Why CIOs Need New Metrics

Today’s IT environment is rapidly changing, and CIOs are constantly on the look-out for innovative projects that can improve performance, enhance efficiencies and/or cut costs.

Sometimes, identifying the “right” project is the easy part, though.

Often, it’s much more difficult to maximize results after a new system has been implemented.

What can you do to make sure that you are getting the most value from a new IT Project? CIO Rick Swanborg offers some sound advice in his recent article, “3 Ways to Get a Bigger Bang for Your IT Buck” at NetworkWorld.

According to Swanborg, three specific management strategies can help you maximize results from an innovative IT investment. He suggests you:

  • Stick around. CIOs need to stay involved and adopt a long-term view, even assigning business analysts and program managers to the project team –sometimes for up to as long as three years!
  • Use budget accountability for process innovation or revenue-generating investments. In other words, make sure any benefits, including cost savings or increased revenues, will be incorporated into their future budgets.
  • Reassess priorities and make adjustments dynamically.

That’s a great list . . . but, it’s missing one essential component. In order to accomplish each of these three strategies, you also need to make sure you are equipped with the right tools and metrics so you can measure the efficacy of these investments.

The role of the CIO is expanding, and now more than ever, they need to prove the business value of IT services and projects.  Transforming IT in this manner will require financial metrics that drive the accountability of IT and enable CIOs to plan over both the long and short-term. For example, these metrics will include: operating profit and margin, net present value (NPV) of the IT portfolio, return on IT assets, IT spend ratio, unit cost by service category, total cost of ownership by business application, fixed vs. variable cost ratio, CAPEX ratios, and budget versus forecast.

Armed with this kind of data, CIOs will find it easier to follow-through with the strategies Swanborg advises. They’ll stick around, employ budget accountability, reassess priorities and make adjustments for new IT projects. Plus, they’ll also realize more benefit from their efforts once they have the IT cost transparency and real-time metrics necessary for meaningful decisions about the business value of new projects.