Selecting metrics to demonstrate IT value

This vendor-written tech primer has been edited by Network World to eliminate product promotion, but readers should note it will likely favor the submitter's approach.

IT is a considerable financial outlay for most businesses, and IT organizations must continually prove their strategic value. They can effectively demonstrate the value of their contributions by selecting and reporting metrics, but the challenge is to choose the right metrics.

In order to select the right metrics for your key performance indicators (KPIs) you must gain a clear understanding of metric characteristics. An effective metric meets the following criteria:

• Is tied to a business goal.

• Is important to the customer.

• Measures a single condition or event.

• Is easy to measure and report.

• Has specific results that support decision making.

IN DEPTH: Revitalizing IT's worth

Use the fewest metrics possible but enough to verify that you are receiving adequate information to make informed decisions. This approach helps you to focus on priorities.

Metric characteristics form a boundary that separates possible KPIs from all possible metrics. A good example of a metric might be "percentage of IT budget supporting projects." This metric is tied to the goal of responding quickly to business pressures. It is important to the CIO and the business customer. It measures the value IT brings to a business, is somewhat easy to measure, and gives management an idea how well IT responds to business pressures. Another metric, such as "number of service level agreements (SLAs)," may not be valuable if no SLAs currently exist and no efforts are underway to build any.

Just as IT organizations will change in maturity, so will the metrics used to measure success. The situation on which the metric is reporting may be usurped over time by other, more relevant situations, or the maturity of what is measured may move to a "steady state" condition. Progress may limit the value of a metric over time. The concept of metric aging can be demonstrated by the following example:

IT strives to become more efficient by eliminating shadow IT (work by IT that is adding value but is not measured). The plan is to eliminate shadow IT by edicts and by preventing IT employees from receiving credit for incident resolution without creating a ticket.

By eliminating shadow IT projects, such metrics as "number of incidents captured by the service desk per month" can be expected to go up. As users learn to open tickets to get their issues resolved, the number of service desk tickets is likely to increase. As time goes on, however, the number of service desk tickets per month may level off. If this occurs, the metric loses much of its value, and it may make sense to replace it with a new one, such as "the average cost of a desktop incident." It's important to re-evaluate your metric choices once a year.

It's valuable to put metrics into categories to help verify you are covering the breadth of the situation you need to measure. Select the minimum number of KPIs needed to deliver the message, and consider the target audience for the metric. When selecting a metric, its breadth or level of detail should be appropriate to the audience. Potential audiences could be a business profit-and-loss owner, IT management, a process owner or even a customer. Once metrics are categorized, it is easier to see if focus areas are over or under represented.

For example, look at the list of potential categories and associated metrics in Table 1. Mean time to restore service (MTRS) is a metric that could be used in multiple categories. It is a valuable exercise to build the category structure that has relevance for your organization. This is essential for determining the optimal selection of KPIs.

Metric categories and examples

Metrics provide information about progress toward business goals. Sometimes it is impractical to collect detailed metrics on every activity related to a process or situation. It may be possible, however, to collect a sampling of metrics that will suffice for a meaningful evaluation. Sampling has risks, such as when one metric doesn't paint the whole picture. For example, the metric "average service desk Level 1 call length" could be artificially low because too few calls are resolved at Level 1. This does not show the whole picture unless you also know "percentage of calls resolved at Level 1."

Follow these steps to build your metric strategy:

1. Select a business goal.

2. Determine how IT supports this goal or in which specific focus areas (processes or activities) IT needs to improve. Analyze the focus areas in parallel.

3. Determine the maturity of the process or focus area.

4. If maturity is too low, determine the scope of metrics needed to measure progress.

5. Review current metrics to make sure they meet the characteristics of valuable metrics.

6. Select new metrics, if needed.

7. Review metrics for effectiveness, completeness and aging.

It's important to use technology to automate and standardize manual tasks. A metric that might help measure the move from manual to automated tasks could be, "percentage of tasks that are automated." The challenge becomes determining the right percentage and knowing if the information you are receiving is valuable.

Many successful enterprises are working toward a goal of having metric-managed IT organizations. They are more closely aligning IT with business expectations for providing value, while also further defining IT as a strategic partner to the business. Start with a subset of the metrics that you consider most important and build on that subset as the value of your metrics becomes apparent. Review metrics over time and watch the perceived value of your IT organization grow.

FitzGerald is a senior consultant for the Business Value Consulting group at BMC Software. BMC offers a comprehensive approach and unified platform that helps IT organizations cut costs, reduce risk and drive business profit.

Learn more about this topic

IT A-listers: Recharged, ready for business growth and speed

To add value through IT, pick up the ball

How does IT measure up in your organization?

Join the Network World communities on Facebook and LinkedIn to comment on topics that are top of mind.

Copyright © 2011 IDG Communications, Inc.

SD-WAN buyers guide: Key questions to ask vendors (and yourself)