IT productivity improvement

Earlier in the month I was invited to a session by a senior well-known IT Research Associate who advises many global CIOs on tactical and strategic agenda. He is a good story teller and had the audience of 20 odd CIOs spellbound with his anecdotes, examples and occasional taunts which most took sportingly or sheepishly depending on how you interpret the expressions on their faces. His consistent grouse was that while CIOs have done a lot for enterprise productivity, they have neglected IT productivity improvements.

Tracing through history he illustrated the role IT has played in enterprise process reengineering and productivity improvements driven by automation, new tools and technologies, mobile enabling the enterprise, and providing time sensitive information in the hands of the decision makers. However during this era the IT team has not demonstrated commensurate improvements; solutions still take as long if not longer than what they did many decades back. He postulated despite progress across the industry, the in-house IT team has lagged behind by a big margin with no major visible improvements.

He went on to compare internal IT teams with the work being done at start-up and tech innovation companies globally. Across comparison parameters on innovation, time, productivity, quality, or sheer volume of work done, IT departments lag behind. He blamed this on mind set, archaic beliefs focused on process compliance to whatever framework the IT team had adopted. ITIL, COBIT, PMI, CMMi were boon in the past; they are the bane now. Agile development methodologies find rare favour with IT.

He did not offer any empirical data or prescription, but no one from the audience disagreed. They sat there silently reflecting on their own realities. Post the hour, I sat ruminating over the discourse trying to figure out if this was indeed universal truth; if it was so evident, how is it that no one has thus far talked about it because everyone loves beating up IT and if it was so evident a simplistic comparison, it would have been well searched and figuring in the top 5 priorities of the CIO and every vendor !

How do we measure IT productivity ? Lines of code per day ? That no longer seems relevant with the shift from procedural to new way of creating programs. How about number of people to support per 100 compute or network assets, or servers; even that is now irrelevant with virtualization and clouds taking over. Maybe number of locations, or solutions in the IT portfolio, time to respond or time to repair; most of these activities are anyway outsourced with SLAs.

The baseline has been shifting and IT has adapted well to the change. In linear motion it is easy to measure a shift; in the real world it is a little difficult to quantify. So what efficiency parameters should the CIO use to demonstrate improvements if at all ? The CIO dashboard and reports have evolved from technology availability to business value. Productivity gain is not specific any more but interconnected and interdependent. People do not measure activity but outcomes.

IT influenced results are business agility, competitive differentiators, low cost of operation (Business and IT), growing revenue faster than market. If the CIO is indeed driving these and well accepted and recognized by the enterprise, does it really matter if the lines of code generated by the IT team is lower than the industry benchmark ? 

Metrics that matter

I bumped into an angel investor in a social gathering organized by a company funded by him. Discussing a range of subjects, he was interested in understanding how customers of his funded company used technology and traction with the Management across different sectors. Acknowledging the fact that all his invested companies used IT as a competitive differentiator, he queried the metrics used by CIOs in India. In the discussion group were CIOs from Banking, Insurance, Manufacturing and Retail.

Starting with IT budgets, the range observed was 1.5% upwards all the way to over 10% for a Bank. I am referring to percentage of revenue, one of the metrics everyone uses and is portrayed as a reflection of the seriousness of IT investments globally. Angelically he disagreed with this norm as Capital and Operating budgets should not be clubbed into one IT budget. Echoing the thought a few CIOs stated that they separated the capital investments moving them to the business units since new initiatives have to be what business needs and wants.

Investors have a way of getting their viewpoints; he asked if separating the capital investment and operating expenses helped. The answer to that was a vehement yes. The CIO actively controls how the existing IT setup is managed and thereby can optimize capacity and support. Investments are always linked to new business initiatives and outcomes. A great system or the best technology does not create a recipe for success if business fails to utilize it effectively. When the investment impacts P&L of the business, the ownership and contribution equals the effort put in by the business and IT.

The discussion veered to CIO dashboards and what were CIOs monitoring daily, weekly or monthly. The responses varied from health of systems to active budget tracking and key projects that IT was involved in. Only two mentioned that there dashboard was no different from the other CXO dashboards but included a few IT metrics too. Considering that the CIO is in most cases an equal partner in the business, why should the dashboard be different ?

Active projects with large investments require monitoring and communication to provide visibility across the enterprise. Success is measured not just by on budget or timeline, but effective use and business value that may have been spelt prior to the project. Like the CMO would monitor marketing campaign effectiveness or the CFO tracks treasury, the CIO has his/her business IT projects.

Lastly the IT Strategy and long-term plan tracking is the most critical one. As the owner, the CIO must track and report periodically progress made, issues and challenges, new opportunities and finally business impact delivered. It is a living plan and not something to be created, approved and locked up. What gets measured normally gets done.

The investor benevolently nodded to the maturity of the CIOs and their success in managing perceptions and that they get it.

What's on the CIO Dashboard ?

March is a very interesting month for most Indian companies. This is the financial year end for a majority; it also brings to focus the ritual of performance appraisals. For a few, this is probably the only time for a formal discussion and feedback session. Irrespective of the frequency of meetings with your Manager, this one holds a lot of importance, as its outcome determines the quantum of increase in compensation and benefits, variable pay, and promotions. Thus, everyone starts preparing for this very important meeting with their manager. The higher you go up the hierarchy, the more intense the discussion. And this is where the CIO dashboard starts making a difference.

Typically, IT was used to measure uptimes, availability, application response time, and similar technology related indicators. These were deemed critical, and most meetings ended up discussing slow application response times or lack of support during month end peaks. This used to happen until realization of the futility of such measures (across the table), as these parameters did not present a true picture of the ground reality.

In the meanwhile, the IT Head also got smarter in his evolution into the CIO role. He began correlating with business outcomes in such a way that the audience began to appreciate discussion around parameters that they understood. Projects were reviewed on timelines and budgets; somewhere, the additional parameter “business value” was added, and everyone agreed. Quite a few technology solutions and consulting companies continue to offer CIO dashboards revolving around the old paradigm of availability and budgets. Today, there’s enough buzz around the business outcomes, but these are not yet figuring on the CIO dashboards.

CIO dashboards are now no different from that of other CXOs, with maybe one or two IT specific metrics being reported or monitored. One of them could be the disaster recovery site’s health, should the business contingency plan be put into action. The second may revolve around the IT organization’s financial health, considering that most IT budgets are now equivalent to an SME’s business balance sheet. As organizations adopt balance scorecards across the enterprise, the discussion around CXO dashboards become irrelevant. As business evolves from viewing reports to dashboards to gaining actionable insights into key business activities, I believe that the dashboards will be relegated to history. Our current state matters, and what we did to reach where we are. It’s also important to know why we are here, and where we should head for.

Annual appraisals bring this into the limelight, as this is probably the best discussion that most CEOs have with the CIO. Clarity of thought is important, as you prepare for this discussion. Maybe, it’s time to challenge the CEO (or whoever your Manager is), on the metrics for your next evaluation.