IS Business Performance

5 Feb

Measuring IS investments performance entails more than just developing performance measures it’s about creating business strategies, describing projects that will contribute to the strategies, evaluating and communicating the result to improve performance.

Measuring performance on IS/IT investments and linking to business outcomes are hard to conceptualise and identify due to inherent uncertainty of outcomes. One of the most widely used framework for performance measurement on IS investments is the Balance Scorecard which most of us have explained and this should be used during investment planning and measurement.

Patrick Plunkett a senior analyst at general services administration (GSA) developed this approach based on valuable opinions from colleagues. They provided 8 steps to develop and use IT performance measures effectively.

The 8 steps are:

1.      Link IT projects to business goals and objectives

Senior management needs to create a balanced scorecard for the organisation by defining the information and IT capabilities they need to be successful. The balanced scorecard consists of four perspectives which provide a comprehensive view of a business unit. The perspectives include financial, customer, internal business and innovation and learning.

2.      Develop Performance measures

Management need to select a limited number of meaningful performance measures mixing long and short term goals. Depending on the size of the project, the measures can be adjusted. Outcomes of the IS investments should be measured not just the cost, timeliness and quality. Outcomes are the results the organisation gets from the IS investment.

To develop these measures management needs to determine the objectives of the project, decide how requirements can be met and what the purpose of the result is and understand why the result matters. Involvement of stakeholders and customers will also improve the quality of these measures.

 

3.      Establish Baseline to compare future performance

A baseline will enable management to determine whether performance improves or declines as a result of the IS investment and this should be documented, recognised and accepted by customers and stakeholders.

4.      Select IT projects with the greatest value

To select IS investment with greatest value, management need to establish investment review board to estimate value and risks of each investment.

 

5.      Collect data

Management need to ask the data needed to define the effectiveness of the project and this will depend upon availability, cost of collection and timeliness.

6.      Analyse results

After obtaining results management need to conduct measurement reviews to determine if the project met the objectives and whether indicators adequately measured results. A key question to ask is: whether the results differed from what we expected? Management also need to look for ways to improve performance during reviews, refine indicators and identify the lessons learned for future investments.

7.      Integrate with management process

To be sure the results improved performance; there is a need to integrate them with existing management processes.

8.      Communication results

Management should communicate results inside the organisation to improve co-ordination and increase focus of employees and managers and also communicate results with customers and the public

These steps focus on direct planning using the Balanced Scorecard. Balanced scorecard transforms strategy into action. They explained that IT performance measures will be active if management effectively plan and link their IT initiatives to their strategies. In practice some steps can be combined and need to be applied repeatedly to obtain effective performance measures and improve business performance.

Reference

https://www.acquisition.gov/sevensteps/library/GSAeightsteps.pdf

Kaplan, R and Norton, D. (2001) The Balanced Scorecard

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