Information Technology Performance Measures

CIOs today find themselves, like other executives, struggling with the notion of accountability. CEOs, CFOs, and Boards in the private sector and Agency leaders, Congress, and legislatures are all demanding technology executives measure the performance of their areas and show real improvements and/or successes.

My firm, Mass Management Consultants, Inc., was asked by a public sector client to examine the issues with setting performance measures for IT departments. We conducted a systematic analysis of the academic literature and business press to identify best practices and preferred methodologies. Additionally, we identified a dozen high-performance IT departments and conducted in-depth studies of these organizations including personal interviews. These were a cross section of Fortune 500 companies, large private corporations, universities, and government agencies that have achieved significant recognition for their IT efforts.

We discovered some really intriguing success stories and were able to develop some distinct insights into the process of creating and implementing effective performance measurements for IT areas.

IT Governance

One of the most important issues that we found needed to be addressed before the implementation of IT performance measures was the adoption of appropriate IT Governance – “Who makes the decisions? Where do you spend the money?” Every interviewee pointed to the importance of governance on the successful adoption of IT performance measures.

The following chart describes our finding that the effort needed to implement of IT performance measures is inversely proportional to the level of governance concentration. Organization III struggled to implement measures because IT served merely as a service provider and policy was in the hands of a dozen autonomous units.

We found that:

•    Generally, the more decentralized the organization, the more complex the development and implementation effort must be for maximum utilization.
•    Committees, boards, and roundtables play a key role in decentralized organization.
•    A well defined “command-and-control” system can replace other more collaborative structures.
•    Outsourcing of IT services can create a serious challenge for PM development and implementation.

The National Association of State CIOs (NASCIO) has an interesting research paper which explores some of these issues.

NEXT: I will discuss the other critical factors that go into creating effective IT performance measures, including financial indices, strategic goals, external ratings and benchmarks, and technical criteria.