Wednesday, January 20, 2010

How to Implement a Successful Information Technology Performance Program

The IT/IS department's role is to provide technical support for the entire organization. While we know that this alone is a complex task, today's business model requires IT/IS to not only support users, but to align technology to meet the business needs of the organization. Understanding business unit objectives and translating them quickly and accurately into IT priorities is essential today. Just as critical is the ability to effectively communicate IT planning and performance data in a way that is useful to business unit management. The growing complexity of IT/IS, the frequent technology changes which take place, and its continuous impact on organizations, have made managing IT performance a critical function for most organizations. Executives are constantly looking for ways to use IT/IS more effectively, and identify uses which generate a higher value add. At the same time they must guarantee the effective integration and return on investment in order to achieve organizational goals and gain a competitive edge.

So how does a performance management team measure how well an organization's IT/IS is aligned to organizational objectives? To answer that, first let's take a look at the different vehicles for aligning and measuring IT performance. The IT Performance Management System utilizes the following vehicles to generate reports that help an organization understand how well they are measuring up to business objectives:

  • Service Level Agreements
  • Performance-Based Contracts
  • Products and services catalogs

Performance Based Contracting (PBC) and Performance Based Acquisition (PBA) are techniques for structuring all aspedcts of an acquisition around the purpose and outcome desired as opposed to the process by which the work is to be performed. Performance-based contracts are predefined by an agreement between the user community, the organization and external service providers.

A Service Level Agreements (SLAs) is a seamless contract that establishes specific services that the organization will deliver to the end-user community with regards to various timeliness, availability, performance, and problem resolution criteria. The metrics contained in a performance based contract need to be specific, measurable, trackable, and meaningful. Performance-based contracts state what a vendor will perform and how well they must perform that activity in order to fulfill its commitments. This gives the vendor the freedom to approach the task however it deems fit, in order to meet the agreed upon requirements.

Product and service catalogs document the products and services that the IT department provides. They underpin the service level management process. The service desk uses the product and services catalog to advertise IT services, and to assist in day to day activities. Documenting these services allow your organization and customers to negotiate SLAs, establish Operating Level Agreements (OLAs) and execute underpinning contracts.

These vehicles are all extremely important in ensuring that your IT performance program is aligned to organizational goals and objectives and that the metrics you are reporting drive your organization to achieve them.

Which Functions Does Your IT Department Support?

What functions does your IT department support? Help desk, capacity planning, data integration, security and custom business application development are a few of the functions most IT departments today support which are critical to the success of a business. It is the performance management team's responsibility to ensure that they identify and report on metrics that capture true business effectiveness.

Questions the performance management team should ask senior management regarding IT strategic alignment and performance:

  • Which of your business unit's processes support the organization's mission the most?
  • Do the metrics we report on drive those processes?
  • Are you satisfied with the current performance throughout your organization?
  • Do our metrics address the company's critical needs?
  • Do our reports provide the required information to make business decisions?
  • Do they identify areas of misalignment?
  • Do IT initiatives appear to be prioritized appropriately?

Inputs into the IT Performance Management Process

IT Performance success and organizational success in general begin with defining organizational goals and objectives. It is critical that IT functions are centered around helping the organization reach it's goals and objectives. If obtaining the best customer satisfaction results is important to your organization, then measuring how many tickets your help desk generates is not the most important metric to pay attention to. Customer satisfaction rating, customer loyalty and time to resolve issues would be more appropriate. When you are determining which metrics you'd like to include in your service level agreements, make sure you identify measurements that drive your organizational goals.

Budget, schedule and project risks are also important when managing your organization's IT performance. The key to successfully managing any project is to make sure you accomplish your tasks under budget and within schedule. By integrating these factors into your service level agreements and other performance based contracts greatly increases the success of your performance initiative.

Outputs to the IT Performance Management Process

Once you have setup the service catalog and performance-based contracts you can focus on the outputs that your performance team will produce. These outputs include:

  • data
  • internal reports (how well are day-to-day operations being executed?)
  • customer-based reports (how satisfied are your customers?)
  • performance reports (is your performance meeting the standards of the performance-based contracts?)
  • contractor-based reports (how well is the service that your contractors/service providers are providing?)

The IT Strategic Planning Process

The planning process involves asking such questions as who participates in the work group, who is responsible for the plan, how can user participation be guaranteed, how can coordination of the different departments involved be assured and how can the quality of the process be reached. The composition of the group responsible for IT/IS planning is a key factor in the planning process. Therefore, the team that finally approves the strategic plan for IT/IS is usually comprised of the top management of the company, the managers of the different functional areas and by the IT/ IS managers whom, with their teams, prepare the plan. Companies that fail to commit senior and departmental management to the strategic plan have a difficult, if not impossible task of aligning IT systems to Business Strategy.

Why is it important to evaluate strategic planning when it comes to Performance Management? Because measuring the right processes is the difference between an organization that is functional and one that's highly efficient. Measuring the right processes allows an organization to eliminate investments that are not producing favorable results. And because it allows them to focus on the areas that most affect the success of the organization.

Victor Holman is a performance management expert who helps organizations reach performance goals through best practice analysis and implementation and custom enterprise performance management products and services.

Check out his FREE performance management kit, which includes several templates, plans, and guides to help you get started with your next initiative.
Victor's complete Lifecycle Performance Management Kit is a turnkey organizational performance management solution consisting of a web based organizational performance analysis, 7 guides, 39 templates, 600+ metrics, 35 best practices, 48 key processes, a performance roadmap and more.
His Organizational Performance and Best Practice Analysis measures how well organization's utilize the key performance activities that drive organizational success, and identifies cost savings opportunities and the critical path to reaching organizational goals.

Learn all about performance management at The Performance Portal


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  9. You had me lost there with your first sentence, but then you got it right. IT supports business objectives and strategies, and anything different than this is a waste of IT resources. I notice that IT departments often do a lot of busy work that adds no value to the business... and that IT people are technical people that have no clue about how the business operates, but IT management should always make sure that IT personnel are aligned with the business strategies.

    Anyway, nice article with a lot of detail.

    Thank you,

    Brian Satterlee

  10. Hi there Victor

    IT seems to be an overwhelming industry indeed with technicalities and confusing codes but one of the most valuable resources that comes by it is the ability to capture and connect with many around the world... marketing, finance, business all evolves around it as to say.

    Great blog... hoping to learn more great things about business strategies here... THnks

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