and velocity of transformation is critical, he adds.
9. A combination of speed, quality, and value
When merged, speed, quality, and value metrics are essential for any organization undergoing transformation and looking to move away from traditional project management approaches, says Sheldon Monteiro, chief product officer at digital consulting firm Publicis Sapient. 鈥淭his metric isn鈥檛 limited to a specific role or level within an IT organization,鈥� he explains. 鈥淚t鈥檚 relevant for everyone involved in the product development process.鈥�
Speed, quality, and value metrics represent a shift from traditional project management metrics focused on time, scope, and cost. 鈥淪peed ensures the ability to respond swiftly to change, quality guarantees that changes are made without compromising the integrity of systems, and value ensures that the changes contribute meaningfully to both customers and the business,鈥� Monteiro says. 鈥淭his holistic approach aligns IT practices with the demands of a continuously evolving landscape.鈥�
Focusing on speed, quality, and value provides a more nuanced understanding of an organization鈥檚 adaptability and effectiveness. 鈥淔ocusing on speed, quality, and value provides insights into an organization鈥檚 ability to adapt to continuous change,鈥� Monteiro says. 鈥淚t measures how quickly ideas can be transformed into tangible results while ensuring quality and delivering value to customers and the business.鈥�
The best way to apply this metric is by measuring the entire journey, starting from the generation of ideas, Monteiro says. 鈥淭his involves understanding how fast ideas are tested through experiments, built into working software, and eventually delivered as features to customers.鈥� The system should be developed to shine a light on each stage of the journey, making it visible and measurable across the organization. 鈥淚mplementing these metrics allows the organization to become 鈥榙ataful,鈥� measuring not only product success but also instrumenting and improving the work itself.鈥�
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