How it works: Using metrics to improve IT-Business alignment

A recent global survey of 150 CIOs by Accenture found that top performers base IT investment decisions on their ability to drive the business forward, but few companies have created the metrics to help them do it. Seventy-five percent of companies surveyed recognize the need for such metrics, but only 33 percent currently use them, the consultancy found. 

Frank Modruson (Accenture’s CIO) says that CIOs must create metrics that show the business how IT is meeting its needs, in "digestible and understandable" terms. "Measure IT's overall performance using a scorecard, he suggests. This should cover IT's contribution to the business (italics ours) , project sponsor and employee satisfaction, and IT spending on operating costs versus new technology investments." (Katherine Walsh, CIO Magazine, Oct 1, 2006)

How it works: our metrics are based on data from our confidential surveys of the top three levels of your senior business management. We ask each of them to list their top 3 business goals and assess IT's current contribution to their achievement on four dimensions. We combine the data on all three goals from all the managers in a business unit. The result is a direct measure of IT alignment for that unit: IS Contribution to managerial goal achievement™.

We tabulate the results by business unit, because these units are usually very different across the enterprise. For each unit, you learn which goal types are getting the best and worst IS Contribution, so you can see where improvement is needed. When IT budgets are tight, you can also see where additional effort is not necessary.

To improve alignment, unit business managers meet and review the findings with IT managers. They compare current project portfolios with actual business goals and rank project importance in relation to goals. Together they develop ideas for what projects are needed to improve IT's contribution in key goal areas, and what projects can be cut back to free up funds for improvement. Unit-level results are then rolled up to the enterprise level, where ultimate priorities (and budgets) are set.

The Alignco Case Study gives detailed examples of the re-alignment process. You can download it by clicking here.

Readiness Factors

We also measure your organization's readiness to begin re-alignment with scores on IT customer satisfaction, IT credibility, and planning interaction (between IT and business). Our Improvement Model shows how these work.

Briefly, we check scores on IT Credibility and Customer Satisfaction. If these are low, it will be difficult to get Planning Interaction meetings going. Work to improve these may be needed to in order to proceed. And if Planning Interaction scores are also low, it means that IT and business don't share much about their future plans with each other. So work may need to be done on these in order to go ahead with re-alignment.

Baseline Assessment Process

We obtain alignment data from business managers in each major unit of the organization with an e-mail or web-based confidential survey. No interviewing is involved, as the questionnaire is highly standardized and validated. "Units" are defined as key parts of the organization whose functions require that they be treated differently by IT. The survey takes about 20 minutes to answer, and is returned directly to us.

We also survey IT managers on topics including systems quality and functionality, job satisfaction, and the status of standards for IT.

We conduct a very brief survey of senior corporate management to compare their goals with those of operating management in the units.

Finally we gather data on general organizational characteristics, such as size, budgets, size of the IT function, and how the IT function is organized.

Our analysis is presented at your site by CogniTech principals, in a Powerpoint format. The report files are the property of the client. Normally we brief the senior IT staff, followed by a briefing for selected senior business managers.

We budget 2 days per unit for training IT managers to organize and run Planning Interaction meetings with managers in each unit.

Elapsed time from contract to final delivery of baseline results is normally from eight to twelve weeks. Clients should plan for another assessment about a year after the first, to gauge progress and note emerging problems and issues. For further information, go to Frequently Asked Questions on this site.

New Key Performance Indicator

A number of our clients have used our basic measure of IS Contribution to Managerial Goal Achievement as a key performance indicator to determine incentive pay for IT managers. Since it is highly correlated with profit margins, it is a realistic measure of IT performance for the business. This incentive also works to get IT managers into the change processes involved in re-alignment.