In the age of digital transformation, IT has become a central component of overall business success. But what does this mean from a measurement perspective?
As Lisa Morgan put it in a recent InformationWeek article, “Business and IT have become so intertwined, their goals must align if companies want to stay competitive. That means traditional KPIs simply aren’t enough anymore.”
Morgan spoke with a number of tech leaders from a variety of backgrounds for her piece. And while all agreed that the IT department plays a pivotal role in driving optimal business outcomes, their experiences with pushing for progressive metrics were mixed. Shifting from traditional IT KPIs to ones more aligned with business goals requires a cultural change, and for many executives, the process was not always a smooth one.
James Anderson, senior director analyst at Gartner, told Morgan, “A lot of people believe it’s just a matter of cherry-picking operational metrics and bringing those to executive decision-makers. They’re all reporting on the wrong things.”
To help address this issue and ensure companies are reporting on the right things, Gartner has identified the following characteristics of a good metric that drives business decision-making:
1. The metric has a clearly defined and defensible causal relationship to a business outcome. According to Anderson, “Boards of directors are concerned primarily with revenue, cost, and the risk of maintaining the revenue. IT should be thinking about the things that are most relevant to revenue, instead of focusing on metrics around IT workload (how many intrusions, how many patches, how much uptime, etc.).”
2. The metric is a leading indicator. A predictive metric is more interesting than a historical one.
3. The metric is tailored to the organization. It may be tempting to copy business-driven metrics you’ve read about or seen highlighted in a presentation, but Anderson cautioned there is no such thing as a “magic dashboard.” Companies must come up with a KPI that truly maps to their unique business, mode of operating, and goals.
4. The metric addresses the intended audience’s business decision making. Consider how the metric impacts business people and their responsibilities.
5. The metric reflects the language of the audience. This is a critical component in order to engender value with non-IT roles. Anderson says, “If we’re only speaking the language of IT, people that speak finance and business outcomes stop listening to us. A lot of times the things that we’re presenting are the abbreviations or acronyms for things that people don’t really understand.”
6. Dashboards should drive action. Dashboards with static data are no use in driving change. It’s essential that these reports provide actionable insights that can help move the business forward.
7. The metric has a business context. Anderson elaborated, “We get there almost by reverse engineering. Find those metrics, KPIs, or indicators that will help us make decisions to course correct or continue doing what we’re doing.”
For any company to be successful today, it’s critical that the IT and business organizations be in synch. Defining and agreeing on the right KPIs across your organization is an essential part of your overall reporting right.