An Introduction To The Measurement of IS To Business Performance.

6 Feb

People are fascinated with metrics today, metrics are applied to everyday human activity e.g. sports, study and academia, business and social life. Business performance is no different and in a sense more important, especially to those involved in business as the indication of trends and practices is a benefit to all involved. The direction of my thoughts in relation to this blog and several blogs to come will be to develop a framework which supports management teams in determining the contribution of IS investments to business performance.

“To define a concept it is crucial to identify the necessary and sufficient conditions for its existence” [1]. The first step of this exercise will be to identify and define the key terms and terminology  involved  in business performance and business performance measurement. In that light a definition of business performance is the measurement of a company in all its actions which determine its success or failure as a business i.e. sales, profit, ROI and performance of business departments in a company. While gathering information to define business performance measurement( which for the purpose of the blogs will be mentioned as BPM) one came across a multitude of definitions such as ” a set of metrics used to quantify both the efficiency and effectiveness of actions”[2] and “BPM reflects the procedures used to cascade down those performance metrics used to implement the strategy within the organisation” [3]. Key performance indicators are another term which is used a lot in relation to business performance, “they are indicators which help an organisation define and measure progress toward organisational goals” [4]. I hope that the direction of this blog during the coming weeks will encompass all terms and idea relevant to business performance metrics and information systems contribution to business performance.

The development of this particular framework will gather and formulate ideas from practiced methodologies in the business performance management field such as the Balanced Scorecard, Total Quality Management and Activity Based Costing, in an effort to further articulate on well formed notions while at the same removing processes and ideas that aren’t plausible. Throughout the course of the blog I hope to consider and take note of the difficulties involved in measuring IT such as direct returns from IT which are measurable and  indirect returns from IT which are much more difficult to measure and are not easily recognised. When considering BPM one must pay attention to the value of conducting IT projects (the cost of IT investments) i.e. fixed costs of an IT project which will remain the same throughout a project regardless of change in activity or life cycle costs of an IT project such as running costs, bugs,  improving and changing the system that accumulate over years and sometimes they aren’t even anticipated. Hopefully the accumulation of a broader knowledge will lead the framework to being more robust and applicable.

[1]  Brennan, Andrew (2003), Necessary and Sufficient Conditions, The Stanford Encyclopedia of Philosophy, Edward N. Zalta (ed.), Available at http://plato.stanford.edu/archives/fall2003/entries/necessary-sufficient/>.

[2] Neely, A.D. (1998), Measuring Business Performance: Why, What and How, The Economist and Profile Books Ltd., London, UK

[3] Gates, S. (1999), Aligning Strategic Performance Measures and Results, The Conference Board, New York.

[4] http://management.about.com/cs/generalmanagement/a/keyperfindic.htm

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