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Measuring Up: Meaningful Metrics

By Thomas Hoffman
July 31, 2006 12:00 PM ET

That flexible attitude has also led the IT group at DHL Express to experiment with more sophisticated measurements. Instead of just assessing the number of IT projects that are delivered on time, within budget and within scope, IT also measures what the business cares most about: the percentage of projects that have met their business objectives, says Bentley.

IT executives have also been able to use metrics to determine which IT projects to shelve. For instance, Gibson and other IT and business executives at Cendant recently put the kibosh on a three-month-old e-commerce project after metrics indicated that it wasn't going to deliver a substantial enough return on investment.

The Business View

For all the emphasis these IT leaders are placing on IT metrics, there's a lot of variation in how often senior business leaders want to review them. At Harrah's, Stanley and his team use their metrics to put together a quarterly operating report with project updates and IT spending summaries that senior executives can dive into.

At Hannaford Bros. Co., interest among senior executives in IT metrics depends on the project being measured, says CIO Bill Homa. For example, top managers at the Scarborough, Maine-based grocer are closely tracking the rollout of a task management system to its 140 stores that's intended to provide managers with a clear message about which operations to focus on each day, says Homa.

At Kaiser Permanente, metrics focus on how the IT infrastructure relates to business costs. The health care organization's IT group, called KP-IT, has created a set of "cost pools" within its data center services. If one of the health care units is running a call center application, for example, KP-IT can measure the percentage of a server's load that's being consumed by the application and the costs that are placed on that business unit as a result, says Michael Blake, vice president and chief financial officer at KP-IT in Oakland, Calif. "We have much more educated conversations with business leaders than we had before," says Blake.

"There's much better delineation [of those costs] than there was two years ago," Blake adds. "So instead of saying, 'I can't understand it,' you can get to the IT price, and the business can figure out how to control the price."

Aidan Collins, a partner at PricewaterhouseCoopers who works with KP-IT, calls the group's approach "an IT view of the world with financial transparency so you can talk with business executives about true life-cycle costs and true accountability within IT services."

Like Harrah's Stanley, Bentley says the metrics that the DHL Express IT organization tracks continue to evolve and mature over time. "When you start off, you're measuring the easy things," says Bentley. "Then you start linking to IT's impact on the business."

Homa puts a more personal spin on it: "The best metric is that I'm still here after 10 years."

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