The question of IT efficiency is one most IT executives no longer mind discussing. They may tout their cost for a particular service and demonstrate their cost in relation to industry benchmarks provided by services like the Gartner Data Center or the Computer Economics Report, both of which are credible third-party assessments. Expense analysis, comparing operations to peer organizations, provides valuable insights and is a vital part of the IT dashboard. Measuring and analyzing IT efficiency demonstrates if IT is doing things right from a resource and cost perspective.
A recent Forrester study reports that 87% of U.S.-based businesses say they couldn't operate without IT, a statistic that raises the obvious question of what the other 13% do. It isn't a surprise to anybody that IT is critical to almost any business these days. For example, Health and Human Services Secretary Kathleen Sebelius identified IT as a key for helping lower the costs and improving the quality of healthcare. The challenge in healthcare is that the demand for IT support often outstrips the resources available due to the general economy and pressure on medical expense. Although IT efficiency has been a focus for several years, the demand can't be satisfied by efficiency alone - IT effectiveness must also be addressed.
Efficiency versus effectiveness is not a subject IT organizations generally discuss. They prefer to talk the nuts and bolts, the bits and bytes of their business, whether it's a resounding debate on the value of cloud computing or the best platform for mobile applications. Yet, as IT organizations have taken on an increasingly larger and more strategic role within their companies, a role that comes with a greater slice of the corporate budget, the pressure to justify their cost and position within the company has increased. Successful CIOs have learned to balance the needs and desires of a demanding user base with a limited budget.
While efficiency measures if you are doing things the right way, effectiveness determines if you're doing the right things. When measuring efficiency, IT organizations generally look to outside data for comparison. For effectiveness, the IT organization must look inside the company to get the answer. The primary sources for measuring effectiveness are the executives, internal customers and users of the IT services. Effectiveness shows how well IT is performing for their users within the organization, which is IT's ultimate responsibility. To improve IT effectiveness, CIOs should focus on how they can help other business areas perform their mission, how they can get closer to their customers, and find practical yet effective solutions.
It is easy for CIOs to focus on efficiency. There are many concrete, third-party benchmarks like the ones mentioned above to use. Focusing on effectiveness, looking inside the company to determine how well IT is serving its internal customers, requires a different approach.
IT effectiveness is based on the perceived value surrounding five key components of IT delivery:
- Project Delivery
- Support and Maintenance
An effective IT organization must pay careful attention to each of these components to deliver effective service and must listen to the internal consumers within their company. No matter what benchmarks IT may achieve, if the department's customers don't believe there is effective value delivery, there is not.