IT Performance Management Imperative #2: Measure business value. Really.

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The most commonly asked question I get from CIOs undertaking a performance management initiative is: “How can I measure business value when our company does not measure benefits achieved?” The truth is that very few companies actually measure benefits realized from projects, so over the years, I have helped many CIOs develop proxies for business value achieved. For example, IT can track the expected benefits of all projects completed by using benefits from the business cases. Or IT can measure the number of projects delivered that directly support strategic objectives of the business strategy.

The fact is, while a proxy is better than nothing, measuring actual business value has so many benefits that any CIO owes it to the organization to make the case to senior leadership. Once companies are actually measuring benefits achieved from projects, behaviors will change. Even before the benefits are measured, executives will be much more careful in their wild claims if they know they are going to be held responsible for achieving them. That means better decisions will be made about what projects to approve and how to prioritize them. Leaders who are held accountable will be more engaged in projects. That means the likelihood of project success and benefits realization increases. Employees working on the project will have a better understanding of project objectives. That means they are likely to be more engaged and make better decisions.

So, what if you still can’t get your business on board to measure project benefits? I still believe a proxy is better than nothing. The proxy will allow IT leadership to have the right conversations with business leadership, and, eventually, get to more accurate indicators. As I mentioned in my previous post, business value is a critical component of any performance measurement system.

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