August 20

We're currently engaged to help a client IT organization explain and demonstrate its value to its client business community. Why do that? If you're perceived as a cost center, your projects are on the chopping block when budgets get tight. But if you really believe you enable better, faster, cheaper business, you want some persuasive marketing to show you're an "investment center" where the company's money is well spent.

Those of you who have read my newsletters may have picked up hints about my feelings on business justification. IT value is as obvious to me as the value of having an office in which to run your business. Nobody would bother to calculate the business value of the office. You need it.

I understand justification is necessary, but part of my objection to most "business value" discussions is that they're all about money. Indirect value? Long term benefits? Vision? They're not likely to win the justification for a project, much less justify entire IT organizations. But common sense tells you it's almost impossible to foresee all the benefits, to quantify the indirect benefits, and to translate indirect benefits into money. I have not been a fan of pure hard justification metrics.

I am changing my mind, however. Why? Because there are frameworks of measurement that look beyond finances yet express value persuasively. This month, we'll look at one - the Balanced Scorecard.

Originally designed as a management system for company-wide strategic planning, the approach prescribes what should be measured to balance the financial perspective. The balanced scorecard, however, can be profitably applied to IT departments as well - both in planning and measuring. Specific metrics aren't spelled out, but the categories - the perspectives - serve as a guide to making your choices. The Balanced Scorecard website describes the perspectives. Rephrased in IT terms, these follow, with some examples:

• Customer Perspective - How should we appear to our internal customers? Examples: Your organization deployed an application that processes large equipment credit sales. It cut the process time from three days to one; the money is in the bank sooner, customers love it, and it takes fewer labor hours to process sales paperwork. You appear to the sales department as real partner, because you helped them improve one of their process measures.
• Financial Perspective - How should we appear financially to our governing body (maybe just the CFO or the CEO)? Examples: Your IT group manages its finances to within 5% of budget, down from 5.5% last year and 6.2% the year before. You appear fiscally responsible, and you're getting even better at it.
• Internal Process Perspective - At what business processes must we excel to satisfy our internal user community and business partners? Examples: You have a helpdesk, and every year, you negotiate a service level agreement (SLA) with your business community - how fast you'll respond and how fast you'll resolve problems - and you negotiate a helpdesk budget. You've invested in a good helpdesk system and revisit your first-line support and escalation processes quarterly. For the last two years, you've successfully met your SLA (which has gotten more stringent) and you've done it within budget.
• Growth and Learning Perspective - How will we sustain our ability to change and improve? Examples: You institute satisfaction surveys that follow deployment of new applications, you commit to publishing the results, and you commit to doing something about your application delivery process with the findings. You've run these surveys for two years and taken them seriously. You found that 92% of respondents are very satisfied or extremely satisfied with your IT group's application launch support; further, the effort you put into surveying has paid off, as shown by the steady increase from the 46% satisfaction rating your scored two years ago.

What makes the non-financial perspectives persuasive? Who can argue with measuring how you improve your customer's life, how successfully you run your own business processes, and how you get better with time?

Metrics Meet Behavior

Let's look at a small example of improving your customer's life.

Some time ago, I was on a project to deploy a knowledge management and collaboration system. Over the life of the client company, they accumulated well over 100,000 electronic documents, not including email. Walking the halls, one could overhear a question like: "Does anyone remember which presentation had that slide we did on child safety seats and air bags? I think we did it four years ago." The business process objective was to cut the time to locate, for example, a PowerPoint presentation mentioning "child safety seats" and "air bags", to something on the order of minutes.

As we approached the rollout, we debated "seeding" the system with some real clients (say, "GM"), brands ("Chevrolet"), and projects ("2001 child safety promotion") to serve as an example of how to organize knowledge assets. One staffer held that we should leave the system bare; users would have to learn to populate the repository sooner or later, so why not let them start now? They can call support if they get in a jam, after all. The opposing view held that seeding the system would give them a quick start, some examples to fall back on, and an early success; if our seeding efforts deprive some of an opportunity to set up organizing information, they can ask their colleagues when the time comes.

Well, put yourself in the position of the user who has just finished training. What would give you more comfort in your first crack at live data, a real example that you could use for reference or a cheat sheet with instructions?

The debate was a cover for a different dynamic, however. The IT staffer in question simply didn't want to load the information, in spite of the fact that 15 minutes of effort would have completed the task. It's unfortunate that the staffer in question understood so little about serving the user community. (The CIO, by the way, understood and cared deeply.)

Would there have been any debate if "satisfaction with support for the launch" was a post-deployment survey question and the staffer knew the answers reflected on her?

It's a small example. But it exemplifies a non-financial measure of value, and it can be quantitatively measured.

Next...

In our next newsletter, we'll continue looking at the business value of IT.