Technology, IT Performance

IT Management should not begin and end with a spreadsheet

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Last week, I attended two roundtable events put on by Hewlett Packard. During the lead-in for the event, the moderator asked the attendees about the importance of performance management and the current state of IT management and measurement at their companies.

Management by spreadsheets

What I found fascinating was that every person in each room was measuring and managing  the old fashion way—after the fact by manual manipulation of Excel spreadsheets. This is problematic at multiple levels.

According to Derek Abell, “control is different than ‘reporting’ in that it implies the possibility for management intervention if things go out of control. Control implies feedback in which management is actively involved. Reporting, on the contrary, is passive. For control to be effective, therefore, data must be timely and provided at intervals that are effective for intervention.” (Derek Abell, Managing with Dual Strategies, pg. 275). At the very least, this means the IT companies participating in the roundtables are not controlling their IT environments the way they should. And apparently this is true across industries as participants came from commercial banking, healthcare insurance, entertainment, property and casualty insurance, and local government and public sector.

Top ten issues provide much insight to the problem

With this sad news said, everyone attending the roundtables was, in fact, looking for a better way to measure and manage. I found as a result their individual comments on the state of IT measurement very interesting. Here are the top 10 comments that I heard in David Letterman fashion.

10) “We measures 100’s of metrics after the fact but we need to measure key things during the fact.”

9) “We need to move from subjective to objective evaluation of performance.”

8) “What is the top line and bottom line for IT?”

7) “Are we making sense out of the data that we collect today?”

6) “For five years I have been managing, now I want to measure and manage.”

5) “We do a ton of work with spreadsheets and this is in fact the problem.”

4) “Simply put we have a timing and quality of data issue.”

3) “Nobody knows what we do until it breaks.”

2) “Today we can only predict the train wreck; we cannot prevent it”

1) “In God we trust; from all others show me the data”

Everyone acknowledged improvement is needed in how they measure and manage IT. To some degree, comment No. 3 “nobody knows what we do until it breaks” was the most telling.  This means that IT is not showing its value except when something negative happens. This is a double negative if I have ever seen one. Simply put, IT organizations need to measure, manage, and communicate the value they generate to the organization as their contributions are taking place. This is what a measurement and management strategy should aim to achieve.

Related links:

       Feature:  Peak performance demands precision control

       Solution page:  IT performance management

       Twitter: @MylesSuer

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Discussion
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mdavis10
Martin Davis 128 Points | Wed, 03/21/2012 - 14:59

Excellent article, it highlights the sad state of affairs with how IT reports and demonstrates value to the business.

 

Joel - you make some great points and I would be interested in any good articles you have come across on how to do a better job of reporting the contribution of IT to business performance.

myles.suer
Myles Suer 139 Points | Thu, 03/22/2012 - 17:03

Thank you Martin for your kind words. IT organizations are really behind in measuring and thereby, managing themselves. I do understand Joel's comments as well about getting to business oriented metrics. These are truly important but industry specific. As I published yesterday, I do, also, believe there is place for IT specific measures and benchmarking too. And even here IT organizations are behind.

Myles Suer

Warren
Warren Burns 11 Points | Wed, 03/21/2012 - 00:54

Excel runs businesses more than any BI tool.

Even though they won’t admit it out loud CFO’s secretly think that there is nothing that can’t be done with either Excel, or in the most extreme scenarios, a Microsoft Access data base. 

Whilst you are standing there pitching that shiny new ERP project to them they are thinking “5 spread sheets and 2 Access databases max”. 

The big consultancies all know this, excel skills are the primary skill they are looking for when they are loitering outside the university gates wearing trench coats and promising boiled sweets and international inductions to the graduates passing by. 

All partners at big consultancies have only reached that level because they have learned the secret skill of making a pivot table do a complete rendition of the Kevin Bacon dance in the movie Flashdance.

jdobbs
Joel Dobbs 324 Points | Wed, 03/21/2012 - 00:01

Myles,

 

Great topic.

 

The real question is what do you do with what you measure?  Many IT departments measure all kinds of performance metrics (many of which are, quite frankly, useless) and then report them, as you point out, after the fact usually buried in a sleep-inducing monthly report.  They are never used, or probably even read, by anyone. 

 

As I see it there are two big categories of IT performance measurements.  The first are the traditional service and performance related ones, stuff like up-time, network performance and all of those things. These should be primarily for internal IT consumption and should be used for continuous improvement.  Reporting without action is a waste of time and energy.

 

The second, and I believe more important metrics, involve the contribution of IT to business performance.  These are much harder to both conceptualize and measure but should be the type of things that CIOs talk about with peers.  These would include measuring and reporting  such things as IT’s direct contribution to  manufacturing cycle times, profitability, sales force effectives and order processing, to name a few.  The measures are expressed in dollars or direct measures of organizational effectiveness.  Very few people do this well, if they even attempt it at all.  It can be challenging to implement but is essential if one wants to move beyond the service provider/cost center role to that of a strategic partner.

 

Joel

 

Goddardd
Doug Goddard 122 Points | Tue, 03/20/2012 - 21:19

It seems to me this article is really about IT governance. In organizations that take governance seriously spreadsheets are still employed but usually in a peripheral way. The reason is they simply cannot handle the amount of data, due to things like string limits. I worked on one large governnce automation project for an outsourcing deal for a major Canadian bank where 12,000 unique resource units were identified in the service catalogue. There were a fewer number of services but the bank was interested in measuring TCO at a resource unit level. The monthly invoices had around 250,000 to 500,000 line items and those line items had to be cost allocated acoss a 30,000 node heirarchy and several different dimensions. In addition to using the allocations for charge-back the bank was also employing it for a fine grained ROI analysis, measuring performance by senior VP, junior VP. line of business, program, portfolio, transit, etc.. At that time spreadsheets tapped out of string space at about 60,000 rows. I'm not sure if that has changed but they certainly didn't work in that context, not to mention the problem of keeping the data within them consistent, acoss hundreds of spreadsheets.

 

Good topic.

Goddardd
Doug Goddard 122 Points | Tue, 03/20/2012 - 21:31

Sorry, I meant TCO rather than TOC.

jdodge
John Dodge 1400 Points | Wed, 03/21/2012 - 13:08

Doug, I fixed the typo...you can always ping me when you need something like that. Best..JD

jdodge
John Dodge 1400 Points | Tue, 03/20/2012 - 14:27

One, two and three are pretty good, but three has the best express the under-appreciation of what IT. Problem is they get blamed for it breaking, too.

PaulM
Paul Muller 119 Points | Tue, 03/20/2012 - 12:29

Love it! What a telling top-ten list as you say, #3 is the most challenging - this indiactes a deep and severe breakdown between business and IT that perhaps explains why "Business and IT Alignment" remains a top level CIO issue more than 20 years since we first started talking about it...