ITD #10 14 Oct 2011| Measuring the contribution of IT to your organization

8/3/2019 ITD #10 14 Oct 2011| Measuring the contribution of IT to your organization

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1ITD #10 Measuring the contribution of IT to your organization IT Decisions 14 October 2011 All rights reserved

Measuring the contribution of IT to your organization

ITD Research #10 : 14 October 2011


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IntroductionEveryone wants to be loved. In IT this old saying is truer

than in most corporate functions. However, the problem

with IT is that most people in the business just expect it

to work, they want their email, Internet access, andsystems to monitor and charge customers to all function

without a problem and most of the time it does.

But when things go wrong, IT gets the blame. So the only

time many people in your company will interact with the

IT department is when there is a problem, which can lead

to a negative impression of what you do. Nobody calls

you up at the end of the day to say thanks for keeping the

network running all day without a glitch.

So how do you effectively measure the real contribution

that IT makes to the company and also ensure that the

people in the business are aware of this contribution to

what they do?

Almost all modern organizations depend entirely on IT.

Can you imagine a modern airline, logistics firm,

manufacturer, retailer or government department

functioning without the support of a complex IT system?

Perhaps your importance doesnt need to be stated it is

obvious.

Unfortunately, thats not the experience of most IT

executives.

Business decisions and strategy planning

can all affect IT you need to manage

and support what the business team

does. If they take decisions about a newproject or business direction without

really appreciating the IT implication

then it can cause chaos or a failed

project delivery.

To be planning business strategy with

the business you need to be able to

demonstrate the real value that IT

provides to them and that needs some

form of quantitative measurement and a

communication strategy.

In the IT Decisions research this week,

the participants of our collaborative

research network explain how they

manage to measure the importance of

what they do, and how they

communicate this.

.

How do you measure thereal impact of IT while

making business areas

aware of that

contribution?


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Participant feedbackTo explore the issue of how to ensure that the value of your IT department is measured and

communicated effectively we asked four questions three of which were multiple choice and one

designed to promote an open discussion.

We received answers from 23 executives from 15 industry sectors: logistics, media, chemicals,

retail, health, consumer services, shipbuilding, financial services, consumer goods, education,

insurance, food production, automotive, broadcasting, and manufacturing.

Question 1: Would it be correct to say that other areas of your organization only appreciate the

contribution of IT if a formal communication strategy is applied?

What an interesting response from our IT leaders. It verifies that you may be the greatest IT leader

your company has ever seen, but if you dont remind people of this fact then they will not

appreciate it.

Some 60.9% of respondents confirmed that they think it is essential to communicate IT wins with

the business, so the contribution of IT is appreciated. A solid quarter (21.7%) of respondents believe

that their contribution is obvious and no further communication is needed.

0 2 4 6 8 10 12 14

Yes

No

IT contribution is obvious

60.9%

17.4%

21.7%


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Question 3: What is the best tool available to measure the impact of IT in your business?

This question was very interesting because of the overwhelming results. Despite our assumption

that data analysis perhaps on service desk calls would be a useful source of information,

nobody said that theory is correct.

Likewise, nobody is really interested in models like Activity Based Costing (ABC), or payment

based on successful deliveries only.

The two tools IT leaders are using to prove their own worth is key performance indicators (KPIs)

with a huge 69.6% of the responses and structured feedback, which took the remaining 30.4%.

Structured feedback takes the form of surveying users or hosting town hall meetings and

discussions focused on IT.

But the overwhelming choice of KPIs shows that the metrics cannot lie. If you are measuring the

activity and deliveries of your team then that hard data is the best way to demonstrate to the

business that you are delivering for them.

0 2 4 6 8 10 12 14 16

Performance Indicators

Structured feedback

Analysis of IT activity (service calls)

Changing delivery models, such as ABC

69.6%

30.4%

0%

0%


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Question 4: Please tell us how the impact of IT is measured in your organization and how you

communicate these results to other areas of the business.

Many of the responses outlined their views on this in detail. The most relevant are listed below.

Food Production: Communication plan covers strategic, tactical and operational aspects

The way in which IT communicates with the other areas of the business is essential for ensuring

that the actions are aligned and that the contribution of IT is perceived, as well as creating an

environment that enables the selling of new projects. This creates a virtuous cycle in the

relationship between IT and business.

We implemented a communication plan as a byproduct of the strategic plan of 2006, which has

since been sensitive to positive perceptions about the contribution of IT to the business. Our

communication plan has specific tools for communicating with various audiences: strategic,

tactical and operational, as well as other tools, which are specifically designed for communication

with IT staff.

Strategic level:

Business and IT Forums These occur over longer periods of time to seek alignment of projectsand discussions of initiatives focused on innovation and transformation. They are oneday

meetings with the business director and key executives of the business and IT leadership areas.

Strategic Committee & Project followups With CIO participation at board meetings for formal

presentation of results, discussion of indicators and progress of IT projects. Occurs at least twice a

year, with the participation of all directors and the CIO.

Tactical level:

Active Ombudsman function Structured feedback tool, where the focus is to interview theprocess managers and leaders of various areas and seek evaluations of each IT service provided,

including the perception of the contribution of IT in the innovation process. Where a service is

assessed as unsatisfactory the respondent must put forward evidence of the reason, so that by

the next interview, the issue causing dissatisfaction is resolved. These meetings occur twice a year

and are added to the evaluation of[IT] participation in the annual results.

IT Management Committee Regular meetings with case managers about the need for review of

processes, extraordinary meetings when new companies are acquired or new production facilities,

distribution centers or other industrial sites are launched.


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Operational level:

Call Records/Help Desk Users at an operational level have a communication channel via the help

desk calls, where service level agreements around problem solving are monitored, as well as

performance around chronic problems and so on.

IT staff:

Individual monthly targets for IT All IT staff have a portion of variable remuneration in line with

monthly targets. This by definition establishes a monthly benchmark for negotiating theestablishment of goals and also a monthly feedback with the obtained result. This approach

makes clear what IT leaders expect from each team member.

Every semester we hold a meeting with all the corporate IT professionals at the company. For

each workshop, we create a theme for discussion around business processes, research of new

technologies, and so on. And we always throw challenges at the team, so that processes to be

rethought "outside the box."

In addition to the corporate IT professionals, some process managers are invited to these events

according to the topics of interest. Suppliers are also invited to talks in order to introduceinnovative concepts and trends in the IT market. Some of the themes of the last workshops were:

"Mobility: the key to innovation", "BPM Process Management," "Social Media Opportunities for

Innovation," among others.

Logistics: Results are communicated internally and through the press

When setting annual objectives which are linked to corporate strategy IT is measured according

to their actual contribution to business. On variable pay (bonus) this represents 65%, leaving 35%

that is tied to business results (where the cost of IT has a direct impact on EBITDA).

With regard to communication of the results, this is done in two ways: internally via the intranet,

through board meetings and meetings with business units separately. It is also done externally,

through the market communication function and the press office. There is no doubt amongst the

company management about the value of IT to our business.

Food Production: Measurement of IT is based on points of impact on business

We choose the main critical points of strategic IT that have a direct impact on the business and

apply indicators that measure the quality of these services. These results are presented through

an IT portal based on the concept Gesto a Vista (management tool aimed at providing necessary

information about a certain area of activity in a way that is simple and easy to assimilate).


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Financial services: The need for IT "sell itself" is worrying

The need for IT to be forced to communicate and "sell" itself constantly worries me a bit. Other

areas of the business are not concerned about that at all and are doing very well thank you. Keep

the basics working, participate and commit to decisions made and deliver.

IT is not the ugly duckling neither the swan of the company, it is subject to hits and misses,

sometimes it is the protagonist and sometimes secondary in bigger or smaller projects.

Consumer Services: Accountability helps the business to discover IT's "black box"

KPIs and indicators in general are essential to show the IT contribution to the organization.

Additionally, it is advisable to carry out regular committees with other business managers in order

to account for the achievements of IT as wll as projects in progress and so on.

These attitudes will help the rest of the organization to discover a little about the "black box" of IT

and analyze how these areas can fit into the context of IT.

Insurance: Performance indicators allow structured measurement of results

I have developed performance indicators (in areas such as productivity, project time, cost

effectiveness, innovation/competitive edge) so that the measurement is made in a more

structured manner and based on a real, tangible set of criteria.

I communicate through reports (such as newsletters and bulletins) in addition to meetings with

the board of executives of the company (the executive committee).

Retail: Formal communication processes are essential to record deliveries and feedback

IT has a direct impact on bootomline results for us, as well as how the company delivers itsproducts and services to the customer. Despite evidence of the obvious contribution of IT to the

business is always important to establish a formal process of communication in order to record

how IT is delivering results and also to get feedback on these deliverables.

Consumer Services: Measurement is made based on indicators of all IT services

In our organization all IT services generate indicators and, based on that, we evaluate our

contribution. Increasingly, IT can generate intangible value to the business, given the technical

reliance of some solutions and products.


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Chemicals: The recipe for success is to combine methodology with success stories

We have been working on performance indicators for years. The idea is to use them in our

relationships with internal customers as well as tactical and strategic monitoring of IT. However,

on a daily basis, the business could not care less about IT performance, provided there are no

disasters. It is the fate of being a utility provider.

On the other hand, the success stories speak volumes. A good project, a new policy for web

access, new gadgets and other initiatives resonate much more strongly in the organization.

Especially in the top management. Anyway, my recipe is to combine things. Use of methodology

combined with the communication of success stories, to reach out to the entire company.

Education: Accountability is used in favor of specific indicators

There is no specific indicator to measure the output of IT within the business, given the wide

scope of activities that IT has across all other departments. What we can clearly see is the

importance of IT in all fronts and how it has been a differentiating factor when the initiatives are

well planned and properly aligned. We have a monthly meeting to report results, where other

departments are also invited. We also present in the board meetings, where we briefly account

for the initiatives.

What other IT executives told us about how they measure the contribution of IT in the business...

Shipbuilding: We use KPIs to measure performance and the actual contribution of IT to the

business. In the current governance, indicators are presented and discussed monthly.

Food production: I measure by examining areas of IT activity, but for me the ideal would be to

collect structured feedback, but I do not have the structure to do so.

Broadcasting: We measure the contribution of IT through the launch of products and services on

time, on budget and with quality as well as indicators around support and cost.

Financial Services: Measurement is done through the satisfaction of users and customers, as well

as system availability and performance, innovation and cost reduction.

Food production: We measure the contribution of IT through performance and financial

indicators, which are communicated in meetings held by IT committee where all business areas

involved take part alongside the presidency and IT.

Media: We are measured by performance indicators, and there is also the interpretation of

feedback from business areas, as well as the presentation of projects related to strategic planning.


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Conclusion and Executive Summary

This was a very interesting research cycle, because very strong messages flowed from the

executive feedback. Three initial lessons came through from the responses very strongly:

IT is only appreciated by the business if you find an effective way to communicate whatyou do and why it is important.

Most IT leaders in Brazil get a bonus based on their contribution to what the businessdoes, which makes the effective measurement and communication of your activities evenmore important.

The use of Key Performance Indicators (KPIs) and data metrics is critical in demonstratingthe value of what IT provides to the business.

This final point demonstrates that many of the lessons learned by the outsourcing community

have been adopted inhouse. An IT supplier must measure what they do accurately, because they

need to put a commercial price on it and send you the invoice, but they also need good

measurement so they can get the correct amount of resource to work on a project.

Over time, the development of KPIs in the supplier community has become very sophisticated and

reliable. Many of these skills and practices can be imported to internal teams, allowing closemeasurement of the internal IT team and the subsequent ability to quantitatively demonstrate

what you are doing for the business.

When asked about their own particular methods for measuring and communicating their

activities, there were also some clear messages:

Events and user feedback is important. Sometimes users do not have a good opportunityto give any feedback other than complaints and they have no time to send suggestions. So

meetings that explore the service levels can be useful for gauging user satisfaction.

At the end of the day, your implementation and willingness to take responsibility for thesystems says more than any communications plan. If the users know they can always count

on you and the IT team then they will trust and respect your opinions.

The business really doesnt care about IT on a daytoday basis they just want it to workso you need to think carefully about how to approach them with information. Most will

not want to read a newsletter proclaiming how wonderful and useful IT is the company.

Dont be too scared of failure and be prepared to back up your team. Ever departmentmakes mistakes at some point with IT they are often more visible because people rely on

it, but if you never fail it means you have never actually tried something new.


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Think about producing a clear and detailed plan that combines your communication plansat all levels strategic, tactical, and operational. So users who need updates and

information about the systems can get it easily, just as the management team can easily

access detailed information on the performance of your department.

It is clear from the responses given by our group of IT leaders in this collaborative cycle that the

need to measure the achievements of IT is very much connected to the need to communicate the

importance of those services.

However, communicating IT achievements without giving the process some consideration can

bore users or worse, it makes them less interested in what your department does for them.

Careful planning to ensure communications reach the right people, as well as quantitative metrics

demonstrating deliveries go a long way to earning respect for the IT team.


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IT Decisions ResearchIT Decisions produces a report like this every Friday, based on what CIOs told us that same week.

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The more participants, the better the quality of the research. So please do invite yourcolleagues to join! Get in touch with recommendations via [email protected].

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13ITD #10 Measuring the contribution of IT to your organization

About IT DecisionsIT Decisions is the premier source of insight into the technology and hightech service industry in

Brazil. The company creates Englishlanguage news and insight for a CIO audience with regular

features and analysis that cannot be found elsewhere.

We focus on decisionmakers and influencers the buyside. Reproducing the sales pitch or

adverts of suppliers is not our thing; we focus on those buying the systems. IT Decisions was founded in 2011 by Mark Hillary and Angelica Mari, two of the most respectedbusiness and technology writers in Europe with a collection of bestselling books and industry

awards between them.The IT Decisions research network is an invitationonly group of CIOs in Brazil who work together

to produce a new research report every week.Take a moment to connect with the IT Decisions management on LinkedIn and take a look at some

of their books, other media, blogs, and publications:

Mark Hillary, CEOhttp://j.mp/markhillary

Angelica Mari, Publishing Directorhttp://j.mp/angelicamari

Mark, Angelica, and the whole IT Decisions team is based in So Paulo, Brasil the biggest city in

the Southern Hemisphere.

www.itdecs.com

ITD #10 14 Oct 2011| Measuring the contribution of IT to your organization

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