In a previous article, we discussed the importance of measuring an organization’s performance. Senior management in most companies tends to focus on measurable performance indicators because of the financial implications they reflect.
Measuring a company’s performance is important, but it is also important to measure the performance of the IT department. Unfortunately, many CEOs and CFOs aren’t comfortable or familiar enough with IT to know how to accurately assess the impact IT has on the company. IT Managers have an opportunity and an obligation to share meaningful performance data with the senior management team, clients (internal and external), and employees. This strategy can help them understand and quantify the progress being made and the impact IT is having on the company.
It's a good idea but how do we start?
In the previous article, we identified the measurements to use when tracking an organization’s financial performance. Now it’s time to get closer to the actual operation of your IT department. There are two other areas in which you should establish meaningful measurements and track performance. They include:
Projects should be measured in several ways. Answer the following questions:
- Was the project completed on time?
- What is the project expense compared with budget?
- What is the post implementation 12-month benefit summary?
- What was the ROI?
Take the time in the beginning to quantify the expected benefits that justify your project. Then track the results over 12 months, or an appropriate timeframe, after completing the project. Knowing the actual results adds significant credibility to your IT organization, assuming the results are positive. If they’re negative, measurements will indicate where changes are needed.
It’s not a bad idea to maintain a project scorecard summary such as the one shown in Figure A.
Keeping track of major initiatives can have a positive impact. Often we are so busy that we forget to stop and reflect on the positives. The nature of an IT organization’s work is often solving problems and dealing with negative issues (all opportunities, but painful nonetheless). A manager’s presentation that provides details of the positive impact that IT is having is great motivational material. Measuring project results helps you focus on what’s important: whether your projects are reaping true benefits.
The ROI on IT initiatives is another measurement that should be tracked. Understanding ROI is valuable for both the IT department and the company. If the company is not getting a reasonable return on the investment of project initiatives, someone needs to find out why. If very good investment returns are being achieved, the company may want to invest more in new projects.
Example: "Find more opportunities like this one!
One of my IT organizations developed electronic interfaces to transfer data automatically from a client system to our company-owned billing system. We determined that every time an interface was put into full production, our company received a boost in productivity worth $2,500 per month. The cost to develop an interface was only $6,000, and it was a one-time cost. This equated to a phenomenal two-and-a-half-month ROI for each project.
Once the president of the company realized what we had, we were immediately allowed to dedicate a team to do nothing but interfaces. We also asked our client managers to identify every interface opportunity we had in our client base.
A simple tracking approach is to add an ROI column to Figure A. In this column, show the number of months it takes to pay for each project based upon the benefits achieved.
Measuring projects quantitatively sends a strong message to your staff that you are committed to projects being completed on time and within budget and to achieving the benefits that justified doing them in the first place. Sharing the dynamics of projects will actually create incentive for your staff to find ways to improve the delivery and results of future projects.
Your clients and senior management team will also be interested in the progress you are making. Everyone really wants to see indications that define whether your project efforts are worthwhile, but most managers do not make the effort to develop the information. It’s worth the time and effort and will set you apart from other IT operations.
Give us some feedback
Do you have a means by which to measure IT’s impact on the company? Do you feel like such a measurement is important? E-mail us with your thoughts or post a comment.