IS Policy Ch 3
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Demonstrate that what a company spends on IT has a DIRECT IMPACT on the performance of the firm.
IT Measurement Approaches (2)
1. Peel the Onion - Show how IT adds value on a project by project basis
2. Put the onion back together - Employees who understand business, personally improve performance that will show up at the business unit/org level.
IT Measurement Levels (3)
- 1. Enterprise
- 2. Functional
- 3. Project
Tie the work of IT directly to the performance of the firm (external customer satisfaction, financial performance)
Assess the internal work of the IT organization as a whole (IT employee satisfaction, internal customer satisfaction, operational performance)
Assess performance of a particular project team (business case benefits, delivery on time, etc.)
Measures four dimensions (Customer, Financial, Internal Operations, Learning & Growth).
Measured against business plan - VISION & STRATEGY.
IT is treated as a business unit with its own scorecard.
Linking IT with Business Metrics - Balanced Scorecard Examples
- Expense Mgmt (Financial)
- Customer Loyalty (Customer)
- Risk Management (Operations)
- Contribution to firmwide priorities (growth)
Five key metrics that are linked w/ company's vision statement.
Complimented by IT specific metrics.
Orients employees to company's mission & vision.
Modified Scorecard Metrics (6)
- 1. Customer loyalty Index
- 2. Associate Loyalty Index
- 3. Revenue Growth
- 4. Operating Margin
- 5. Return on Capital Employed
- 6. Strategic Imperatives
Customer Loyalty Index (customer satisfaction)
% of customers who said they were satisfied and would recommend to others.
Associative Loyalty Index (employee satisfaction)
Employees perception of the company as a great place to work
Leading indicator of customer satisfaction
Return on Capital Employed
EBIT / Capital used to generate the earnings
IT identifies key projects and measures that will support the business achieve key strategic imperatives.
Should be integrated into variable pay program - links results to pay.
Good IT metrics considerations (5)
- 1. Focus on overall business performance
- 2. Business Understanding is KEY
- 3. Simple
- 4. Visible
- 5. Linked to incentive systems
Advice to Managers (5)
- 1. Results take time
- 2. Have common goals
- 3. Follow up on problem areas
- 4. Be careful what you measure
- 5. Don't use measurement as a method of control!
What would you like to do?
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