Key performance indicators (KPIs) are how professionals demonstrate that they are improving the business. For a clown, a KPI might be the number of children who laugh at a joke, or maybe the number of eyes poked out by a popped balloon animal. IT too has some metrics that work better than others, and Pearl Zhu writes about four perspectives on CIO KPIs at his blog that best allow the CIO to measure growth and success:
- IT cost breakdown
- IT performance quadrants
- PMO KPIs
- IT KPIs to measure business/IT capabilities
Breaking down costs to see where all the money is going allows opportunities to tweak or shift the bottom line. The data can be used to both improve financial forecasting and determine through dollars spent what are the top priorities of IT. If dollars spent do not align with organizational goals, it is time for a change. Measuring the value of IT itself through polling the various departments on IT’s worth will also prove beneficial, as IT will almost certainly improve as it strives to meet higher evaluation scores from each department.
Using the IT performance quadrants of customers, IT service/project performance, fiscal health, and organizational capacity will enable IT to use the right metrics to the right stakeholders in the clearest possible way. PMO KPIs come into the equation when CIOs want to be able handle projects as an intrepreneur (NOTE TO MATT: Apparently, that is indeed a word separate from entrepreneur, if you weren't already aware of that. Obviously, I was not.), and particular PMO KPIs of use to IT are return on investment, time to market, and resource utilization. When talking about KPI to measure IT capability, Zhu says:
Thus, CIO needs to pursue tactical, strategic and innovative alignment with the business. The long term growth is usually based on a unique set of business capabilities, how can KPIs capture such “capability” insight or process effectiveness, innovation? Understanding and having a visual representation of your IT/Business capacity will result in your ability to understand where your internal resources are being deployed. With this metric in place, you can then begin to decide which business units /departments/ stakeholders are receiving too much capacity, and which ones are not.