Use of key performance indicators (KPI) in IT

Use of key performance indicators (KPI) in IT

The key performance indicators of IT departments still primarily focus on the measurement of the IT center and the IT infrastructure. While the measurement of the IT center is aimed at the proper function and consumption of the technical systems, the measured values in the IT infrastructure area are aimed at the availability of the infrastructure components. 

The system availability forms the basis of the service provision, but allows only an insufficient statement about the service quality perceived by the end-user.

In principle, the IT KPIs should therefore also be based on the requirements of the business processes or be derived from them. Very often in practice, this is handled differently, with the result that corresponding IT key figures are plausible and informative in terms of IT, but do not have any direct connection with the business. IT KPIs should therefore always be derived from the business perspective.

IT management indicators are quantifiable indicators that are used to measure and control performance. IT management figures are always organization-specific with a direct reference to the strategic goals of an organization, which inevitably requires the specification of a strategic IT goal, and must offer the possibility of deriving action measures in terms of targeted improvements.

Requirements for a key figure system

KPIs can only be used sensibly if, despite their company orientation, they also have a general character. The basic requirements for this are:

  1. The quantitative character of KPIs (e.g. clearly definable expenses in the form of costs, prices, personnel or time intensity, material input, etc.);
  2. The clear delimitation of the variables to be measured so that a standardized comparison with external companies or internal departments is possible;
  3. The objective character of KPIs i.e. KPIs must allow objective statements and must not be subject to subjective assessment.

Type of KPIs to be used

The fundamental question arises as to which KPIs are suitable for IT performance measurements and which number of KPIs can be sensibly used. Practice shows that a large number of measured values lose in clarity and the approach to measuring performance is often called into question. Therefore, the following rules of thumb should be observed when developing an IT performance indicator system:

Practicability: IT management metrics systems must be practicable (e.g. concerning the necessary internal information and the measurement of the metrics).

Lowest possible complexity: When developing an IT management performance indicator system, the complexity should be kept low at the expense of the amount of information.

Continuous measurement: IT management indicators must be measured continuously to be able to understand the developments, to initiate improvement measures, and to check the success of improvement measures.

Collaboration: There must be a joint division of labor and control between IT management, the specialist departments, IT purchasing, and IT controlling.

Few more measures which we consider relevant for measuring the KPIs are:

Productivity

Productivity is related to the efficiency of the processes, measuring the resources that were used, and the solutions delivered, as well as their association, being possible to verify the relationship of results with investments and resources.

To calculate this metric, an ideal number of resources must be established for the conclusion of a project to better manage expenses and how they are used in the department.

Infrastructure Availability. The IT infrastructure is directly linked to the time its resources are available. This means that it is important to monitor how long it takes for system failures or network unavailability to be fixed. It is a fairly valid indicator to evaluate the performance of the IT area. Industry specialists indicate that the ideal uptime of systems and devices should be above 99%. 

Numbers of bugs. Through the overview of bugs in the systems, the IT manager can identify problems in the processes, either in development or in code testing. A high number of failures indicate what exactly the company can improve in its software development policies. This can be done by modifying or searching for more efficient routines, such as the use of the DevOps strategy to organize internal processes. Other indicators related to bugs can be the number of hours to correct bugs and critical failures, as well as the number of bugs - critical or not - for versions released. 

Customer satisfaction. Customer satisfaction with the service is one of the most important indicators to guide decision-making. To measure and carry out this control, you will need a communication channel with the target audience to analyze feedback. 

 Approval of costs. Approval of costs is an indicator linked to the performance of the department. A suggestion to do this monitoring is to map the resources of the sector and cross-check the data with the results obtained.

Percentage of the IT security index and percentage of incidents. Mapping system threats and failures that have occurred are valid indicators to manage and demonstrate how secure the system is. In the same way, approving the number of incidents that occur, be they on servers, data centers, network infrastructure, or digital security systems, are also important factors for the approval of the area as a whole.

Requirements for KPIs

Not every key figure is suitable as a KPI in the sense of an operationalizable measured value. Each key figure must therefore be subjected to a structured test procedure for its suitability. Aspects include the conformity of the KPI (KPIs must have a causal relationship with the process or service goals and enable the progress to be measured when the goal is achieved), the ability to be influenced (the change in the measured value in the event of e.g. process changes), etc.

It can only be assumed that a KPI is suitable if it meets all the relevant evaluation criteria. In the context of balanced scorecards, additional key figures are used that are also non-quantitative. However, this often makes it problematic to combine the measurement results into an overall statement.

Suggestions

Experience teaches that the work of defining KPIs for the IT department has to be a gradual and evolutionary process, some ideas are:

Start with a few indicators that can be measured and are associated with defined strategies or objectives. Being very ambitious from the beginning leads to future frustrations and therefore abandonment of monitoring and control. Start with a few indicators, and then add other indicators to the list.

Use an appropriate tool, ideally a Business Intelligence (BI) tool. 

Create an initial Dashboard with the basic indications, which will evolve the project by project. 

Avoid manual access or collection of data at all costs. Automate from the start. It starts with automation in mind. This way, KPIs will always be available and updated in real-time.

Designate a person responsible for the definition and monitoring of KPI. Do it in such a way that you define the solution and work closely with those responsible for the infrastructure departments, projects, maintenance, operations, Service Desk, etc. If you have a PMO, you can delegate the KPI management to him/her.

Keep it simple from the beginning, define few but useful KPIs.

Remember if you don't measure it, you can't know what you do and how you do it.

The benefits of a KPI system for the company

The main benefit of IT management indicators lies in the possibility of deriving action measures in terms of targeted improvements from the IT management indicators.

IT improvements can be measured and forecasted. The transparency gained based on measurements helps to increase the qualitative IT benefits of an organization in the long term.

Taking steps based more on performance data than on intuition and experience is a smart idea. With information viewed as an asset within the company culture, the IT industry only tends to stand out and act as paramount to business success. Remember, that what is not measured cannot be specifically improved!