Monday, July 20, 2009
Will social networking replace traditional networking?
The Economist recently published a couple of articles on social networking versus traditional networking, “Insider Out” and “Joining the Club”. They make some interesting points about online social networks creating more of a meritocracy of networking, after rightfully bashing the unfairness of some traditional closed networking groups. Yes, in theory, people have better information and can more directly access the very best people for each networking need, if they are both targeted and creative in their contacting. The interesting question to me is: Will the new online sites just strengthen the traditional closed ones? The combination of the two is what’s really powerful, so I’d say yes.
Wednesday, July 8, 2009
There's no magic IT spend benchmark ... let's stop looking!
One of my CIO friends asked me this morning for the best overall benchmarks for IT spend. I told him the only measure I’ve seen consistently is IT spend as a percentage of revenue, which averages around 3% and varies by industry with retail at the low end and financial services at the high end. And I told him I didn’t like it …
He sent along a Gartner report he’d been reviewing with all kinds of potential benchmarks like spend per user device, spend per employee, IT headcount as a percentage of overall headcount, etc. As suspected, it also had the standard IT spend as a percentage of revenue, probably more accurate than my ballpark at 4% and with all the usual breakdowns by industry.
The report was interesting but didn’t change my opinion. I’ve never seen an overall measure I like for benchmarking IT spend to other companies. At the detailed level, benchmarks can be interesting for comparing things like help desk cost per employee or training cost per IT employee but overall benchmarks have too many variables to be fair comparisons. Not only are industries very different, company size and age influence spend as well. Additionally, companies use IT in different ways strategically and should invest based on their strategy.
Theoretically, benchmarks could be useful to back up more internally focused analysis, but I haven’t even found them particularly helpful in that regard. We’ve used benchmarks to try to convince CFOs that they need to invest to stay competitive, and they usually just argue that their company isn’t comparable to their industry or competition. These benchmarks could be used to make a case for cutting spend, but most executives don’t need extra analysis to be convinced of that strategy anyway.
So my vote is to stop looking externally for an easy answer, and instead focus on improving the measures in house based on the company’s strategic objectives.
He sent along a Gartner report he’d been reviewing with all kinds of potential benchmarks like spend per user device, spend per employee, IT headcount as a percentage of overall headcount, etc. As suspected, it also had the standard IT spend as a percentage of revenue, probably more accurate than my ballpark at 4% and with all the usual breakdowns by industry.
The report was interesting but didn’t change my opinion. I’ve never seen an overall measure I like for benchmarking IT spend to other companies. At the detailed level, benchmarks can be interesting for comparing things like help desk cost per employee or training cost per IT employee but overall benchmarks have too many variables to be fair comparisons. Not only are industries very different, company size and age influence spend as well. Additionally, companies use IT in different ways strategically and should invest based on their strategy.
Theoretically, benchmarks could be useful to back up more internally focused analysis, but I haven’t even found them particularly helpful in that regard. We’ve used benchmarks to try to convince CFOs that they need to invest to stay competitive, and they usually just argue that their company isn’t comparable to their industry or competition. These benchmarks could be used to make a case for cutting spend, but most executives don’t need extra analysis to be convinced of that strategy anyway.
So my vote is to stop looking externally for an easy answer, and instead focus on improving the measures in house based on the company’s strategic objectives.
Thursday, July 2, 2009
IT Performance Management Imperative #2: Measure business value. Really.
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.
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.
Subscribe to:
Posts (Atom)
Posts
