Three CIOs discuss how they showed IT’s business value by measuring sales growth, customer impact and risk mitigation.
One Set of Metrics for All
Tim McCabe, SVP & CIO, Delphi: In the past, the most important metric in IT was system uptime. But as technology has become more commoditized, we now measure IT services in terms of the preservation, creation and foundation of business value, and we benchmark ourselves against those outcomes.
This value framework ensures that Delphi IT measures itself against the same key performance indicators as everyone else–just like sales, finance or operations.
When we meet with others in the enterprise, we’re all having the same conversation about the same business outcomes. We apply the principles of revenue generation and operational excellence to evaluate, prioritize and measure our projects to maximize shareholder value. Does it help sales? Increase share price? Improve throughput? These are metrics our colleagues and shareholders understand and value.
It takes time to get the IT organization to think differently, and we have those conversations with our IT colleagues throughout the organization, from Delphi headquarters to our sites around the globe.
It’s not something we measure once a month–it’s how we live and breathe. And when the enterprise makes a shift in its operating model, we rewrite those metrics and re-educate the team. Change is easy; making that change stick is hard.
Measuring Customer Impact
Larry Jones, Global VP of IT for Commercial Pharmaceuticals, Johnson & Johnson: IT is the backbone of customer contact, so we’re looking at indicators like sales, customer impact, and our performance versus the competition.
It takes an inordinate amount of time, for example, to get information to healthcare professionals, whether it’s a package insert or digital data, because those messages are vetted by marketing, regulatory compliance and other stakeholders. But IT has an opportunity to reduce that time through new workflows and applications.
We partner closely with the business on technology projects, like our new mobile sales platform or our CRM system, which has the tagline “created by the people who know our customers best”–that is, the business, enabled by IT.
It’s important that our entire IT team gets it. When you’re managing a server farm or storage or a cloud solution, you can lose sight of the fact that when something goes down, a patient might not get the information on that oncology drug they need to stay alive. It’s motivating for IT professionals to understand how they affect that. We may seem removed from the customer, but we’re not.
In the end, business metrics help you prove your case and keep the IT investment coming. Without them, the business only remembers the last time a system didn’t perform.
The Big Three: Revenue, Cost and Risk
Rick Roy, SVP & CIO, CUNA Mutual Group: We use three macro-level business metrics to prioritize IT investment decisions and set strategy: revenue growth, cost reduction, and risk management and compliance.
For line-of-business spending, it’s rare for someone to introduce a major initiative without a strong connection to one of those. But at the enterprise level, it’s more challenging. How does that Windows 7 upgrade really help the business? Whoever presents that case has to make that connection.
Risk mitigation and compliance are the hardest to quantify. We must distinguish between the need-to-have and the nice-to-have. We can’t just say we need to invest in something because the risk is high. What does that mean? Will we lose money? How much? Will we lose customers? How many? We take advantage of our in-house actuarial and risk-modeling expertise to quantify risk.
We look at IT spending in business terms, reporting our costs as an expense ratio. It changes the conversation from “IT costs too much” to a conversation about priorities. It requires more rigor, but it benefits IT to have a clear focus on our top priorities.
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