Nonprofits Need Metrics Too

Proving the value of IT investments is hard enough for companies. The bottom line looms as the ultimate measuring stick. It’s an even bigger challenge for nonprofit organizations, but it isn’t any less important. This year CIO received several Enterprise Value Award applications from nonprofit groups, but the value metrics for many of them weren’t quite what our judges were looking for. (See Page 48 for the beginning of our Enterprise Value Awards coverage.) We spoke with longtime judge Doug Barker, vice president and CIO for The Nature Conservancy in Arlington, Va., about the importance of valuation and metrics for nonprofit organizations.

CIO: What kind of valuation techniques do you think most nonprofits are using today?

Barker: On the whole, I think nonprofits are behind the curve on this one. There are some industry-standard, basic measures that work for part of the IT value equation, such as cost reductions, operational efficiencies or user satisfaction, but they don’t really get at the core strategic value of IT. This is an area that many nonprofits, as well as some for-profits, are just starting to look at.

Do you think it’s more difficult for nonprofits than for-profits to demonstrate IT value?

Yes. In general, for-profits have it easier in that their bottom line can be measured in dollars. Nonprofits often have more of a struggle to develop and track meaningful measures of value. This really depends on the mission of the nonprofit and what metrics there are for measuring its impact.

What recommendations would you make to nonprofits hoping to win an Enterprise Value Award in the future?

Be as specific as you can. At the onset of the project, look closely at exactly what you’re trying to achieve. Establish and start to track as many meaningful metrics as reasonably possible. Include all relevant details on things such as cost savings, increased user satisfaction and so on. Most important, if at all possible, provide details on the strategic impact of the system on your bottom line?your organization’s mission?however you measure it.