Demonstrating the value of IT to business

A metrics based approach

Copyright Transpire Pty Ltd 2012.

Perceived value varies according to stakeholder so it is important that we frame metrics that are relevant to our audience.
Stakeholding Board and Executive Value drivers 1. 2. 3. 4. 5. Does IT support the achievement of business objectives? What value does the expenditure on IT deliver? Are IT costs being managed effectively? Are IT risks being identified and managed? Are targeted inter-company IT synergies being achieved?

Business Unit Executives

Perceived value varies according to stakeholder so it is important that we frame metrics that are relevant to our audience.
1. 2. 3. 4. Are ITs services delivered at a competitive cost? Does IT deliver on its service level commitments? Do IT investments positively affect business productivity or the customer experience? Does IT contribute to the achievement of our business strategies? 1. Are the organizations assets and operations protected? 2. Are key business and technology risks being managed? 3. Are proper processes, practices and controls in place? 1. 2. 3. 4. 5. Can we attract and retain the talent we need to support the business? Are we developing the professional competencies needed for successful service delivery? Are we creating a positive workplace environment? Do we effectively measure and reward individual and team performance? Do we capture organizational knowledge to continuously improve performance?

Corporate Audit and Compliance

IS Organisation

Copyright Transpire Pty Ltd 2012.

We have adopted a Balanced Scorecard approach

Vision and Strategy

Financial Perspective To succeed financially, how should we appear to our shareholders? Customer Perspective To achieve our vision, how should we appear to our customers? Internal Perspective To satisfy our shareholders and customers, what business processes must we excel at? Learning & Growth Perspective To achieve our vision, how will we sustain our ability to change and improve?

Source: The Strategy-Focused Organization, Robert S. Kaplan and David P. Norton, 2001
Copyright Transpire Pty Ltd 2012.

Metrics can support improving outcomes for cost, time and quality and will typically span from front line measures for staff performance through to wider functional measures

Metrics may be related to

Efficiency, Effectiveness or Compliance

Metrics specifically help drive

Cost, Time or Quality

Metrics are generally derived from underlying measures

An example measure would be the average incident duration by category and priority

Compliance metric examples % of support staff with relevant certifications % of calls converted to tickets Efficiency metric examples % of time spent attempting to contact customers % time requests spend in pending state Effectiveness metric examples % incidents solved proactively (i.e. before reported) % incidents solved correctly the first time (i.e. not reopened)

Copyright Transpire Pty Ltd 2012.

The successful introduction of strategic and operational metrics must be underpinned by a proven Performance Management Framework
PLAN - Planning is the phase where performance objectives and standards are defined, articulated and communicated to the rest of the organisation.
The outcome of the process is a set of strategic objectives and performance standards for evaluating progress. Each Process Owner will define a Service Improvement Plan (SIP) for their process, outlining the organizations short term (less than three years) goals and an approach for achieving them. The outcome is a set of objectives, a plan for achieving them and performance criteria for measuring achievement.

DO the Do phase is where action is taken to achieve the stated objectives at the targeted performance levels. Enacting the SIP includes the following aspects:
Identify process responsibilities and performance measures Revise and agree position descriptions Establish the scorecard by which performance will be measured.

CHECK the Check phase is for measuring results and analysing performance. Measuring describes what happened and the analysis describes why it happened and makes recommendations for management action. Scorecard results should be across the organisation. ACT - the Act phase is where action is taken by management based on the performance analysis provided in the Check phase. Acting on scorecard results which might include rewarding or counselling staff on achievements, recommending change to targets or objectives and identifying further service improvement activities ITILv3 recommends the use of to Demings improvement cycle of Plan, Do, Check, Act (PDCA) for continual service improvement. The PDCA cycle establishes a metrics based performance management framework as follows
Copyright Transpire Pty Ltd 2012.

Our framework starts with business goals which then map to IT goals, processes and metrics (>300)

Perspective Business Goal

Financial 1 - Provide a good return on investment of IT-enabled business investments. 2 - Manage IT-related business risk. 3 - Improve corporate governance and transparency. C ustomer 4 - Improve customer orientation and service. 5 - Offer competitive products and services. 6 - Establish service continuity and availability. 7 - C reate agility in responding to changing business requirements. 8 - Achieve cost optimisation of service delivery. 9 - Obtain reliable and useful information for strategic decision making. Internal 10 - Improve and maintain business process functionality. 11 - Lower process costs. 12 - Provide compliance with external laws, regulations and contracts. 13 - Provide compliance with internal policies. 14 - Manage business change. 15 - Improve and maintain operational and staff productivity. Learning and Growth 16 - Manage product and business innovation. 17 - Acquire and maintain skilled and motivated people.

IT Goal

Process

IT Performance Metrics

Copyright Transpire Pty Ltd 2012.

The scorecard is tailored from our metrics database

Perspective Business Goal

Financial 1 - Provide a good return on investment of IT-enabled business investments.

IT Goal

Process

IT Performance Metrics

24 - Improve ITs cost-efficiency and its contribution to business profitability. DS6 - Identify and Allocate C osts % IT Actual to Budget C ost Variance % IT Actual to Budget Profit Variance % IT Actual to Budget Revenue Variance % IT C osts - Business C hargeback % IT C osts Automatically Allocated % IT C osts Mapped to IT Services % IT C osts Related to Business Value Drivers % IT C osts to Business Disputed % IT C osts to Organization Revenue Business Satisfaction - IT C ost Model IT C ost Allocation Model Reviews IT C osts - Actual

Copyright Transpire Pty Ltd 2012.

Copyright Transpire Pty Ltd 2012.