This post unpacks research from Forrester on how IT leaders can rethink the CIO dashboard to communicate the value of IT to the business.
CIOs are struggling with communicating the value of IT to the business. That’s a key finding from a Forrester and TBM Council survey to evaluate the impact of current business imperatives on the metrics that CIOs use to convey the performance and contribution of technology to business goals.
» Related content: 6 best practices for communicating the business value of IT
Traditional measures of IT focus exclusively on operational metrics and don’t make them relevant to business leaders. This has led to two major problems: First, a significant gap in perceptions about the value and contribution of technology to the organization, and second, a lack of alignment between business goals and IT measures — leading to costly mistakes.
The disconnect between IT and the business
Specifically, half the business leaders surveyed feel that IT is holding back the business—a very strong testament to the communication disconnect. Business leaders also estimate that IT spending is roughly 8% of their revenue, whereas, in reality the number is 5%—leading to missed expectations.
Another challenge that surfaced in the survey is that while many organizations’ IT metrics are predominantly transaction-focused, CIOs and business leaders are also looking to measure and communicate IT’s contribution to business outcomes and the ability to respond to market changes.
CIO KPIs and dashboards play an important role in helping address and eliminate this disconnect between IT and the Business.
Architecting an improved CIO dashboard
According to Forrester, the ideal scorecard is not only in sync with the business outcomes but also takes into account the maturity of existing measurements, perceptions of the business executives, and culture of the company. It’s also the beginning of conversations—not the end.
There are three specific issues that the ideal CIO dashboard must address. They must:
- Show business leaders not just the costs but the benefits of spending on IT
- Measure and communicate how IT is helping deliver agility
- Make a direct connection between IT investments and customer satisfaction
In their report, Forrester proposes a four-quadrant BT value scorecard. The four perspectives are health, delivery, outcome, and agility. It is consciously designed to be relevant to both IT and business audiences. The scorecard abstracts the typical IT operational metrics up a level to show the relationship between IT activities and business outcomes.
Tracking and communicating the health of existing IT investments
The health perspective communicates how efficient/proficient IT is with its technology investments. These KPIs can show whether IT investments in technology are in line with business expectations and strategy.
Forrester recommends the following domains for healthy KPIs:
- Governance: Technology projects span a wide spectrum; therefore, it’s essential to ensure that there is appropriate ownership, oversight, and alignment among the stakeholders. Many CIOs wanted more business accountability for technology projects. KPIs such as percentage of projects jointly governed by business and technology stakeholders will ensure appropriate oversight and accountability.
Image 1: The project portfolio view in Apptio Cost Transparency provides full financial status of projects by business unit, investment owner, objective and more.
- Performance: This is probably the strongest area for CIOs, and many of them take pride in providing reliable, scalable, and secure technology environments. Metrics such as uptime, number of breaches/incidents, and system availability are hallmarks of this domain.
Image 2: The Infra&Ops dashboard in Apptio Cost Transparency shows IT spend over employee, unit cost of infra, and other metrics to measure IT performance
- Efficiency: Many of the efficiency KPIs are looked at in conjunction with an industry benchmark, but it’s important to only look at these benchmarks as starting points and to set goals based on individual context of the company’s environment. KPIs such as IT spend as a percentage are included here.
Image 3: The Apptio IT Benchmarking application lets you know how you are doing in relation to industry peer benchmarks
Contact us today to see how Apptio can help you implement a Business Value Scorecard in your organization.