CIOs listen up: You are what you measure!

A few years ago, Dan Ariely, a professor of behavioral economics at Duke University, wrote for Harvard Business Review that “You Are What You Measure.” In the column, Ariely explained that people alter their behavior “based on the metrics they’re held against. Anything you measure will impel a person to optimize their score on that metric,” he says. Remembering this, I have been asking CIOs over the past year what they measure to get a better sense of their strategic or tactical orientation.

 

A few weeks ago, I had the opportunity to spend time with yet another CIO—in this case, one who works for a large manufacturing company. This CIO believes in balanced scorecards as part of IT management. In fact, he is already having a scorecard assembled for him and his management team. The scorecard has four quadrants, as you would expect. And while it will measure how well IT budget and innovation spend are managed, this leader says it is important for his business customers to understand the value that is being delivered in the change (demand)-side of IT. So instead of compiling spend by portfolios, programs and projects on the CIO scorecard, it will tally innovation spend by strategic business objectives. As part of this, the CIO will also measure the time to value.

 

This CIO and I then discussed the run (supply) side of IT; the most amazing element of this area had to do with availability. The CIO said availability is not interesting at the IT service or even the business service level when you are talking to CEOs. He said that today’s CIOs to be relevant need to become as outward facing as they are inward facing, and they need to see what their customers see. And customers are interested in performance for their value chains/business capabilities at different times of the quarter. At the beginning of the quarter, what matters is something like configure to order; and at the end of the quarter, what matters is order to cash. This fits amazingly well with Richard Hunter and George Westerman’s book “The Real Value of IT.” In this book, Hunter and Westerman assert that every measure should be something that the business can understand. I asked the CIO how he goes about calculating this value chain availability. He said it is really simple: You consider performance independent, and you multiply all the availabilities of supporting infrastructure, applications, etc.

 

As I said at the beginning of this piece, CIOs are (effectively) what they measure. If they are focused on reactive operational reporting, then they are about fixing things as they break. If they are using a balanced scorecard methodology and focused on improvement, then they are about what I like to call “performance-driven” culture. And if they are focused on business-oriented metrics, then they are business-related and moving toward demonstrating the real value of IT.

 

As Ariely said: “What you measure is what you’ll get.”

Solution page: IT Performance Management

Twitter: @MylesSuer

Labels: IT strategy
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About the Author
Mr. Suer is a senior manager for IT Performance Management. Prior to this role, Mr. Suer headed IT Performance Management Analytics Product ...
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