Golden Gate University San Francisco Business Metrics and IT Discussion Discuss the key business metrics and IT. Provide examples of linking IT to business

Golden Gate University San Francisco Business Metrics and IT Discussion Discuss the key business metrics and IT. Provide examples of linking IT to business metrics.Apart from the main answer, please include 2 standard short responses that can be given to peers. Materials included. Chapter 3
© 2015 Pearson Education, Inc. Publishing as Prentice Hall
3-1
The Goal of IT Metrics are to
demonstrate that what a company
spends on IT has a DIRECT IMPACT
on the performance of the firm.
© 2015 Pearson Education, Inc. Publishing as Prentice Hall
3-2
“Peel the Onion” – attempt to show
how IT adds value on a project-by-project
basis.
“Put the Onion Back Together” –
employees who truly understand what
their business is trying to achieve can
sense the right ways to personally
improve performance that will show up at
a business unit and organizational level.
© 2015 Pearson Education, Inc. Publishing as Prentice Hall
3-3
© 2015 Pearson Education, Inc. Publishing as Prentice Hall
3-4
The key to linking IT to business
performance is to create an
environment where everyone
understands what measures are
important to the business and are
accountable for them.
© 2015 Pearson Education, Inc. Publishing as Prentice Hall
3-5
Enterprise Measures – Tie the work of
IT directly to the performance of the
organization (e.g., external customer
satisfaction, corporate financial
performance).
© 2015 Pearson Education, Inc. Publishing as Prentice Hall
3-6
Functional Measures – Assess the
internal work of the IT organization as a
whole (e.g., IT employee satisfaction,
internal customer satisfaction, operational
performance, development productivity).
© 2015 Pearson Education, Inc. Publishing as Prentice Hall
3-7
Project Measures – Assess the
performance of a particular project team
in delivering specific value to the
organization (e.g., business case benefits,
delivery on time).
© 2015 Pearson Education, Inc. Publishing as Prentice Hall
3-8
Balanced Scorecard – Uses measures
from four dimensions (Customer
perspective, Financial perspective,
Internal Operations perspective, and
Learning & Growth perspective). Each
metric measures progress against the
enterprise business plan. IT is treated as
a separate business unit with its own
scorecard.
© 2015 Pearson Education, Inc. Publishing as Prentice Hall
3-9
Source: Balanced Scorecard Institute, www.balancedscorecard.org
© 2015 Pearson Education, Inc. Publishing as Prentice Hall
3-10
Shareholder Value
(financial)
Expense Management
(financial)
Customer/Client Focus
(customer)
Customer Loyalty
(customer)
Customercentric
organization (customer)
© 2015 Pearson Prentice Hall
Effectiveness and
Efficiency of Business
Operations (operations)
Risk Management
(operations)
Contribution to Firmwide
Priorities and Business
Initiatives (growth)
3-11
Modified Scorecard – Five key metrics
that are linked to the company’s vision
statement. Complimented by IT specific
metrics. Results are communicated on a
quarterly basis. This approach orients the
employees to the company mission and
vision.
© 2015 Pearson Education, Inc. Publishing as Prentice Hall
3-12
Customer Loyalty Index – the percent
of customers who said they were very
satisfied with the company and would
recommend it to others.
Associate Loyalty Index – employees’
perception of the company as a great
place to work.
© 2015 Pearson Education, Inc. Publishing as Prentice Hall
3-13
Revenue Growth – the percentage of this
year’s total revenues with last year’s total
revenues.
Operating Margin – the operating income
earned before interest and taxes for every
dollar of revenue.
Return on Capital Employed – earnings
before interest and tax divided by the
capital used to generate the earnings.
© 2015 Pearson Education, Inc. Publishing as Prentice Hall
3-14
Strategic Imperatives – company
identifies a number of strategic
imperatives each year. Each area of the
business identifies initiatives that support
these imperatives and determines which
metrics to use. IT identifies key projects
and measures that will help the business
achieve these imperatives.
© 2015 Pearson Education, Inc. Publishing as Prentice Hall
3-15
Strategic imperatives Initiatives are integrated into Variable Pay
Program.
Variable Pay Program links a percentage
of an individual’s pay to business results
and overall business unit performance.
Metrics can change from year to year.
© 2015 Pearson Education, Inc. Publishing as Prentice Hall
3-16
Figure 3.1 Percentage weightings assigned to IT Variable Pay Components for a Particular Year
© 2015 Pearson Education, Inc. Publishing as Prentice Hall
3-17
Focus on Overall Business
Performance – focus employees on
financial and nonfinancial enterprise
performance.
Understanding is a Critical Success
Factor – ensure employees understand
their objectives and how they tie to
company performance.
© 2015 Pearson Education, Inc. Publishing as Prentice Hall
3-18
Simplicity – metrics should be simple
and easy to use.
Visibility – encourages employee buy-in
and accountability.
Links to Incentive Systems –
distinguish between fair compensation for
the individual and reward for successfully
achieving corporate goals.
© 2015 Pearson Education, Inc. Publishing as Prentice Hall
3-19
Results will take time.
Have common goals.
Follow-up on problem areas.
Be careful what you measure.
Don’t use measurement as a method of
control.
© 2015 Pearson Education, Inc. Publishing as Prentice Hall
3-20
There are significant benefits to be
realized by holding IT accountable for key
business metrics.
Business performance will become part of
the mindset of IT staff if the business
measurement program is properly
defined.
© 2015 Pearson Education, Inc. Publishing as Prentice Hall
3-21
© 2015 Pearson Education, Inc. Publishing as Prentice Hall
3-22

Purchase answer to see full
attachment