Measuring IT Success: 4 Areas

8 Feb

When measuring the effectiveness of an IT investment with the use of Balanced Scorecards it is vital that firms first thoroughly decide on which measures will be used. Accurate selection of measures will assist firms in identifying if they are gaining their desired value from the investment they have made. The IT Performance Measurement Guide [1] examines 4 areas where IT specific measures are analysed in order to clearly view the value of technology for a firm. The measures are subcategorised into enterprise needs, customer needs, it internal performance and innovation. The following gives a brief outline of what is thought to be pivotal when measuring the value of IT investment.

1. IT & The Strategic Needs of the Enterprise:

This centres on methods to measure how IT supports the achievement of organizational strategies. Essential questions must be addressed before evaluating the effectiveness of IT investments.

  • How well integrated are our IT strategies with business needs?
  • How well is the overall portfolio of IT investments being managed?
  • Is IT spending in line with expectations?
  • Are we consistently producing cost-effective results?
  • Are we maximizing the business value and cost effectiveness of IT?             [1]

The measures capture the contribution of IT solutions and services, compare what was planned for IT benefits and IT strategies against what actually happened, and compare IT strategies and planning and enterprise strategies and planning. Xerox is an example of a corporation that followed theses steps:

“Xerox made IT portfolio management a key objective area as part of its overall strategic enterprise 
strategies. Xerox wanted to improve information management spending, deliver IT infrastructure renewal, and deliver process-driven IT solutions to customers. A key part of the overall IT strategy was to evaluate existing IT applications. Xerox ran each of its existing applications through a rigorous analysis process, stopping those of low usage and value to keeping others as corporate wide applications.” [2]

2. Satisfying the Needs of Customers:

IT customer measures are designed to measure the quality and cost effectiveness of IT products and services. When evaluating the impact of IT on customer satisfaction, the following questions should be considered:

  • How well are business unit and IT staff integrated into IT systems development and acquisition projects?
  • Are customers satisfied with the IT products and services being delivered?
  • Are IT resources being used to support major process improvement 
efforts requiring information management strategies?             [1]

3. IT Internal Performance:

Internal IT business measures are designed to evaluate the operational effectiveness and efficiency of the IT organization itself.

When evaluating internal IT business functions, the following questions should be considered:

  • Are quality products delivered within general industry standards?
  • Are quality products being delivered using accepted methods and tools?
  • Is our infrastructure providing reliable support for business needs?
  • Is the enterprise architecture being maintained and sustained?       [1]

In order for an IT investment to be successful and solid companywide, it is imperative that the IT core of the company be robust.

4. Innovation and Learning:

Innovation and learning measures evaluate the IT departments’ skill levels and ability to sustainably deliver quality results. This area recognizes that without the right people with the right skills using the right methodologies, IT performance will likely fail. Measures in this field should be used to answer the following questions:

  • Do we have the right skills and qualified staff to ensure quality results?
  • Are we tracking the development of new technology important to our 
business/mission needs?
  • Are we using recognized approaches and methods for building and managing 
IT projects?
  • Are we providing our staff the proper tools, training, and incentives to perform 
their tasks?                   [1]

Continuous improvement of employee skills and competences should be enabled by on the job training and development. Highly skilled and satisfied employees will hugely contribute to the success of IT project implementation.

The above steps are essential when attempting to support management teams in determining the contribution of their IS investments to business performance.

Prepare, Plan

Preparing is a vital step to success in any area as Benjamin Franklin, one of the Founding Fathers of the United States, pointed out:

“By failing to prepare, you are preparing to fail.”

——————————

 [1] GAO/AIMD-98-89 IT Performance Measurement Guide

[2] Hoenig, C. (1997) Measuring Performance and Demonstrating Results of Information Technology Investments. DIANE Publishing Company, PA.

 

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