This model is a road map for improving IS alignment and contribution, which in turn improves profit margins of private-sector companies. All these metrics and their inter-relationships are very useful in understanding IT performance improvement. Here's how they work, starting at the top.

IS Contribution and Alignment is the major outcome measure for IS performance. This is the measure our clients use as a Key Performance Indicator (KPI) for IS performance. It is also used as a basis for incentive compensation for IS management and as a component of a Balanced Scorecard for IS. This measure is important because it correlates very significantly with industry-normalized profit margins across more than a hundred private-sector companies. In fact, it accounts for about half the variance in within-industry profit-margin comparisons. So this is the key target measure to improve.

This is done by re-aligning IS projects and programs to better support actual management goals and objectives as revealed by our measurement process. Re-alignment takes place within the operating units of the organization in Planning Interaction meetings including both IT and business managers. They start by using our survey data to match proposed IT projects with actual operating management goals. Our data show you what kinds of IT projects are needed to support new management goals, and which current projects can be de-emphasized to free up funds for new ones.

The road map shows that Planning Interaction is the biggest determinant of IS Contribution. (Planning Interaction scores measure how well IS and business managers work together in the development of the business Strategic Plan.) When IS managers participate with business unit managers in the planning process, they know where the units are headed and can adjust the IS portfolio accordingly. This involves identifying new IS projects to support new goals and noting what projects can be de-emhasized to free up funds for new projects. When this becomes part of an overall organizational planning process, it has resulted in improvements in the IS Contribution score of between 3 to 7 points in a 12-18 month period and corresponding improvements in industry comparative profit margins of one to three percentage points.

Assessing relationships. Planning Interaction requires strong collaboration between business and IS managers to understand the alignment issues and to recommend changes in IS projects and programs. Sometimes relationships between business and IS managers are so poor that it is difficult to get them together for the re-alignment process. Here's where the other measures are very helpful.

IS Credibility is the important centerpiece here. It has a .59 correlation with Planning Interaction scores. The long and short of it is, if IS Credibility (with business managers) is low, (meaning that business managers don't believe IS capable of delivering projects effectively), business managers won't take the time to work on re-alignment issues. Both IS Credibility and IS Contribution vary greatly across operating and support units of the enterprise, and if these are low, remedial actions must be taken in order to get on with planning interaction. So, if IS Credibility is low, where do we look in order to fix it?

Customer Satisfaction, of course. Our customer satisfaction metrics assess business manager ratings of IT performance on many different basic jobs. If IS does not do its basic jobs well (such as delivering needed information accurately and in timely fashion), it hurts IS Credibility enormously. We look at how well IS scores on things like quality of output, response time, downtime, and the like, to see what must be remedied to improve credibility and customer satisfaction.

We also look at Systems Quality and Functionality measures to see if particular system types are creating problems for business managers. Finally we look at several measures of the quality of the relationships between IS and business managers. If these are problematic, we can turn to our measures of IS and business cultures for underlying reasons.

Cultural Conflicts Assessment of IS and Organizational culture types and their characteristics have proven to identify many of the reasons for conflicts between IS and its internal clients. These conflicts are many times the basis for low Customer Satisfaction scores. Also there can be both cultural impediments to and enablers of Planning Interaction. The ability to identify problems and build the solution bridges to resolve these conflicts can result in improved Customer Satisfaction and Credibility scores, paving the way for effective planning interaction.

CogniTech's assessments provide a rational, data-based way of managing the IT project portfolio. Our knowledge about these impacts was established scientifically, using data from over 200 organizations and thousands of individuals over the last 15 years. So your improvement efforts are solidly based on facts, aimed with precision at exactly what must be done to improve IS Contribution to the organization's bottom line.