Every business needs to measure the return on their IT investment.
And, today more than ever, the IT organization needs to prove the value it provides.
If you’re a CEO, CFO, CIO or board member, these quick tips should provide guidance on measuring, and increasing, the value of IT.
The Challenge
Most CEOs that I speak with tell me that IT takes too long and costs too much. When I ask them how much value IT provides, they struggle to find an answer.
The key to transitioning from a cost center to delivering great value is measurability.
Two important things happen when we measure IT. First, measurement drives continuous improvement. Second, when we measure IT, we’re able to show the value created. And that is what drives trust, credibility and respect, and puts IT in a truly strategic role.
What to Measure
The five most important things to measure, and examples of metrics to use, are:
ONE: Customer Service
Measure customer satisfaction vs total cost of ownership and try to continuously improve satisfaction at a decreasing cost.
TWO: Infrastructure
Cyber resilience can be measured by time to detect a threat and time to remediate one.
Service availability can be measured by uptime for critical services like email, networks, etc.
THREE: Software Development and Maintenance
Measure the percent of projects completed on time, within scope, and on budget.
Measure the cost per story point or function point and strive to deliver more features at a continuously decreasing cost.
Measure the timing of error detection in the software lifecycle. Most errors should be found in unit testing where it’s least expensive to fix. If we get all the way to regression testing or deployment before we find an error, we spent a lot of money to get there, only to return to development.
Measure the reliability of production software based on availability and always drive to improve that number.
FOUR: Project ROI
Return on investment for business projects supported by IT is a critical measure and it forces us to hold business sponsors accountable for the results delivered after investing IT resources.
FIVE: Budget Compliance
IT adherence to operating and capital budgets should be a natural for every organization.
The IT Value Journey
You may have to establish baselines for some or all these measures in your first quarter or first year. Once you have the baseline, continue to measure consistently and drive continuous improvement.
Evolve your processes and systems to be able to measure. It will be well worth it.
I once had a CFO that certified that IT contributed approximately $14 million a year to the bottom line for three consecutive years. This is how IT evolves into a strategic asset for the company.
I am happy to discuss this further with anyone who is interested or wants to learn more. Just email me at the address below and we’ll set up a call.
Larry Wolff is the founder & CEO of Wolff Strategy Partners, a boutique consulting firm specializing in Enterprise Strategy Management and Digital Transformation. Larry has served as CEO, COO, CIO, chief digital officer, and management consultant for public, private, international and emerging growth companies. His specialties include corporate and IT strategic planning, technology led business transformation, business and IT turnarounds, merger integration and large-scale project rescues.