A Case of Why BI for IT?
In a recent “Tweet Chat” hosted by Howard Dresner a group discussed IT departments using business intelligence to measure internal performance. Internal analytical evaluation is an interesting concept, but this type of project may be a hard sell to a corporation that is looking to cut costs. Is Internal BI something companies should consider? Yes!
Until you are able to measure how productive your IT staff is, there is no other way to justify IT staffing levels or secure more budget dollars for future projects! If a CEO asks questions like “What was the labor-savings realized by Project A?”, a CIO should be able to give that answer. Performance metrics aren’t just for sales or financial dealings of the business in question. Every department in a corporation should look at internal performance metrics to see where they are spending their time, where they are adding value, and where they can ultimately make improvements, cut costs, and streamline themselves as a department… which in the end, does affect the business and their bottom line. It is surprising that CEOs don’t need this type of analytical information for an IT department (or any department) that makes up such a large part of a company’s operating budget (in some cases).
So what do you measure and how do you measure it?
For IT to measure their productivity, they accurately track their time against the correct project or projects that they are working on or supporting. This data will show hours spent in new development verses production support issues, which projects are getting the most time, and other areas where time is spent (i.e. training and education, meetings, help desk tasks, etc). Included in this data would also be IT salary and departmental cost information so that you can measure dollars spent against time for each project. It would make sense to average departmental costs across the headcount unless there are specific costs associated with certain people or teams.
Next, you need to find a way to measure impact of IT projects and tasks to the business. This is a bit trickier to track as Project ROI is hard to nail down. A simple way to start maybe through initiating a survey of specific project users from the business, using questions like “How many hours a week does Project A save you on an average week?” and “How long have you been utilizing Application X?” You will need to ask questions targeting for each project or application that IT is supporting. Coupling this data with salary data from HR (average salary, not actual salary) you can then see what the saving are in regards to labor costs for the business.
Once you have those pieces of data, you can start to formulate an IT Spend to Business Impact ratio. This is where it might get scary for CIOs and upper management in IT, because now the blinds are up and everyone can see what projects were worthwhile and which ones were “flops” on ROI. This exposure is a good thing however, because it helps you understand and hopefully pinpoint where projects go wrong. If there is too much time being spent on support and enhancement requests then perhaps you need to do a better job capturing requirements or perhaps a more rigorous QA process. Do one or two project managers constantly run past SLA or production deadlines? Are they under estimating their time, or are their other issues that need addressing? The list could go on and on as far as analytical study of IT metrics.
Effective budget planning could also be affected by implementing BI within the IT structure. When developing project plans and designating resources you can show your projected spend for a project against the IT budget for the year. Another area that could be explored would be a measure of expected ROI from a project. Based on the requirements gathering, IT groups could capture the time spent on a task, and the potential time that would be saved by employees who would be using the application. This type of data could be useful during project prioritization and eventually you could show perceived savings vs. actual saving against the total cost of the project. By using BI for budgeting and project prioritization management can see the true impact of IT vs. the dollars spent and budget dollars are best used to support the business all while getting the greatest “bang for the buck”.
How accurate is the data?
This is the biggest obstacle I wrestle with on this type of reporting and questions exist in multiple places regarding the accuracy of the data.
First, is the IT staff accurately recording their time and are they recording it against the proper projects? Does 1 hour of charged time REALLY equal 1 hour or was it really a half hour and you needed to fudge your time because the management team gets upset when you time sheet isn’t at 40 hours or more? For this problem, I think IT managers need to realize that 40 hours of real work may not occur each week… some weeks it is 32 and some weeks it is 50. Lording over your employees because their time sheet appears short of the standard 40 hours per week is not a way to manage. When management adopts this more flexibility or realistic attitude, then you will see the accuracy improve on time reporting.
Secondly, is the business accurately reporting their time spent on daily tasks? It may have taken them 1 hour to put a report together, but they don’t think about the 6-12 hours of data wrangling they may have done to get ready to prepare the report. It’s very easy to forget about the steps to complete a task once you are working on the last phase of a task.
Is this project worth the investment?
Whether to invest or not in an IT BI Program is a very valid question, but it may not have a straightforward answer. In theory, it makes sense to use a sustainable method to measure departmental performance. In practice, data validity is “iffy” if certain aspects of general “IT Culture” aren’t brought into question and ultimately changed to support this type of evaluation. With that said, I think that if an IT group “feels” like they are providing value it is positive for moral. Consequently, if the IT group actually KNOWS and can quantify their impact for the business I can only imagine that the moral would be higher, and you would see productivity improve. In addition, having this type of performance monitoring comes in handy in many situations including budget discussions for areas of IT. As the performance reporting improves you can perhaps use this data for individual performance reviews or at least supporting data for this activity. Would this investment eventual pay for itself by way of improved productivity, better project management and project planning? I think in the long run it would, but the key would be to have patience in allowing the Internal BI Solution to mature so the results become more accurate.
So, is your IT department ready to look in the mirror?