IT KPIs: The top 5 challenges
“If you aren’t keeping score, you aren’t playing the game.”IT KPIs communicate the business value of IT to every line of business. IT has the most complicated cost model in the enterprise and—inevitably—the most roadblocks in the way of tying spend to performance.
Apptio has worked with thousands of IT professionals to validate the 10 essential KPIs to measure IT performance. These metrics focus on company priorities and communicate IT quality and value in terms the business understands. Operational data (a.k.a., “Feeds and speeds”) tells a technical story about IT—business partners don’t want to descend into that level of minutia. They just want a (limited) number of KPIs to track IT performance.
Agreement on the right KPIs is one thing. Knowing you have a robust cost model and budgeting and forecasting solution in place to deliver them is something else entirely. The 10 essential KPIs to measure IT performance are split into four categories: financial fundamentals, delivery, innovation and agility, and business value. These need to be trended over time and built on a cost model that will bend (but not break) in the face of operational updates that change infrastructure TCO.
Apply a two-step approach to building stakeholder buy-in for using KPIs to measure IT performance: communicate the benefits of using KPIs and pro-actively address how you calculate KPIs. The benefits of KPIs are usually an easy sell—everyone wants metrics to measure success. The devil is in the details of the KPI calculations themselves.
Here are the top five challenges you will hear when proposing to use KPIs to measure IT performance. And how to address them.
#1: “My data isn’t ready.”
Organizations have more operational and financial data than they know what to do with yet often have little confidence in the quality of that data. It’s easy to feel trapped. The only escape is to just start—let the process uncover bad data and let the analysis drive data improvement. A purpose-built solution like Apptio’s suite of costing and planning solutions automates ETL processes from prescribed source systems. Even without a dedicated solution, IT finance teams build momentum with an incremental roll-out of financial-based KPIs. There’s no need to boil the ocean—start small, deliver quick wins, and build from there.
Overcome challenge #1:
- Start with limited data sources (e.g., finance data only).
- Rollout KPIs incrementally to build stakeholder buy-in.
#2: “We don’t have any standards. We can't rollout IT KPIs.”
An IT costing model must deliver like-for-like comparisons between competing IT functions and services. This needs a common taxonomy of IT towers (e.g., computer, storage, network) to ladder up to application and service TCO. IT financial metrics come directly from the general ledger but do not easily snap to language both IT and the business understands to driver improved IT performance. The Apptio TBM Unified Model (ATUM) standardizes the financial information necessary for IT leaders to manage their technology needs. Breaking down spend by cost pools, towers, and services to identify infrastructure optimization or cost reduction opportunities.
Overcome challenge #2:
- Leverage an industry standard taxonomy for IT.
- Serve like-for-like comparisons between competing applications and service.
#3: “We aren’t ready for that level of transparency.”
Transparency invites a critical eye into areas IT leadership may not want to expose. Righting the wrongs of poor optimization or redundant capabilities only happens when both corporate IT and the business understands the challenge and have shared accountability to drive change. IT needs to own the decisions that led to the current state. All business leaders make decisions with incomplete data and those decisions do not always work out as intended—IT leadership isn’t exempt from that. Transparency should be a badge of honor—accepting scrutiny puts IT in the same position as every other line of business.
Overcome challenge #3:
- Embrace transparency as a change agent.
- Share accountability for improvement with business stakeholders.
#4: “It will take too long to get analysis.”
A cost model must ingest new data every month and allow quick analysis. Manually updated, homegrown spreadsheets suffer from needing systematic data loads and normalization before getting to the main event of reviewing KPIs. The delay (sometimes days, sometimes weeks) prevents early detection—and remediation—of spend surprises or optimization challenges. The quicker the diagnosis, the quicker the mitigating action to get back on track.
Overcome challenge #4:
- Deploy a cost model that automates data ingestion.
- Focus on delivering insight early to allow time to act.
#5: “We don’t have the resources to implement or maintain this.”
A herculean effort to maintain a cost model isn’t sustainable. Either business partners balk at the effort involved and question the output or, conversely, they see the benefit—love it—but don’t understand the amount of time and effort that goes into making the magic happen. Corporate IT can argue the value of the KPIs and business partners can be on-board, but if the process to deliver them is too hard it will (eventually) be pushed to one side for a more frictionless path.
Overcome challenge #5:
- Get buy-in for the benefits of the KPIs first and then claim the right resourcing.
- Don’t rely on herculean efforts. They aren’t sustainable.
»Download these eBooks to analyze cost, utilization & consumption to make informed decisions that maximize business value:
- 7 roadblocks to IT transformation
- Essential KPIs for the IT strategic planning process
- The essential guide to building a cloud center of excellence