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Different Strokes for Different Units
The CIO at a major property and casualty insurance company explained his company's approach this way: "IT value metrics are developed internally and matched to the business unit. In other words, something done for the workers' compensation business unit would be totally different from [metrics] for personal automobile, which would be different from those for commercial building coverages. Most of these have been in play for many years, with modifications made as the business changes."
Gary King, CIO at fashion retailer Chico's, echoes this business-by-business IT value measure. "My conversation with the business unit changes based on the business unit. For some, it is about cost savings, for others the ability to scale or drive revenue," he says, noting that steering committees monitor delivery dates and project scope.
"Value measurement forces discipline. Many people hate this," says a services firm CIO. "The chief operating officer and divisional COOs love it, since it forces discipline and business rigor -- and solid business fundamentals."
How Metrics Change the Business Conversation
James Barry, vice president of application development at payroll firm ADP Inc. in Roseland, N.J., believes that metrics are what get him a spot at the strategy table. "Without any quantitative measure of my organization, I would not be at the table with the decision makers," he says. ADP tracks uptime percentages and total cost per client for building, supporting and maintaining systems. "No matter how many stats we give, they always want more," Barry says.
Providing believable, respected metrics also helps counter the "technology is too expensive" argument, adds the CIO of a global financial services firm. "What I now do is have a business conversation regarding whether the business activity is generating appropriate value for the shareholder."
Another CIO agrees. "The metrics had the benefit of making the conversation a business conversation, regardless of the topic," says the CIO of an East Coast insurer. "They tended to focus on improved profit, lowered costs, increased satisfaction, greater market share, etc." Systems projects that supported various business initiatives were blended into the overall project plan along with the other drivers. "These tended to increase the level to which IT was a business partner, with its own deliverables, as part of an overall plan -- which is always more valuable than having system projects in isolation," he adds.
"It is my experience that not all metrics are numeric. How the company feels about technology and IT is also a major factor at all levels," notes Reesa Abrams, a longtime educator and principal at Techno-Coach in Monterey, Calif.
The power of metrics comes not from the numerical values they portray but in how effectively they guide us and our businesses to the same page (see CIO Habitat, June issue).
When you know where the goalposts are, it is much easier to score.
Thornton May is a respected futurist, adviser and educator whose insights on IT strategy have appeared in Harvard Business Review, The Wall Street Journal, BusinessWeek and numerous computer industry publications. To comment on this story, email editor@ciodecisions.com.
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