Managing Performance with Strategy

One of the CIO's most important IT
strategies at the end of the business day
is to use performance as a key element
and successfully implement the
components of IT management with
the organization's mission. But
developing the strategy, which uses
performance as a tool, is easier said
than done. To succeed, they must
tackle the following areas:

Ensure a clear view. The entire
organization must understand that
performance-based management will be
used to steer IT decisions. It also must
understand the management process
that will be used and know that
everyone affected will have visibility
into the results and adjustments made
during the ongoing process of
managing to the strategy.

I call this state the clear view.
Several techniques can enhance this
view. One is the balanced
scorecard, which provides a
simple, understandable way
to present the performance
plan for IT strategy and
progress against that
plan. Another
technique is to use
a Web-based
reporting tool to
present
performance
results and to
provide a drill-down
analytical capability to
broaden understanding
of the component
activities that contribute to
strategic progress.

These approaches are
often referred to as
management or performance
dashboards. Keep in mind that
these techniques are not an end
in themselves. Their purpose is
to ensure that the leadership team
understands strategy, the contribution
of IT and the results.

Develop performance measures. As
part of the IT strategy development,
the CIO aligned IT resources to the
organization's mission and established
IT goals within the framework of
contributing to the success of that
mission. Further, the CIO stated those
goals within a performance and results
context. In developing the IT strategy,
the CIO identified the results,
measured at the goal level, and
proposed a resource plan for
accomplishing each goal.

At this point, the CIO's challenge is
to develop performance measures for
key IT operations and initiatives that
must be successfully delivered to
achieve IT strategic goals. The CIO
also must identify or create
information sources to periodically
assess actual performance.

Creating performance measures is
more art than science. Nevertheless,
some rules of thumb generally apply:
Rather than create your own
measures, adopt those used by
others—especially by organizations
that have similar goals and
operations; measure performance that
really matters, since having fewer
measures is often preferable; and
review existing information for
relevancy before creating new
information and sources.

The typical IT organization will
have some measures that are
operational (measuring efficiency and
service-level), some that are project-based (measuring cost, schedule and
quality), some that are governance-based (measuring compliance and
standardization), and some that are
transformational (measuring
comparative change).

Create a line of sight. With a line of
sight, which describes a desired state
produced by enterprise architecture, one
can see from a tactical process or activity
through the architecture to the specific
program to which it contributes. I
propose a similar use in the context of
IT performance management.

The desired state is to be able to look
up the performance hierarchy from the
lowest level of performance and its
related measures, through all successive
performance levels and measures, to the
highest level of performance and
measures: the IT strategic goals.
Creating this line of sight contributes to
the clear view and helps assign
accountability and understand
interdependencies.

Build project management capacity
and discipline, and adopt continuous
improvement as a management
principle. To effectively manage, an
organization and its leadership must
have some basic competencies that
enable the planning and execution of
projects and operations with predictable
results. Let me stress that these
competencies are critical to achieving
high performing status.

Monitor actual to planned
performance. At this point, the CIO
and team should have leadership on
board. They should have created clear
linkages between base activities and
strategy and should have developed
appropriate measures. Once that's
complete, they can implement a critical
piece of the performance system: The
CIO must now monitor how actual
performance stacks up against planned
performance and begin to use the
results to manage the operation.

The CIO should expect detractors
to emerge. Visible performance and
accountability management involve
major change for many organizations,
and that change will be difficult for
some. The CIO needs to demonstrate
solid resolve to counter these
objections.

Benchmark against credible
performers. After establishing a
foundation of performance
information, the CIO should actively
seek out organizations that have
similar missions, operations and
strategies to compare performance.
This kind of benchmarking can be
quite effective in understanding
current levels of performance, best
practices and improvement strategies.

By getting customers of IT involved
in the benchmarking process, the CIO
can broaden understanding of the costs
and trade-offs involved in delivering a
higher level of service or result. This
will help manage expectations.

Continuously refine measures.
Most new adopters of performance
management find that their plans
and measures need adjusting after
they gain experience with monitoring.
A reassessment in the implementation
plan can help the CIO determine
whether adjustments are needed.
The CIO team should expect to
periodically refine measures as changes
occur in the performance environment.

Periodically reassess current strategy.
The performance system will allow the
CIO to assess performance against plan
for the key attributes of success:
schedule, cost, quality, customer
satisfaction, etc. Operations and
projects can be adjusted to improve
results and perhaps to reduce resource
investments.

Periodically, the CIO needs to
determine whether there has been a
cardinal change in the performance
environment and whether it is of
sufficient impact that the IT strategy
should be rethought. These periodic
assessments need to be built into the
management process.

Integrate performance with budget.
Since the plan allows performance to
be measured and understood—including the relationship to cost—the
CIO can relate performance to budget.
When this relationship is visible, the
CIO can describe credibly the budget
required and trade-offs involved to
achieve planned outcomes.

The result of such budget and
performance integration is to make the
budget process more objective and to ensure
a strong link between budget decisions and
accountability for results.