7 Guiding Principles of Business-Oriented KPIs for IT

7 Principles to Business-Oriented KPIs

Driven by the acceleration of digital transformation within their enterprises, CIOs have engaged in a significant shift in their IT leadership objectives which are driving the development, monitoring, and usage of new IT metrics and KPIs.   What are the new guiding principles being used to deal with the “service oriented” IT business required by the rapid introduction of new technologies?  Such concepts may seem obvious when listed but are too often unknown during implementation of metrics.

Principle One: Results

Move away from KPIs focused on organizational activities, like time, cost, etc. While interesting, these activities are too often used as weapons to enforce submission and are inadequate to motivate changes in behavior.   Instead focus any kind of performance management on the results desired by the business …or on what the organization is trying to accomplish.

Principle Two: Value 

KPIs must have value in making a business decision possible, meaning that “value” is what is being measured …not information or activity.

Principle Three: Actionable 

KPIs must identify what is “actionable” versus non-actionable, meaning that the KPI must provide some kind of insight to effect some kind of demonstrable improvement

Principle Four: Timely 

Being timely frequently means real time, as well as trading off a KPI that is exact …but too late for any kind of impact versus a KPI that is approximate but good.

Principle Five: Efficient 

Efficiency refers to process and requires leveraging what’s available.  The goal is to express clarity in the “why” for purposes of closing corporate books in hours instead of weeks.

Principle Six: Unambiguous  

Metrics must be clear, concise, objective, and verifiable … and is not open for debate.  KPIs must be able to be checked and verified.    The symptom of ambiguous is that those involved with the metric don’t know why the measurement is done.

Principle Seven: Leading vs Trailing KPIs

Trailing KPI’s look backward to assess what we’re doing well and where we are off target. “Leading KPIs” identify our progress towards the business goal and enable us to adjust our performance, behaviors or deliverables so that we can get back on target. We need both.

For more guidance on developing KPIs for digital transformation, watch this on-demand web conference from IDC’s IT Executive Programs which features survey results of KPI practices from successful IT organizations.

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