IS Policy Ch 3

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IS Policy Ch 3
2015-10-10 14:09:15

IS Policy Ch 3
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  1. IT Metrics
    Demonstrate that what a company spends on IT has a DIRECT IMPACT on the performance of the firm.
  2. 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.
  3. IT Measurement Levels (3)
    • 1. Enterprise¬†
    • 2. Functional
    • 3. Project
  4. Enterprise Measures
    Tie the work of IT directly to the performance of the firm (external customer satisfaction, financial performance)
  5. Functional Measures
    Assess the internal work of the IT organization as a whole (IT employee satisfaction, internal customer satisfaction, operational performance)
  6. Project Measures
    Assess performance of a particular project team (business case benefits, delivery on time, etc.)
  7. Balanced Scorecard
    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.
  8. Linking IT with Business Metrics - Balanced Scorecard Examples
    • Expense Mgmt (Financial)
    • Customer Loyalty (Customer)
    • Risk Management (Operations)
    • Contribution to firmwide priorities (growth)
  9. Modified Scorecard
    Five key metrics that are linked w/ company's vision statement.

    Complimented by IT specific metrics.

    Orients employees to company's mission & vision.
  10. 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
  11. Customer Loyalty Index (customer satisfaction)
    % of customers who said they were satisfied and would recommend to others.
  12. Associative Loyalty Index (employee satisfaction)
    Employees perception of the company as a great place to work

    Leading indicator of customer satisfaction
  13. Return on Capital Employed
    EBIT / Capital used to generate the earnings
  14. Strategic Imperatives
    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.
  15. IT Variable Pay Example
  16. 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
  17. 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!