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Traditional IT metrics fail in tough budget times

Lean budget times exacerbate the need for IT to be able to collect metrics that show its value to the organization. Traditional forms of metrics that are used to justify projects will fail you when it comes to defending yourself against the rest of the organization – you need to be able to show your value through the work of others.

I was in a meeting with a large group of CIOs the other day and the buzz in the room centered around budgets cuts. The words bunker mentality, hunker down and no new projects swirled about, seemingly on everyone’s tongue – and I can’t blame them. Things are looking pretty grim in our neck of the woods when it comes to funding and the outlook is bleak. This obviously can lead to pessimism, but what I was hearing in the room was less pessimism than it was reality.

It was clear to everyone in the room that day that the next one to two fiscal years were going to be all about staying afloat and being able to provide necessary services and only necessary services. However, I must caution that hunkering down too much and sucking it up like good IT professionals will lead to worse consequences. I have to say that the phrase of the day for these times needs to be "when the times get tough, the tough start squeaking." I say this because even in the worst of times, the squeaky wheel continues to somehow get oiled while the wheel that struggles in silence gets more taken away from it.

I know this for a fact because I'm usually the wheel that gets its oil taken from it. Why? Well, for one, there is the general consensus that IT is like a utility – no one hears a peep out of you if things are running smoothly. Second, there is the idea that IT is an expense, not a revenue producer. Third, I am generally a good team player and will take one for the team.

Already my management has come to the IT well in my organization not one but three times looking for liquidity. Folks, I am officially saying that my IT well has run dry and from this day forward any more blood from this turnip will cause me to offer up for sacrifice services that people deem essential but actually aren’t. For example – Blackberry services. What kind of noise do you think people will make when they find out that they can’t use their Blackberry? I ask you – is having a Blackberry truly essential for anyone? People might like to think so, but in most cases it's just a value-add – people work better because of it. Sounds like much of everything else we do, doesn’t it?

While the paragraph above might sound a little more negative than I intended, my point is that people forget that IT is mainly about productivity. We're like those old 3M commercials that used to point out "We don't make the things you buy. We make the things you buy better." In the case of IT, the saying should be "We don’t do your work for you – we make the work you do better." Better in this case means faster,  increased quantity, easier, or sometimes non-existent – thus freeing you up to do other things.

I don’t think anyone will argue the point above. The problem comes when we try to quantify how much better we do make things. One of the CIOs in the meeting I attended states that he likes to point out that every dollar spent on IT is like getting 1X dollars in return and thus every dollar you cut from IT is like cutting 1X from the organization. This idea flows well with the idea that IT is, in fact, a force multiplier but what happens when someone asks you what X is? I understand it's all about metrics and we should have that answer right at hand – but tell me, how much productivity is that Blackberry adding to your organization? It's easy to say that it certainly does add to one’s productivity, but how much?

Thus our quandary – much of our multiplying force is intangible or difficult to quantify or hard to collect metrics on. Thus it makes it difficult for us to defend ourselves in lean times. Therefore, when things start to get tough, we should consider offering up first those things that might cause a howl in the organization. It also means, at least for me, that I need to do a better job on the metrics that count. I’m not talking about uptime or how quickly a trouble ticket is resolved. I’m talking about the metrics that have meat in a budget hearing.

For example, I once worked as CIO for a large city/county. One of my favorite directors was the head of Emergency Medical Services (EMS). I would love to watch him during budget hearings for he was truly a master. When confronted by a Commissioner who would ask if an X percent budget cut would impact his operations he would calmly reply "No problem sir/madam, an x percent budget cut would reduce the number of emergency vehicles we can field and thus increase response time per emergency situation by x minutes. Which district would you like people to start dying first in Commissioner?" This worked every time.

As IT management professionals, we need to be able to determine our impact on the services that others provide. These are the kinds of metrics we need to be collecting because these are the ones that help determine what gets cut and by how much. When it comes to budgets cuts, you're in competition with the other units in your organization and no one is going to remember the fantastic return on investment you made in that large project two years ago. You need to be able to demonstrate your value today.

Lean budget times exacerbate the need for IT to be able to present metrics that show its value to the organization. Traditional forms of metrics that are used to justify projects will fail you when it comes to defending yourself against the rest of the organization – you need to be able to show your value through the work of others. Only by doing that will you avoid being the department that can be cut without hurting the rest of the organization or its customers.

5 comments
lhardy
lhardy

When I was in the military, I remember we had a standard level for equipment and anything under that standard was automatically replaced. In the civilian sector, IT professional have to fight tooth and nail to get new equipment, sometimes not replacing anything for a two year stretch. More and more companies are realizing that to stay on the lead edge of technology, you have to replace outdated automated informaton systems, software, and devices. By showing the effects on not having certain services, the company will then know the impact on cutting the IT budget. Again, Thanks for the discussion. LaBon

henry.l.wong
henry.l.wong

The complaint and approach is a very recurring theme in IT, whether it's budget ($) or any other resource. In working with data center managers and IT professionals on energy efficiency, the metrics which have failed us is looking and addressing just the incrementals. The example provided calls out for an opportunity-cost analysis, a what-if impact analysis in terms of the business. An example I use for redundancy and energy efficiency, is the 1hr downtime and 3hour re-establish bsn operations (small bsn) vs. the ongoing energy, equipment, and maintenance costs. That level of opportunity cost usually begin to wake up the CxO's.

thutzler
thutzler

I hear comments like this all the time, and agree with them. The corporate beancounters don't really care what IT needs or wants, they care about how IT is going to affect the bottom line, and their bonuses, by either adding to it or taking it taking away from it. However, as a new IT manager, in a company with a very small IT department, it is difficult to know what to measure and how to measure it in order to be effective in defending the IT budget.

steve.suther
steve.suther

The concept of treating a company?s ecosystem of data like it does its monetary systems really resonates with me. I have utilized that data to justify my information security budgets year after year at a global financial services form. As Ramon mentions, it?s IT management that almost always ends up on the ?hot seat? when budget restrictions are put in place, and for me, it always seemed to be IT Security in particular. I was often successful in justifying an existing budget and avoiding reductions. I accomplished this by presenting meaningful metrics and executive dashboards from a central repository of data that measured levels of compliance to policies and regulations, threats and vulnerabilities to the organization, and management of incidents that may have impacted business processes within the enterprise. These enhanced metrics became key to ensuring that the information security and risk programs told a unified story, relative to how well the networks, data and third parties accessing them were protected.

kgartner
kgartner

In the world of zero-sum economics, the IT manager is going to be faced with fixed or reduced budgets, but with no expectation of lower capability or quality of service. Smart companies might tie the IT manager's compensation with meeting the budget and the quality numbers, both. IT Metrics (before, after and during) are key for any initiative. Server consolidations are a favorite that yields benefits when done right. Picking email as a huge consumer of IT resources, our analysis of >10,000 employee companies repeatedly shows that more than half of all the email volume in a company stems from about 1% of the employee population. We have seen the same curious trend in different verticals. As relevant to this article, if you can reduce the email flow without compromising the actual needs of the business, you reduce the amount of resources you need to devote to this. This should be quantifiable as genuine savings. IT metrics are key, but they are passive and not, themselves, going to do anything but give you data. A lot of email waste is due to bad email practices or unenforced corporate policies (so-called 'paper' policies). The waste involves Reply-to-all (perhaps there is a circle in Hell reserved for those who use Reply-to-all-with-attachment?), sending to overly broad mailing lists, superfluous CCs (that stem from the ever-present CYA in big companies). I contributed analytical material to a email best practices article recently especially geared to large enterprises based on our experience -- http://www.permessa.com/whitepapers/Email_Best_Practices Back on topic, if you reduce the overall email volume you save server bandwidth, network bandwidth, archiving costs, mailbox cleanup initiatives, can forestall server consolidation efforts, etc. (Full disclosure - my company makes realtime email policy enforcement software for Lotus/Domino -- training users not to send offending mails). I have a strong interest in the following question: how can one take IT Metrics (disk/network volume) that reflect substantial IT resource usage reductions and monetize them into actual 'savings'? The way Permessa does this is to ascribe weighted constants to the savings -- a message that was 2MB in size, sent to 25 people would have a simplistic 'impact' on the organization of 50MB (multiplying the message size times the number of recipients). If the mail was blocked (due to email policy enforcement) before traveling to any of the recipients then you just saved 50MB * the 'value' of that disk storage -- the media, the backup, the archiving, etc. Also, we consider the productivity costs of a message, for example that every recipient is going to spend at least 30 seconds of time considering this message. Say you think you disk resources are worth about 50 cents per MB and 30 seconds of your average employee's time is worth 25 cents ... this blocked email just saved more than $30 ($25 of disk and $6.25 of user productivity). In addition, the thwarted sender has learned a bit of a lesson and is trained properly so next time will perhaps put the large attachments up on the corporate CMS and send a link to it instead of embedding it. There is a fine balance between blocking legitimate business email and chastising senders who are abusing the shared resource or, worse, using it to send their vacation photos to colleagues. If you can separate the wheat and the chaff, you get back a lot of the resource held hostage by inappropriate corporate email. Anyway, if anyone got this far in this reply and would like to engage in how to best use IT metrics -- *especially* in lean times -- to monetize savings from various initiatives then I'd be interested. Ken Gartner Director of Software Development http://www.permessa.com