Business Alignment: Find the Right IT Metrics

If your IT metrics do not align closely with business goals, you’re less likely to achieve top performance. Yet CIOs struggle to fashion those metrics: A recent global survey of 150 CIOs by Accenture found that top performers base IT investment decisions on their ability to drive the business forward, but few companies have created the metrics to help them do it. Seventy-five percent of companies surveyed recognize the need for such metrics, but only 33 percent currently use them, the consultancy found.

The high turnover rate among CIOs contributes to the problem, says Frank Modruson, currently in his fourth year as CIO of Accenture. "IT takes time to change, and if the leader is changing too frequently, it’s hard to successfully implement a program," he says.

Modruson says that CIOs must create metrics that show the business how IT is meeting its needs, in "digestible and understandable" terms.

Measure IT’s overall performance using a scorecard, he suggests. This should cover IT’s contribution to the business, project sponsor and employee satisfaction, and IT spending on operating costs versus new technology investments.

Another best practice: Create a business case for each IT initiative, highlighting costs, benefits and business processes to be affected, he says. Then IT needs to report on the initiative. At Accenture, Modruson’s IT team measures the results of a project for three years after completion, highlighting achievements and pointing out hard and soft benefits. "This shows us where IT is strong, where it is weak and where [we] should be investing," he says.

The highest-performing companies in the study (as measured by 33 criteria such as effectiveness of skills management and leadership in technology innovation) were more willing to invest in new technologies, such as SOA and Web portals. They were also more likely to throw out rather than tweak applications that didn’t meet business needs, Modruson says.

Copyright © 2006 IDG Communications, Inc.

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