Metrics are important for an IT organization to manage and control costs while ensuring the quality and value of service increases. Metrics are a key part of a managed process environment enabling cost reduction. Many organizations have great intentions when selecting and implementing metrics, but often fail for the following reasons:
  • The metrics and data are not actionable. For example, many organizations report the number of incidents they solved during the month. If the number of incidents was 100, or 200, what is the meaning of the number, and what are you able to do about it? If you change the metric to report the percent of incidents that were caused by changes, or the percent of changes that caused an incident, now you have a quality and resulting cost measure to impact. For any metric ask yourself if it is good or bad, and if you are able to do anything to affect it. If you cannot answer these questions, it is not a good metric to use.
  • The metrics are not meaningful. Metrics drive behavior. The problem is the wrong metrics drive the wrong behavior. Avoid this by making sure the business drivers are the foundation for your IT guiding principles and that you use the guiding principles to drive the metrics. Do this by asking how you will know when you have that attribute. One company identified a list of possible metrics based on the business drivers as shown in Figure 1. Metrics facilitate the realization and vision of a plan if you ask yourself, "How will we know when we achieve that?" For example, if a guiding principle is flexible systems, how will you know when you have achieved that? A good metric may be to measure the average time to make a modification to the system. Even better than measuring how fast IT completes requests, measure how many requests the business completes themselves. This would be flexible systems at their best.

    Key business drivers
    IT principle
    Resulting key metrics
    Implementation priority
    • Growth
    • Acquisitions, divestures
    • Agressive
    • Global potential
    • Performance (monthly)
    • % of service level agreements met (annual)
    • IT steering committee meetings (annual)
    • Customer focused
    • Cross selling
    • Varied stakeholders
    • Desire for paperless
    • Remote offices and dispersed workers
    • Driven by key metrics
    • % of applications Web enabled (annual)
    • # of duplicate data groups (annual)
    • # batch interfaces (annual)
    • Breadth of business
    • Innovative
    • New products
    • Need to be nimble
    • # reusable components (annual)
    • Average time to complete requests (monthly)
    • Competition
    • Price pressures
    • Business process improvement
    • Changing profitability curve
    • Capital constraint
    • Economic fluctuations
    Efficient and effective
    • % projects on time (qtrly)
    • % projects on budget (qtrly)
    • Internal client satisfaction (annual)
    • Help desk request satisfaction (monthly)
    • Post project review satisfaction (qtrly)
    • % of IT costs for maintenance (annual)
    • % maintenance as a percent of revenue (annual)
    • % of applications custom (annual)
    • # improved/paperless business processes (annual)
    • Average IT satisfaction rating (annual)
    • Regulatory
    • Privacy issues
    • Industry forces
    • Overall availability % (qtrly)
    • # audit findings (annual)
    • # disruptions by severity (monthly)
    • % abandon calls (monthly)
    • % calls resolved on first call (monthly)

    Figure 1: Metrics example
  • Make sure the business executives and governance process are involved in selecting metrics that are meaningful to them so that you do not have to report endless amounts of meaningless data. If your goal is cost reduction, make sure that you reflect that in your metrics. However, in addition to efficiency, metrics that measure whether you are doing it well can also include effectiveness metrics that measure if you are doing the right things. This will ensure you do not cut costs or decrease value or service to the organization.
  • Make sure you do not have too many metrics. There is an endless amount of data that you are able to measure in IT. Keep in mind the 80/20 rule and focus on the data that is critical and meaningful. Work with the business to agree on what is meaningful to them. Less is more and fewer metrics drive focus. Too many metrics confuse employees on what is important. As the organization evolves and matures, you can add more metrics, but start small.
  • Publish and communicate the metrics. Some organizations make the mistake of using metrics at the management level but not communicating them to the entire organization. Make sure targets are attainable. Trend metrics to ensure you are heading in the right direction. Communicating the metrics on a regular basis will tell others it is important. Celebrate success.


This section includes processes to manage the business relationship, including understanding the business, marketing IT offerings, satisfaction management, and metrics management. This section outlines specific cost reduction opportunities in these processes.

Understanding the Business

When working with the governance process, IT should challenge the business projects to ensure that requested IT investments result in quantifiable benefits and to verify alignment with the strategies and priorities. However, to do that effectively, IT must understand the business and have a good relationship with it. Many organizations do this by having liaisons, relationship managers, IT partners, account managers, or analysts for the business. These individuals are responsible for managing the business and IT relationship and are passionate about it. They proactively help the business determine how to use technology and participate in process re-engineering. They know their industry, participate in departmental meetings to understand their challenges, and speak the language. This close relationship will ensure that technology investments are in alignment with the business and will reduce wasted costs on projects that begin but are cancelled, or on projects that are completed but do not deliver the anticipated benefits. This level of involvement will improve IT s credibility and IT will be perceived as a true business partner.
Many popular IT strategic planning methodologies tout alignment with the business. It is only with this deep and thorough understanding of the business that IT is able to go beyond alignment to becoming a transformational leader and business strategist that helps use technology for innovation and differentiation in the marketplace. This knowledge will ensure IT investments are the most effective.

Marketing IT

IT must continually market and communicate the services and products available to the business. Only by using the tools and technology will the business realize the most value and payback from investments. The more individuals that use the tools and functionality, the less the unit cost of the functionality. There is nothing more discouraging than having a company invest millions of dollars in a Customer Relationship Management system, then having only one or two power users actually use the technology. As mentioned earlier, most companies only use a small portion of the functionality provided in monolithic Enterprise Resource Planning and other enterprise systems. Continual training and education will increase the use of systems and return on investments. New employee training should provide an overview of all IT capabilities, policies, and procedures so they are aware of tools to make their jobs easier. Monthly status reports, Intranet sites, and other presentations inform all areas of the business of IT activities and tools. Several companies mentioned wasted efforts and money due to a lack of communication, where one part of the business was investing in technology while another business unit was investing in another similar technology, which created duplicate functionality and excess costs.
Top Tip: Communication

"Communication must be robust in good times so you can leverage it in tough times. We have an online newsletter every two weeks for communication. We have team lunches on a regular basis to talk and listen to concerns."
—Hank Zupnick
GE Com Real Estate

Satisfaction Management

In times of cost reduction, be sure to communicate changes and level-set expectations of changes that the business should expect in service levels, support, or services. When reducing costs, it is important to ensure that the service and value you provide to the business does not decrease, or does not decrease more than planned. Having documented and agreed-upon service level agreements, as mentioned earlier, will help in communicating changes in services or expectations. Ensure you provide proper communication if service decreases are planned. People are far more tolerant of lower service levels if they understand the cost savings that are driving the changes. Conduct regular surveys that measure the user satisfaction with IT. Ensure cost reductions do not affect satisfaction too deeply or you may need to take appropriate action to shift costs.