For decades, IT has had a reliable set of metrics for measuring performance. These metrics focus on technical aspects such as throughput, dropped packets, application availability, and service availability. Such measurements have served the industry well.
But things have changed. The CIO no longer has exclusive control over the IT budget. In fact, line of business (LOB) owners now control most of it, with some reports saying that LOB owners dominate as much as 60% of total IT spending.
With that in mind, how can you measure the value of IT operations from a practical standpoint that businesspeople will understand and accept? Management often, and understandably, values internal organizations based on their level of success. The more successful the business partner, the more likely that department is to get budget and head count, and, of course, keep their jobs.
So the viability of an IT organization depends on how it presents its value to LOB managers with control over the budget. IT managers can't afford to have business leaders baffled by obscure IT metrics any longer. These business managers are now demanding to know how IT is helping the business both save money and make money.
Jeremiah Caron, head of research and analysis at the technology market intelligence firm GlobalData, said the shift is clear. IT is still responsible for making it all work within a certain budget, he said. But IT's relationship with its LOB colleagues has changed—innovation and integration requirements now sit alongside operations expertise.
“We've seen convincingly in our research over the years that the role of IT has changed significantly. IT needs to learn to speak a different language that changes the discussion from just the bottom line to the top line as well."
—Jeremiah Caron
So, what kind of metrics will IT need to begin reporting? The new normal includes some traditional technical measurements as well as business-oriented metrics. Here's a run-down, starting with the familiar.
Out with the old, in with the new
Mean time to repair (MTTR)
This is the average time it takes to fix an IT device or component that's gone down. It reflects money saved (as opposed to going outside the company for repairs), revenue generated (rather than being lost due to damaged equipment remaining offline), and the overall efficiency of your IT organization.
Mean time between failures (MTBF)
This is the average amount of time between IT device or service failures. Again, success in this metric reflects lower expenses and revenue generated. It also has the ability to showcase just how skilled an IT team is. A prolonged MTBF implies that the team is good at what it does, since repairs last.
Service availability
This describes how often a service or device is operating and ready for use; it is expressed as a percentage. This is the origin of the expression "five nines availability" (meaning the network is up 99.999% of the time). High availability—including high availability for all software and hardware components—implies a well-trained and well-run IT department.
Time to deploy
This is the length of time between IT’s commitment to implement a device or service and the actual beginning of operation of that device or service. A short time to deploy implies that the IT team is highly skilled and efficient and can get new equipment or services up and running quickly.
These are all old, familiar metrics, the ones that every IT staffer has leaned on and trusted for years. However, as Peter Bendor-Samuel, CEO of Everest Group, has written, “Good intentions, but here’s the problem: Almost all IT service levels or metrics measure the performance of functional disciplines.”
In other words, for all the insight these metrics provide into IT skill and efficiency, they don't provide enough information on the business value of IT operations to convince an LOB leader that operations need to be expanded or enhanced. Bendor-Samuel said that to do that, IT must introduce some different, and relatively unfamiliar, business measurements into the mix.
The new world of business metrics
One solution to the above problem is for IT to begin to produce and leverage some new numbers, because selling IT to LOB budget holders requires a different way of communicating, said Chris Oggerino, senior technical marketing manager at Cisco.
“If you want to sell to [LOB managers], you need to show them both top-line and customer satisfaction numbers. Our organization is using this new business data as they enable applications to meet infrastructure demands.”
—Chris Oggerino
Here's a look at some of the biggest ones.
Bottom line
This is a company's income after all costs have been deducted. In its simplest form, it is revenues minus expenses. A large bottom line points to an efficient organization that has effective cost control practices in effect. IT will need to quantify and measure its impact on the bottom line directly, in terms of employee time saved and increased productivity through its offerings.
Services availability
This is the percentage of time during which IT services are available. This is related to network availability, with the added component of usability. In other words: Not only are all devices up and running, but the services they enable are operating.
Customer satisfaction
This metric is generally described as how highly your customers rate your company when surveyed, as well as how likely they are to refer other people to your company. The IT organization can contribute to this metric by expediting repairs, solving technology problems, and speeding up delivery of products and services, thus contributing to overall customer satisfaction. For example, an app that loads quickly due to an optimized network is directly related to customer satisfaction. Faster service resolution—ideally with a single call or email—can also be a huge plus here.
Customer retention
This is closely related to customer satisfaction, defining how likely customers are to be repeat customers. Customers almost always return to a company only when they receive outstanding products and customer service, and IT impacts this metric in a manner similar to how it impacts customer satisfaction. Usually expressed as a percentage, high customer retention is always a mark of business success.
Revenue increase
This is truly new territory for IT. In the past, IT organizations were charged with enabling revenue-producing operations and keeping costs low. Now IT is likely to be measured by how it creates new revenue, either by enabling it indirectly or by directly earning it through its own services.
This can be counterintuitive, but consider questions such as these: What proportion of sales is coming through the website, and how has that grown due to IT's efforts? How many sales were made as a result of new artificial intelligence–driven upselling in the call center? How much cash has been earned directly by selling maintenance plans or outsourcing the company's own IT services to partners and franchisees? All of these can be tracked to showcase IT's value to the top line.
Putting next-gen metrics to use
These metrics are thankfully not difficult to calculate. A help desk system can provide MTBR, network availability, and even internal customer satisfaction metrics. IT logs will yield information about MTBF and time to deploy. External customer satisfaction is probably in the data kept by your marketing department, and if it isn't, you can capture it by working with marketing to survey customers directly about their opinions and habits.
This needn't be packaged into an expensive dashboard or a fancy presentation. In fact, tracking this information in a simple spreadsheet will help you gain credibility with any LOB manager.
Afzal Ballim, a consultant and prominent IT strategist, has created a primer on business metrics for IT professionals looking to better explain their business value. He has even offered, in a recent CIO magazine story, to share his spreadsheet templates for presenting these metrics to management.
What's in it for you
These metrics will be new to many, and some effort will be required to define, track, and report on in terms of your organization’s progress and contribution. But the effort will benefit anyone in IT operations management. By tracking these metrics, you’re more likely to receive:
- Partnership. LOB managers will be more likely to consider you an equal partner in the organization's success. They will likely see you as working with them to be a success and will in turn work with you to expand the effectiveness of the IT operations, further improving those metrics.
- Respect. Your company should start to see you as a direct contributor to its success instead of a cost center, thus treating IT like a valued partner. Your colleagues will likely begin to offer a seat at the table when setting company strategy and performing other long-term planning.
- More money, more easily. When LOB leaders see how closely IT operations precede overall company success, they'll stop wailing about how expensive technology is and start asking how much your proposed upgrades will help build their business.
To get a seat at the table, however, you need to act quickly. LOB leaders are probably already developing their business plans without you, so it’s important to get their attention while you can, which means you need to start analyzing and presenting these metrics right away.
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