We beleive there is a language barrier between IT Vendors, IT, and "the business." Too often a discussion starts with features, functions, and demos, when really everyone wants to hear about value. Cost (maybe IT Cost/Revenue) is an obvious metric every senior IT person is concerned with. What are the other 4? We beleive these key business metrics should be measurable, quantifiable, and easily comparable. And there can't be 100 of them - that defeats the purpose. Please let us know your thoughts.
Pat, Warija beat me to the response and i'll add on. We see our KPI's at Intel IT change based on what we want to focus most on improving and use a combination of .
We categorize our KPIs based on IT business value categories that include business growth, business efficiency, employee productivity in addition to IT Agility, efficiency and continuity
We also formally report our key IT indicators and metrics in our IT Annual Performance Report and if you look back in history of this report you see some items change (ie cloud metrics, virualization%, device count are new) and some items are stable (IT cost / employee, IT cost / Biz revenue)
In our IT Operations area we are establishing a new framework on four metrics types
As we look forward, our organization is placing a focus on Velocity as a lead metric and KPI we want to improve.
Here are my 5:
In today's digital age, data is prolific and we're only going to see an exponential increase as time goes on. Building on Pat's point, it's very easy to pull together hundreds of KPIs to measure the capabilities, processes and the output of an IT department, but to use an old consulting question, "so what?"
To break it down, ask yourself, "Why are we measuring something” and “what outcomes do we want to achieve?" IT’s KPIs should ideally be directly linked to business objectives e.g. revenue, market share, transaction cost but for this exercise, let's assume we're trying to demonstrate value to the business.
I'll borrow from the BCG Value Framework to articulate the outcomes we want to achieve. It's a simple 2x2 with IT and Business mapped against Efficiency (do things better) and Innovation (do better things). Thus our objectives are to:
And I'll add one more to build a foundation for our KPIs:
So our first KPI is focussed on lowering the price to serve whilst maintaining or increasing the level of predictability and quality. Typical metrics used in this space include application & infrastructure availability, % cost of maintenance but with our focus on value, let’s use the average cost of a business transaction.
Improving IT effectiveness could be a measured by IT cost reduction/IT project spend or the percentage of the IT budget spent on innovation, but I would suggest focussing on the end goal, which is IT's ability to serve and their responsiveness to the customer; IT’s agility. Measures now could be application & infrastructure architecture complexity but I would recommend measuring the outcome, which is time taken to respond to IT demand. It is important to also measure cost and quality to ensure gains are not at the expense of other factors.
Business efficiency is the ability of IT to deliver projects and can be measured by the return on investment enabled by IT projects. This focuses the conversation on value, not just IT’s ability to implement projects to time and budget.
To measure IT’s impact on business growth, we can measure the percentage of business initiatives driven by IT. This ensures that we’re not just measuring alignment but the extend IT is involved in executing business strategy.
Lastly and perhaps most importantly, we need to measure perceived value; relevant as IT departments often see themselves as effective, however they lack the means to measure success (in the eyes of the customer) or the language to articulate it to their customers. Therefore we need to measure customer satisfaction with IT services, projects and alignment to business strategy, as well as business partner satisfaction.
Our list of KPIs therefore consists of:
Interesting. Thank you everyone for your responses. I confess to being a little surprised.
I would think Key IT metrics or KPIs would need to meet some basic criteria:
Therefore the start of our list for the TOP KPIs would be something close to:
Many, many other important metrics would “roll up” into these KPIs but there would only be those top ones (we picked 5, which is obviously arbitrary). We believe that having a relatively stable, common set of KPIs also lends itself to benchmarking and comparison, which is valuable too.
I understand why IT would want to make sure it’s “aligned” with business objectives. Of course. But how do you really measure that? I would suggest “the business” defines business outcomes or initiatives or goals, or whatever. IT would then say, “because we’re improving performance against our key metrics, we’ll be able to more effectively and efficiently help deliver on your objectives.” So the process and components become the following:
Hope that isn’t totally confusing. Our aim is to help vendors have a more value focused, aligned, conversation with IT, thus the reason for this discussion. Thanks again for all the feedback.
A most interesting discussion and some very insighful answers. I would add a response from a different perspective. At http://www.smartkpis.com we have researched and documented over 550 IT KPI examples grouped in several categories:
Quite a few, indeed. This large catalogue of IT KPIs provided the platform for analysing which were the most visited during 2010. The results are somehow surprising, as they are mostly operational in nature:
A more comprehensive list of reports is available in the Top 25 Information Technology KPIs of 2010 report.