Erik Guldentops, Executive Professor at the University of Antwerp – Management School.

How are CIOs dealing with Performance Management? CIOnet set up a survey that got an excellent response from 70 CIOs providing a ton of information.

The main objective of IT Governance is addressing IT’s performance in its contribution to the business. As one of the five domains of IT Governance, Performance Management is about measuring the other four domains. While Strategic Alignment and Risk Management should not be underestimated, CIOs are used to deal with the remaining two domains: measuring IT’s contribution to the business (Value Management) and measuring the usage and performance of resources necessary to deliver that value (Resource Management).

Real or perceived
The survey showed most enterprises involved were sufficiently independent to establish their own IT strategy. It inquired the enterprises’ needs for reliable IT as well as for new IT to get the feel for what that strategy is, real or perceived. At the same time the survey probed for the perception of IT in the enterprise. The first two questions positioned all survey enterprises in the IT Strategic Impact Grid as defined by McFarlan, as being in the strategic mode. Those looking at the results could not ignore a sense of ‘wanting to be’ versus ‘really are’, better known as the knowing-doing gap. This was confirmed by the perception questions. They indicated that IT is considered as a value enabler with predictable results. At the same time it showed a lesser believe in IT as a business opportunity and a lesser confidence in IT’s abilities and responsiveness.

Metrics
When measuring IT’s performance, the positioning in strategic mode is further questioned by the strong focus of enterprises on budget-oriented metrics. A quarter of the CIOs reporting to their CFO may have a strong impact on this. Even stronger indicators against the strategic positioning were the low importance of innovation and future orientation metrics compared to the financial, customer and operational metrics. Important ser-vice metrics appeared easy to obtain. Or were they important because they are so easy to obtain? This illustrates one of the key issues in IT performance measurement: cost-efficient availability of metrics that closely link to the strategic objectives. Notwithstanding, the survey provided lots of data about the metrics with the highest impact to cost ratio in all industries. This together with data on importance, cost, inhibitors and enablers, actual and planned metrics will lead to further analysis and articles on Performance Management.
Despite probably overrating themselves on their maturity on the subject, enterprises defined the key to success in Performance Management: the need to have clear objectives, strong focus and effective communication. Finally, let me quote John Thorp who spoke on IT Value to CIOnet members a couple of years ago. When confronting an executive with the fact that performance results of past projects were not properly used in a business case, he got the answer that they would surely perform better in the future. John exclaimed: “Hope is not a method!” ?

Source: CIOnet Magazine, winter 2010