acca report outsourcing

The IT organisation is moving beyond simply being a provider of services to the rest of the business, it is expected to work closely with the business in delivering maximum returns. In order to show how IT is benefitting business, metrics are needed to gauge costs, efficiency, productivity and performance. Here are six issues that CIOs should concentrate on.

Tailor your metrics for the appropriate audience

All too often, the IT team's internal metrics are presented externally to the business or the client, says Glenn Bladon, Director, IT Consulting at IT consultancy and services provider ECS. "Smart CIOs will provide different metrics/dashboards for different audiences. For example the CFO will be interested in cost metrics that ensure he is getting value for money," he adds.

Focus on the important stuff

The CIO must learn to develop new metrics around a number of topics – including system development priorities, new application functionality, and product and service sales – to highlight to the senior management board the business value that has been generated.

"Within my own organisation, I've introduced high-priority applications and system upgrades on a continuous 30, 60, 90-day delivery cycle that aligns with quarterly company objectives," says John Everhard, chief technologist at Pegasystems Europe. "This enables me to measure new application functionality and system upgrades that have been delivered to production."

Make sure the metrics measure what customers need and understand

"Too often a CIO and their team build metrics in IT without really understanding what customers (internal and external) really need from their analyses," says Adam Woodhouse, a director in KPMG's CIO Advisory team. He says that spending time to understand how your team and customers work, use IT and what's really important to them, is the best investment a CIO can make.

He advises CIOs to understand what customers need, translate this into metrics that IT people can understand and measure; and report these in a clear way.

Measure service quality, not transaction quantity

CIOs need to weigh metrics about the quality of service more heavily than quantity and length of transactions.

"It's important that CIOs look at this in the context of improving overall service quality, rather than the opportunity to save costs for example, and work with the business to understand their objectives and requirements," says Stuart Facey, vice president EMEA at Bomgar. "This approach may require CIOs to change their support team's structure, skills and training, in addition to their metrics."

Get organisational buy-in

An implementation of a metric gathering method will only work if all the relevant parts of the companies accept this methodology.

"Communicating clearly with the immediate team and other colleagues will only increase chances in collecting the most favourable information, of which to guide businesses to a comprehensive performance overview," says Colin Rowland, vice president EMEA at Apptio.

The right metrics get better results

Many businesses employ metrics, but more often than not, they are not using the right ones. "There is no point measuring the amount of support tickets closed from an outsourced IT service when that is not what the Service Level Agreement is built around," says Paul Cash, managing director of Fruition Partners UK. "If you're not looking at the right metrics, you run the risk of hiding poor outsourcer performance and uncovering it when the damage is already done." He adds that metrics should not be applied to single, siloed contracts – but with a view to the metrics of the whole end-end-end IT function.

Don't concentrate on just costs

Simply trying to reduce cost is short sighted and can result in unintended consequences, says Oliver Neuberger, a partner at independent consultancy firm Glue Reply. "Our most advanced clients have the control tools and governance to link IT performance directly to macro level business outcomes, such as NPS, revenue and profitability. By measuring the right things, businesses can encourage the right behaviours and evolve an IT function that supports and drives the business rather than one that is sold off to the lowest bidder," he says.