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Key Performance Indicators
Because KPIs are linked to objectives and strategies, there are necessarily far fewer than the sum
total of all IT performance measures. Ideally, you should track between six and ten KPIs. Never
try to track more than 15 KPIs on any one IT scorecard.
As strategies and objectives change, your KPIs will also change. Because of this, there needs to
be a methodology behind selecting KPIs to ensure that they remain relevant and useful to the
organization. The methodology must include a means to assess where the data comes from, its
availability, how long it will take to collect and how often it must be collected. Finally, the
methodology should assess the accuracy of the data, how often it needs to be reviewed and how
it will be displayed.
Once your team has selected their candidate KPIs, they need to be scored to confirm their
viability, practicality and usefulness. The initial scoring should eliminate candidates that fail for
practical reasons. This is the initial assessment of your measures. After this first round of
"confirming" the KPIs, your candidate list should begin to be reduced so that only those
measures that will have the greatest impact remain.
from IT Performance Management: The Basics
Summary Metric Benchmarking for IT
Summary Metric benchmarking uses higher-level or aggregate metrics for broad comparison and
analysis with the purpose of identifying major opportunities for improvement. With Detailed
Metrics the goal is to track, compare, and improve specific IT activities; with Summary Metrics
it is to identify improvement opportunities, often in processes that are not rigidly structured, such
as solving customer problems, developing new technology-based business capabilities, and other
forms of troubleshooting or innovation.
Summary metrics reduce measurements to a manageable number of Key Performance Indicators
(KPIs). This consolidation of information enables broad comparisons, but it does not give direct
"answers" regarding what is happening or what to do to improve. For those answers, you need to
look in more detail - often at the detail metrics behind the summary ones - or trace the
connections between IT activities and summary results. Summary metrics don’t give direct
answers, but they do indicate where to look and what questions to ask next. The results can range
from quick hit improvements to major process redesigns.
The best comparators for Summary Metrics benchmarking are best-in-class organizations within
a multi-business-unit corporation, among industry competitors, or with other companies with
similar processes and business demands for IT products and services. But because the metrics are
at summary level, it’s especially important to understand the comparators’ derivation of the
measures and overall context. This includes company configuration, complexity, or policy
information useful in establishing situational likeness. Enterprises with similar business
attributes, IT spending mixes, and IT operational traits will make for better summary metric
comparisons. A third-party data aggregator will need this kind of information in order to make
meaningful comparisons from their database of potential comparators. Any Summary Metric
benchmarking initiative should use these attributes as comparator selection criteria.
from Fresh Approaches to Benchmarking IT: Focusing on Customer Experience and IT Effectiveness (CG-4507)
The Hidden Logic of Business Performance
Companies facing challenges of all kinds almost always assume that the "explicit rules" -
strategy, policy, procedures, processes, organizations, regulations, reward systems - collectively
govern business performance. They use these formal mechanisms to change the company’s
strategic direction and manage its business operations. Even though experienced leaders
recognize that there is usually a lag between sending a "control signal" into the body of the
organization and the eventual response, most also assume that the traditional management levers
are their best shot at producing the changes they seek. For example, if you want to change
behavior, you tinker with the reward system; if you want to increase efficiency, you redesign a
process; if you choose to compete differently, you refine your product/market strategy.
In reality, it’s not that simple. All management levers are inextricably interconnected. Just as
there is no powerful drug that can be administered to human beings without inevitable side
effects, so it is with the management levers in a corporation: adjusting one can have unintended,
and often counterproductive, side-effects elsewhere. In both cases, you need to take a holistic
perspective. All aspects of the business model come together in one point - the minds of people
- and manifest themselves in group behavior. To get to the root of what is really going on, you
need to decode the rationale that underpins group behavior and, ultimately, business
performance. This is the fundamental but "hidden logic" that drives an organization.
from The Hidden Logic of Business Performance: Decoding the Patterns that Drive Results (CG-4814)
Pitfalls of Performance Measurement
Overcomplicated individual measures. The tendency is always to measure where the
measuring is good, to measure those things that are easily, automatically, and precisely
measured. But by dint of close measurement, these things are already under control and,
therefore, in need of relatively little measurement attention. Add in the tendency to equate
precise counting with good measuring, and we have cases of voluminous operational
statistics, while the root causes of the occasional operational failure, the detail tracking of the
mechanics of a call center, or low customer satisfaction and poor repeat business are not fully
understood. Many individual measures are overkill; at a minimum, they should be taken but
remain invisible behind meaningful exception reports. Elaborate statistical measures also
create a misleading impression of precision and lend themselves to counterproductive
manipulation. Measure my performance by counting my keystrokes, and this chapter will be
twice as long. The cure for overcomplicated individual measures is "loosen up" and "keep it
simple".
Insufficiently comprehensive measurement programs. While many individual activities
may be measured to death, measurement programs on the whole typically have big gaps.
Important things, often in the health and value categories, are not measured because they are
seemingly difficult to measure, and because the results don’t come in until sometime in the
future. As one result, important interconnections among performance, health, and value are
not visible until it is too late to do anything about them. As another result, management loses
credibility because the overall operation and organization are not really under control. A
comprehensive measurement program, especially one that motivates and communicates value
and health, demonstrates good management, raises credibility, and sometimes even mitigates
the negative impressions of poor performance. A measurement program with obvious gaps
does the opposite. The cure for insufficiently comprehensive measurement programs lies in
balanced scorecard and service profit chain approaches. The goal is to account for all the
ingredients, understand how they interact, and be able to adjust the recipe over time.
from Implementing an IT Performance Scorecard: Taking Measure and Taking Action (CG-4506)
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