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7 ways to measure the efficiency and effectiveness of the IT value chain

MylesS on ‎09-30-2013 08:26 AM

Value Chain KPI.jpgAt most events for HP managers, participants have the chance to stretch their world views. Several years ago, I went to an event for HP managers that featured a presentation from HP customers. To many attendees’ surprise, our customers suggested that HP should stop developing new product features and instead focus attention on product integration.


Clearly, the IT value chain and its associated value streams are a response to these customers, with an integration strategy that is product and framework-agnostic. In my previous posts, I have discussed how to measure performance against each value stream. In this post, I’ll delve into the measures of efficiency and effectiveness for the overarching IT value chain. Specifically, these are metrics (and by extension, KPIs) that are leading indicators of end-to-end IT value chain performance. I have chosen seven metrics that, if controlled and measured, afford the opportunity to truly improve IT performance as a whole.


1)      Number of applications by lifecycle category

Several years ago, I got hear a hospital enthusiastically discuss its new portal technology; I asked for details. The presenters said they were excited that the portal allowed them to meet HIPAA requirements despite being stuck with a set of ancient, unsupported green-screen applications. Clearly, IT organizations should seek to balance application lifecycles. A high number of unsupported applications means that IT is not making the needed investments to grow business productivity, or—even worse—is paying significantly higher costs in the detect to correct value stream.


2)      Percentage of end-users affected by application quality problems

This is the ultimate DevOps metric. Looking at the quality of application performance, a high number of problems indicates poor delivery of applications/services to end-users. In other words, a performance deficiency is occurring in application requirements development or quality testing. Application quality clearly impacts internal IT departments and IT’s business customers.


3)      Percentage of defects discovered post-production

This is a “proof-is-in-the-pudding” metric. Defects clearly should not be promoted into production.The higher this percentage, the more negative impact IT creates for itself and its customers. Worse, more pain and costs are introduced into the detect to correct value stream.


4)      Change success rate

I have documented separately the importance of having a high change success rate. The impact of this on the request to fulfill value stream is huge (and often ongoing)—55% of incidents are caused by failed changes according to ITIL Version 3.  Control this, and you improve success of the strategy to portfolio, requirement to deploy, request to fulfill, and detect to correct value streams.


5)      Percentage of changes resulting in outages


Ditto everything that was said for change success rate. The number of changes resulting in outages should be small. And the larger this percentage  gets, the more impact for detect to correct.


6)      Percentage of services that meet performance goals

The percentage of services that meet performance goals should be high and growing over time. If it’s low and shrinking, then defects (possibly for requirement to deploy) are leaking into detect to correct. Even worse, business service costs are increasing vs decreasing over time.


7)      Percentage of business service costs being reduced quarter over quarter

If the above metrics improve, then business service costs should be going down quarter over quarter, as the business gets more effective and efficient. This is a lagging indicator for detect to correct—but a leading indicator for strategy to portfolio (consider the potential investment dollars that can be freed to develop new requirements to deploy).


Putting it all together


So there you have it: seven metrics to measure end-to-end performance across the entire IT value chain. Together, they tell you how well you are running your business of IT. The question is, When do you start?

Related links:

Blog post: The complete, unabridged secret to managing the IT Value Chain

Ebook: Value streams: A user-centric model for the enterprise CIO

Article: Finding your true value

Solution page: IT Performance Management

Twitter: @MylesSuer

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 Management including IT Financial Management and Executive Scorecard.

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