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IT should embrace performance measures

This is the third in a series of four posts on bringing transparency into the IT/Business leader discussion.

Performance grades are a strange thing. We get graded regularly from the time we enter kindergarten until we earn our college and graduate school degrees. Yet once we enter the workforce, grading pretty much disappears.

Or, the idea of “grading” in the workplace takes the form of the often-dreaded annual performance review. But annual performance reviews don’t help an organization address how a department is doing. And “how IT is doing” can be a significant source of friction between IT and business leaders.

The earlier posts in this series ("ending the reign of the C-I-No" and "fixing the divide between IT and business executives") introduced research by George Westerman, Research Scientist at the MIT Center for Digital Business, on the importance of transparency in the relationship between IT and business. In these posts, we detailed two of the four key value areas to this transparency: risk management and prioritization. The third value area is IT cost and performance. This touches upon the importance of measuring outcomes and how when both sides understand the reality of the performance of the IT department.

The discussion between IT cost and performance usually results in IT claiming they are doing really well, considering the level of investment in IT. The business side often disagrees, and feels IT costs too much and doesn’t deliver the level of service required. But without any measurement, the conversation is really just about emotions and "gut feelings." And while IT may initially reject the idea of measuring performance, the outcome can be very positive for both parties (or both sides).

Take the case of Intel Corporation. The short version of the story is that the IT department had a very bad reputation—so much so that it was the butt of a 1998 company-wide April Fool’s joke. (The full story is detailed in Chapter One of The Real Business of IT: How CIOs Create and Communicate Value” by Westerman and Richard Hunter.) This embarrassment led to a series of initiatives that changed not only how Intel’s IT department delivered services, but also how it communicated with business leaders.

Fast forward to 2003. As Westerman writes in his book, “Satisfaction with IT’s performance had improved dramatically, with more than 80 percent of Intel employees surveyed rating the IT function as a strategic business partner.”

In the end, isn’t that what every organization wants—business leaders and employees valuing IT’s contribution? Measuring IT’s performance is vital to bringing transparency into the relationship between IT and business. And transparency makes for a much happier organization.

Check back soon for our final post in this series on transparency between IT and business leaders.

George Westerman is Faculty Director for MIT Sloan Executive Education’s Essential IT for Non-IT Executives program and author of two award-winning books on IT management. He was the featured speaker for the webinar, “IT is from Venus, Non-IT is From Mars: Bridging the IT and Business Leader Divide to Improve the Value of IT.”