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How to choose technology metrics that matter to your executive team

Different outcomes matter to different stakeholders. Focus on the metrics that directly drive the business outcomes they care the most about.
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When our team began our CIO Hybrid Cloud journey, the benefits and value of migrating to a hybrid cloud platform were clear and straightforward—at least that's what we thought.

We identified four direct benefits that we expected to see:

  • Improved developer productivity
  • Greater infrastructure efficiency
  • Improved regulatory compliance and security
  • Overall business acceleration

But the challenge we faced was how to quantify and translate these benefits into actual business value for our stakeholders. We had many metrics we could use. But we needed to choose the right set of business metrics for our organization.

[ Discover ways enterprise architects can map and implement modern IT strategy with a hybrid cloud strategy. ]

What is value?

Webster's definition of value includes:

"1: the monetary worth of something: 2: a fair return or equivalent in goods, services, or money for something exchanged; 3: relative worth, utility, or importance."

The approach we took to determine the correct value metrics for our organization was to first define value in terms of our organization's objectives and outcomes. Once we had a clear understanding of value across the organization, we could start to determine how to measure our progress in delivering that value.

In our "crawl stage" of delivering our hybrid cloud platform to the organization, we had a simple vision of what value that would bring:

  • Reduced or optimized operating costs
  • Faster and seamless application deployments

The business outcomes we targeted were to reduce our overall IT cost and reinvest a portion of the savings to fund innovation projects. The metric to track this progress was a relatively straightforward financial measurement: year-to-year cost reduction (percent or actual monetary reduction).

Having quicker and more seamless application deployments would support the business outcome we define as enabling more frequent deployments. We chose the DevOps Research and Assessment (DORA) metric deployment frequency to measure this progress. We tracked this metric and the number of applications migrated to our hybrid cloud environment for a year.

After a year, we showed great progress toward achieving the business outcomes we defined. However, the actual business value we delivered was not apparent to the executive team. What were the underlying factors for the IT cost spending trends? What actual business value did we deliver by increasing deployment frequencies by 20%? The progress we made was important and the result of hard work. How can we articulate this value in broader business outcomes?

We needed to determine the correct metrics that not only drive value but are also aligned directly with key business outcomes defined by the broader organization.

[ Check out Red Hat Portfolio Architecture Center for a wide variety of reference architectures you can use. ]

Outcome-driven metrics and TBM

We needed a way to filter all the various metrics we track and identify those with a direct line of sight back to a key business outcome. We found the answer in outcome-driven metrics (ODM). According to Gartner:

"Outcome-driven metrics are measures of operational and business outcomes that provide a direct line of sight back to the outcomes on which they depend, and with outcomes that are dependent on them."

Before implementing the ODM approach, we first needed to better understand our IT spend model and the underlying dynamics. In other words, we needed a cost transparency view of our IT spending that provided more than a financial view of the cost. We chose to implement the Technology Business Management (TBM) model (using the ApptioOne tool) to provide end-to-end cost and value transparency. The TBM model and taxonomy enabled us to hold more balanced discussions with our business partners around cost, performance, risk, and value. The principle of transparency is the core for understanding, improving, and communicating value.

Once we started to gain traction in our TBM implementation, it was time to identify our organization's key business outcomes. Then we documented and made them visible to the entire organization. This subtle pivot is a philosophical game changer for us around metrics.

[ Learn how to build a flexible foundation for your organization. Download An architect's guide to multicloud infrastructure ]

Once we established the key business outcomes that matter most and those we could influence, it was time to follow the steps recommended by Gartner:

  1. Identify technology stacks that support critical business processes to develop an initial connection between technology and business outcomes.
  2. Identify measurable technology operational outcomes that directly impact business outcomes, reflecting the readiness of technology stacks to support critical business processes and outcomes.
  3. Use metrics driven by both technology and business outcomes to facilitate informed conversations with executives to influence priorities and investments.

Next, we performed ODM mapping using:

  • Technology ODMs: Operational metrics with a direct line of sight to business outcomes
  • Business ODMs: Business metrics with a direct line of sight to business outcomes
  • Operational metrics: Measure various aspects of operations for IT decision making

To our surprise, very few of our metrics mapped directly to a business outcome. What we had were many operations metrics that focused on our operations performance, such as outages and mean time to repair (MTTR). Although these metrics are critical to running our business, they're not of high importance to an executive focused on sales and revenue growth.

[ Read 5 tips for succeeding with stakeholders in architecture projects ]

Therefore, we needed to identify measurable technology operational outcomes that directly impact business outcomes. This needed to reflect the readiness of technology stacks to support critical business processes and outcomes.

Once the technology and business metrics that have a direct line of sight to our business outcomes are identified, we can pivot our executive conversations to the business value of our technology investments. We're in the crawl phase of this transformation and are just starting to see positive results. However, it's an organizational behavior change and will continue to evolve.

Different metrics matter to different stakeholders

Using ODM, we can separate our metrics into operational metrics, technology ODMs, and business ODMs based on our established business outcomes. We've been able to reduce our overall number of metrics and increase the number of leading indicator metrics.

All of this will allow us to raise the level of conversation with the executive team to focus on the metrics that directly drive the business outcomes they care the most about. At the same time, we'll be able to continue focusing on the operations metrics at the operational level. This way, we can give our various stakeholder groups the data that reflects their own priorities.

This originally appeared on Hybrid Cloud How-tos and is republished with permission.

Topics:   Business   Strategy   Career  
Author’s photo

Al Willis

Al is a Senior Manager at IBM CIO and accomplished (PMI Certified PMP & ) project management professional. More about me

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