Metrics are more important than ever. But building an optimal framework in today's digital environment presents significant challenges.
By Samuel Greengard
Organizations have always looked for ways to understand the key factors that impact the balance sheet. However, in an age of rapidly evolving technology and furious changes in the way business takes place, the role of metrics is growing more critical. "Every day, new technologies emerge and there are different ways of doing business. It is an extremely disruptive time," says Merim Becirovic, senior director of business operations for Accenture's high-performance IT organization.
Developing a framework for success is no simple task. A recent Gartner study found that only 31 percent of organizations have IT metrics in place to improve business operations, only 31 percent rely on a dashboard, and just less than half (48 percent) of IT leaders use key performance indicators (KPIs). Yet, success requires more than metrics, it requires the right metrics. An enterprise or any given department can exceed all of its established metrics and the enterprise can still stumble if it's measuring the wrong indicators.
How can a CIO help build an effective framework that steps beyond IT-centric metrics? A starting point, Becirovic says, is identifying overarching goals and embedding them in a well-defined governance model. This can help IT and the business operate in lock-step, improve decision-making and clarify issues about IT spending. It also helps leaders better understand the role of technology in driving the business and what direction it should take in the future. "Many of these issues sound very basic," Becirovic states. "But a governance structure must be in place in order to develop an effective strategy."
Key performance indicators (KPIs) naturally vary from one organization to another. It's also necessary to create different KPIs and metrics for different departments or levels within an enterprise. Typically, anywhere from a handful of factors to somewhere around two dozen might exist. But Becirovic says these metrics must focus on business outcomes rather than IT-centric performance.
For instance, this might mean tracking the availability of business applications or gauging how effectively a customer service system influences loyalty, satisfaction and customer retention. Accenture relies on a top-level scorecard that's shared with a steering committee. Departments create their own metrics, which tie into the enterprise-level metrics. Becirovic says that it's also essential to benchmark outside the organization to gain additional perspective.
What the Best Metrics Have in Common
The best metrics offer a look at past performance but also illuminate the future. They also lead to definable actions for the business. Sebastiaan Moeys, founder and CEO of Netherlands-based gaming network, Gamesys, says that, ideally, "measurement systems tie into the factors that actually define business performance and create value." At Gamesys, which serves about 10 million gamers in 42 countries every month, this means monitoring detailed data about the speed and performance of web applications and building out an IT infrastructure and network to support key goals.
Moeys relies on a dashboard from Cedexis to drill down into pertinent performance data, including CDN measurements, real user monitoring information, page load time data and SLA validation. In addition, the firm plugs in behavioral data and information about retention rates to understand whether games are achieving the desired level of success and meeting the organization's business goals.
Becirovic says that success is increasingly predicated on CIOs communicating and collaborating with other business leaders on a constant and ongoing basis. He believes it is wise to conduct a complete review of KPIs and metrics at least every couple of years and revisit specific metrics as needed. "It's important to reach out to various business leaders and ask a lot of questions," he says. Among the key questions: Where do you think we need to go? Are we hitting on all the right cylinders? Are we doing the things that we need to do as a business? What else should we be thinking about or doing?
The end goal, Becirovic says, is to ensure that the metrics are actionable and build systems—within sales, marketing, operations, finance, HR and elsewhere—that make employees accountable. "When everyone knows the business goals and what metrics tie into them it's possible to more closely align the technology and systems with the business needs," he concludes. "A CIO must serve as a strategic advisor to the business, assess technologies and help the enterprise bring all the pieces together effectively."
About the Author
Samuel Greengard is a contributing writer for CIO Insight. To read his previous CIO Insight article, "Everything as a Service Goes Mainstream," click here.