The Measurement of IT: Key Metrics for Delivering Business Value

It is recommended that CIOs focus on two objectives: The first is improving the efficiency and effectiveness of IT, that is, getting more things done faster and better with the same or fewer resources. The second is demonstrating the value of IT to the organization. The key to both of these is measurement. In the first case, IT performance is measured so that there is a benchmark to improve against. In the second case, measures are used that connote value, whether that value is expressed in reducing the cost of doing business or in new revenue streams that are the direct result of an investment in information technology.

Metrics by themselves provide little value — it’s how the metrics are implemented, reported and acted on that differentiates successful measurement programs from failures. Research has shown that despite the best intentions, four out of five measurement programs fail within one year of their inception.

Having said this, what are the right measurements? The Giga Information Group has collaborated in an effort to assist its clients in building an effective measurement toolkit for IT. To make it as practical as possible, the metrics were organized along job functions. Analysts were asked to put themselves in the shoes of IT management and ask the question, "What metrics would I consider to be key to successfully managing or demonstrating the value of my function?" During this exercise, two major types of metrics were identified in keeping with the two objectives — improving efficiency and demonstrating value.

The first metrics are operational metrics. Focusing on these metrics enables you to improve the performance, productivity and efficiency of the specific IT function. Operational metrics include such things as cycle times, defect counts and output rates. The second metrics are value metrics. Focusing on these metrics enables you to demonstrate the function’s value to the overall business. Value metrics tend to be cost and/or revenue based. Examples would include cost per business transaction, cost of IT per end user, revenue and profitability of a new IT-enabled product or service, etc.

The following key measurement areas are addressed in this report:

Key Metrics for IT Value

When defining metrics that will be used to determine whether an IT project increases revenue or reduces cost, it is important that the set of metrics used translates to an actual impact on the corporate financial statements.

Key Metrics for Application Development Organizations

Without metrics, everything is just an opinion. Metrics use is on the rise in enterprise AD shops today. Given the classic resistance by developers, metrics programs must be goal-oriented and sold as such within the organization.

Key Metrics for Capacity Planning

Fundamental metrics are a global gauge of how much capacity is currently used by a given application or a set of applications. Secondary metrics are used to characterize how the resources of a specific component are used by an application.

Key Metrics for Contact Centers

The dynamics of contact centers are changing; quantifiable metrics on the transaction costs for customer interactions across each channel are needed to determine the effectiveness of automated services and to measure customer acceptance.

Key Metrics for Enterprise Architecture

Metrics for enterprise architecture fall into two basic categories: those that characterize the workload of the architecture group ("activity metrics") and those that show enterprise architecture’s value to the enterprise ("value metrics").

Key Metrics for Information Quality

Information quality metrics fall into three areas — representational, procedural and judgmental — and include not only the form (syntax) of the data but also the content (semantics).