Five Metrics for Your 2013 IT Scorecard
At the start of the year many IT leadership teams refresh their scorecards, but too often, the result is unusable and quickly forgotten. Scorecards fail for a number of reasons. Last week I wrote about the mechanics of building a workable scorecard and discussed seven pitfalls in collecting and using IT metrics. This week, I will suggest some metrics to include.
One of the first pitfalls is to pick metrics that don’t connect to a strategic goal. Some metrics should link directly to business strategy, but these will differ by company. Other metrics should link to IT’s own strategy, and these may be more consistent as most IT strategies are shaped by the same trends.
CEB’s Future of Corporate IT study describes five shifts that are reshaping IT. Below, I have selected a handful of forward looking metrics from our IT Scorecard Builder tool that can be used to guide IT through the shifts.
1. Project Interdependencies – The IT project portfolio is changing. More projects relate to analytics, collaboration, and customer interaction, rather than process automation. This shift leads to more interdependencies, as innovative new functionality relies on foundational capabilities such as data integration or a collaboration platform.
One way to manage these interdependencies is to measure high risk “driver projects”. A driver project has a large number of other projects dependent on it. Progressive companies identify driver projects, assess the risks to the project, and devote additional resources and oversight to reduce the risk. To track progress, the IT scorecard measures the percentage of driver projects that are high risk.
2. Service Health – More than 50% of IT teams are adopting end-to-end IT services to identify and deliver on specific business outcomes. If a service truly supports a business outcome, when the service fails the business outcome also fails, so service health becomes critical.
The potential impact of service failure can be measured by looking at the percentage of functionality at risk, divided by the number of levels of redundancy. This can be multiplied by the percentage of employees who use the functionality. The higher the resulting percentage, the healthier the service. Services with low percentages should be the targeted for greater investment and oversight.
3. Vendor Performance – The cloud is just the latest of many sourcing options that are gradually reducing the amount of in-house delivery. Reliance on external partners means that it is important to keep a close eye on vendor performance. Some scorecards include metrics such as vendor staff absenteeism or turnover that help predict future vendor performance.
4. Complexity – A growing percentage of business leaders provision technology for themselves. This is not necessarily a bad thing, but it can lead to greater complexity that drives up costs and creates risk.
To distinguish between complexity that is justified by the resulting speed and flexibility, and complexity that is problematic because of cost and risk, some organizations measure progress against a complexity target. IT estimates the acceptable level of complexity in each architectural layer then measures actual complexity against this target. The metric changes as redundant technologies are removed and new technologies are added.
5. IT Skills Shortages – The changes faced by IT will lead to huge shifts in skills and roles. While some skills can be acquired through hiring, much will have to come by developing the existing team. To this end, some organizations maintain a skills development index that measures the number of employees who are on track against their skills development goals.