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Measuring modern IT performance is no longer a single management discipline but a multidimensional approach.

The art and science of Information Technology are to optimize its usage, achieve business value, develop long term organizational competency, and unleash the full potential of the digital organization. To improve IT performance and organizational maturity, the high mature IT organizations leverage “PIICC” model to identify what is right and wrong in the IT environment, make an objective assessment of IT effectiveness, efficiency, and overall competency, and provide data-based insight on how IT can bring success to the company for the long term.


Performance evaluation of IT efficiency (keep the lights on) and effectiveness (top-line revenue growth, and transformative change): In reality, the IT environment is often fraught with information inconsistency, process redundancy, and platform/system overlapping. IT performance assessment helps IT management take a critical look at IT strengths and weaknesses, diagnose the early signal for dysfunctional areas, and keep improving IT efficiency and effectiveness. IT leaders must keep in mind which KPIs best measure IT capability to deliver business value. To transform IT from a cost center to a strategic business partner, a set of IT performance indicators needs to show a clear link between IT performance and top-line revenue generation, as well as the benefit/cost calculation - the tangible progress made for transformative change initiatives.

IT portfolio performance evaluation (on value, on time, on budget, etc): IT portfolio management is essential to build the strategic business competency. IT portfolio is a collection of programs and projects that are designed to help the organization achieve its targeted performance because economic cycles are getting shorter, and decision cycles are getting shorter as well. IT portfolio rationalization is an activity more critical than ever. IT applications blended with current digital technology trends can deliver significant benefit to business growth, such as real-time business insight, innovative products/services deliveries. Thus, it’s important to make an objective performance evaluation and track the progress of IT portfolio management to ensure on-value, on-time and on-budget delivery. Because the degrees of over-budget, late delivery or poor system performance conditions would reduce customer satisfaction. Dissatisfaction negatively impacts the overall value of products/services deliveries. Thus, the “on-value” evaluation of IT portfolio should be an overall performance measurement based on the combination of cost, schedule, quality, performance, and satisfaction of the customers or shareholders.

Innovation performance assessment: Innovation performance management is often different from many other types of business initiatives. The purpose of innovation measurement is to track innovation management effectiveness, not just about the quantitative results which sometimes can mislead the management with a short-term perspective. All innovation initiatives, hopefully, should achieve some business result directly or indirectly. To harness innovation, the innovation performance measurement should focus on the business goals and desired behaviors. Normally organizations look for KPIs measuring business results generated by innovation efforts. You choose those KPIs by deciding which are seen as critical to making progress in order to deliver more innovation benefits. Some factors that could be used to measure innovation score could be % of revenue from new products/services introduced, resources invested (human and financial), employees motivation, number of innovation initiatives being launched, process KPIs, or organizational innovative culture readiness, etc.

Cost optimization measurement: Generally speaking, IT cast can be categorized into: IT operational cost, financials (budget, expenses, service costs, etc), people cost, vendor cost, etc. . Some of the "long poles in the tent" tend to be labor; depreciation and new capital spending. The challenge is to have visibility and traceability between costs and the assets consuming those costs. When selecting the right set of metrics for cost optimization, ask whether the metrics can reveal anything meaningful for the identified purpose, and ensure the management buy-in for the metrics collection processes, such as.a calculation of the cost to fix structural quality problems. IT value is often measured by optimization and consumption of IT assets in support of the business solutions that are identified within the organization's revenue producing stream. The CIO's dashboard can highlight some significant IT cost and finance information and keep track of the overall IT financial health.

The measures should be oriented to justify innovations the organization needs: Better look at what the results were prior to implementing the innovation and after. Generally speaking, there are two types of innovation measurement. The first type is about measure innovative thoughts or actions - the business value brought by those novel ideas being designed and implemented. The second type of innovation measurement is through innovation drivers - the crucial elements of creative culture or the differentiated innovation competency. The further goal of innovation measurement is to track innovation management effectiveness, not just about the quantitative results which sometimes can mislead the management with a short-term perspective. Innovation performance indicators need to focus on measuring quality, quantity, time, cost, revenue growth, profit improvement, margin targets, products variety for stability, turnover, shareholder/owner return and talent sustainability, etc.

Select a set of measurements which are seen as critical to make continuous progress: Normally organizations look for metrics measuring business results generated by innovation efforts. But, it often takes quite some time for a new innovation driver to produce those measures. It is difficult to measure the impact without taking the time to generate impacts. Therefore, it’s always critical to select some leading KPIs for measuring innovation results in the long run and help to make continuous improvement. Do no just measure innovation with lagging financial metrics only. For example, one of the solutions is to define process KPIs, which demonstrate the growing capability of the organization to deliver more innovation with business impact in the future. In practice, the problem for innovation measurement is often that the initiative is not well defined. The performance metrics have to be credible and relevant in the eyes of stakeholders, and truly help the business improve their innovation capacity.

The innovation performance indicators should focus on building innovation competency and desired culture (mindsets, attitudes, and behaviors): There are incremental innovation, radical innovation, hard innovation and soft innovation. And most importantly, being innovative is a state of mind, it is a culture thing. Thus, innovation efforts cannot be measured the same as other types of business initiatives via quantitative manner only. In many companies, a pervasive obsession for purely quantitative measurement or numerical success indicators sweeps aside much of the softer and more qualitative information that is crucial in making innovation effort to develop a creative culture and build innovation competency. To measure and manage innovation effectively, a necessary set of desired attitudes and behaviors should be clearly established before performance indicators are designed. And then, innovation managers can leverage performance indicators as the best tools to nurture an innovative culture and promote continuous innovation within an organization.

What gets measured, gets managed. Metrics are not the end-all solutions to innovation management, but simply another set of tools and information. Choose the right metrics by deciding which are seen as critical to make the progress in delivering high performance innovation results. And keep the measures simple and understandable.

Measurements provide necessary feedback: You can only manage what you measure, there is no exception for innovation management. Organizations usually look for KPIs measuring business value generated by innovation effort. Innovation measurements provide necessary feedback which helps the business keep improving the innovation process or drive early success to create a positive spiral. Thus, metrics management is a critical component of innovation management. It’s important to select a right set of KPIs by deciding which are seen as critical to make the trackable progress. The fewer, the better, but they have to be credible and relevant in the eyes of the stakeholders. Because metrics are part of transparent visual management allowing the business pulling resources and assets together for orchestrating an innovation symphony and delivering better business results. More specifically, innovation performance of the company depends on the quality and quantity of ideas entering the “innovation pipeline,” how well it can convert them into desired output, propositions, or process improvement, etc, with measurable business benefit.

From monochrome to multidimensional vision for re-imagining the future of the organization: In the digital era with “VUCA” characteristics, vision becomes so important to both capture business growth opportunities and predict risks. Digital leaders today must shape a clear vision and constantly visible by sharing their vision and encouraging others to share theirs as well. They can manifest a vision vividly by taking a broader lens and embracing the full spectrum of colors rather than just "black and white." Lack of vision, tunnel vision, monochrome vision, or the “vision existing on paper only” are all sorts of traps which could mislead management, make bad strategy, cause decision ineffectiveness, and decelerate the speed of changes. Metaphorically, A variety of traffic lights: Red, Yellow, Green, Which color should symbolize the visionary leadership? With conventional wisdom, if you see the green light, it implies that you can see further and drive ahead boldly; if you see the red light, it means you perhaps get some serious issues, need to be cautious and controlling - stop, wait and examine. In fact, to deal with “VUCA” digital new normal, yellow light is a good symbol of visionary leadership - having both courage and caution at the same time. When the yellow light is flashing, leaders have to make judgment calls, set widest range of strategic alternatives and take proper actions all the time. The other vision-related trap is that business executives think that somehow if they have a vision, magically it will become a reality. A passionate connection to vision doesn't mean you will always be excited about it, it means you need to live by it at the daily basis and will be willing to suffer for it as you realize you are responsible for the game-changing effects of its realization.

From micromanagement to macro-management for encouraging autonomy: Nowadays, many organizations suffer from overloaded information, rapid pace of changes and frequent disruptions, the “command and control” management style is gradually running out of steam because today’s workforce is highly educated and fluent with digital technologies, they prefer to make their own choice to communicate and do their work with freedom. To put another way, autonomy or self-management is an emerging digital theme. Therefore, it’s important to lay out the ground rules upfront as a team, make a real shift from micromanagement to macromanagement, set clear goals and measurement to guide the team without over-controlling. A team can be self-organizing in determining the best and most efficient method of delivering the commitments. Holding managers or staff to their accountability is key so that the whole team knows the significant details, the mechanisms, and goals to the annual and long-term goals are vital. If you are pulling the reins too tight, setting too rigid process, or undermining managers or staff to micro run or make a decision without collective input, you probably fall into the micro-management trap. Micro-management is often a culture thing, it can be diagnosed early on and fixed properly to encourage autonomy and improve the team accountability.


From monitor-driven to motivational style of performance management for unleashing talent potential: The purpose of managing performance is about setting performance metrics to make objective assessments and understand performance measurement result. In many traditional organizations, talent performance management turns out to be some practices to monitor people's daily behaviors or an annual routine to focus mainly on past performance. But monitor-driven performance management is not sufficient to nurture a culture of innovation and develop a people-centric digital business. The one way to find out whether the performance measurement and management are effective or not is by looking at the behavior and culture the KPIs are driving. If negativity or unhealthy competition is up, mediocrity is encouraged, and politics is becoming more and more dominant, then you know that performance indicators are perhaps set wrong and performance management evolution is a strategic imperative. Highly effective performance management should facilitate frictionless information flow and motivate people to accomplish their work creatively and achieve performance higher than expectations. Performance management is not just a silo management practice to monitor or measure the quantitative delivery of staff, a team or a function, but a holistic management discipline which needs to connect many relevant dots such as strategy management, change management, culture management, and people management to involve development, enablement, and enhancement.

The digital paradigm shift represents the next stage of business maturity which will improve how the enterprise works and interacts with its ecosystem. Reinventing the future of business takes both vision and strategy; it’s about setting out goals and working at them in a systematic way for proactively disrupting outdated mindsets, processes, technologies, or cultures, etc. It takes multifaceted approaches to unlock digital performance and catalyze change. Companies should experiment and learn, run, grow and transform business consistently and harmoniously.

Vanity - using measures devised solely to make managers look good or encourage people gaming the measurement data. Performance management is never just about numbers, and measurement is not for its own sake. The goal of measurement management is about providing guidance to help improving future decision-making and action taking. If the management manipulates numbers to make themselves look good or encourages people gaming the measurement data, it will mislead stakeholders, contaminate business culture and diminish multidimensional business value. It’s also important to explicitly communicate the intention behind metrics and make sure that the well-defined set of metrics can enforce information-based communication and lead to continuous improvement.

Provincialism - letting departmental boundaries dictate performance measures. Every function within the company perhaps has their own set of performance measurement. But ultimately, performance measurement and management should focus on achieving the strategic goal of the company, not just the individual, team, or functional performance, but to ensure the business as a whole is superior to the sum of pieces. Provincialism will enforce the silo wall and cause unhealthily internal competition. Also, don’t just scratch the surface to manage the numbers, always understand the whole story behind the scenes. The performance measures need to motivate teams to achieve more, and functional measurements should be directly aligned with the strategic goal of the business  so that top business executives would keep track of the key business success factors for ensuring the seamless strategy execution.

Narcissism - measuring from your own point of view instead of the customers'. It is undoubtedly dynamic time, every forward-thinking organization intends to run a customer-centric business. In reality though, measuring via convenience - from an inside-out operational management lens is still the common practice in many companies. The consequence is that the business keeps spinning, without improving customer satisfaction or increasing the brand value of the company. Metrics need to evolve to something that matters to the internal users or end customers, at the same time that “customer sentiment” needs to get put into something more tangible. Both quality and quantity measures are important because shipping the wrong products on time and within a budget doesn’t benefit anybody, particularly the organization. Companies need to understand the maturity of customer-centric performance measurement practices at the overall organizational scope. The goal is to develop or improve related business competency for improving customer satisfaction.

Egotism - assuming you know what’s important to measure. The problem with measurement is that more often, the metric is very subjective. People have different opinions on how to measure or how to read the measure, or overall how to make it work. Egotism might lead to ego-centricity which is a behavior that is motivated by a belief that one's ego is of greater importance than others' are. Like many other management disciplines, Performance Management is a collaborative effort, it’s important to keep communicating and take a systematic approach, put the cohesive effort into getting the correct measurements, collecting the relevant information, analyzing it, evaluating it, and determining what needs to be improved. Humble attitude and scientific methodology are both important. It's fair to say any organization that didn't have a systematic approach to measurement and analysis at both the strategic level and operational level has a giant blind spot that is impairing their performance.

Pettiness - measuring only a small portion of what matters because you’re fixated on details. Keep in mind performance measures are stories, not just data, financial indicators in many business situations only cover part of the story. Neglect to measure something important will create blind spots for business management to make effective decisions or drive progressive changes with speed. Measuring only a small portion of what matters stops the management from seeing the full picture of what’s going on in the business and limits their view on how to accelerate business performance and unleash its full potential. Ideally, your measures should cover all areas that contribute to business value creation including service quality, employee engagement, business competency, customer satisfaction and financial outcomes. to ensure that the measures are both qualitative and quantitative, and implement whatever mechanisms you need to be able to gather the data and improve performance management effectiveness.

Inanity - measuring the wrong thing causes bad consequences flow: Wrong selection of performance measures could get the devastating effect to the business because it distracts the management to get the right things done effectively, or even causes the long term damage by fixing the wrong problems or encouraging poor behaviors. To avoid the pitfall of measuring the wrong things, people in the organization need to know and understand why the data are being collected and analyzed, as well as what decisions will be made based on the data. The one way to find out that the performance measurement setting is ineffective is by looking at the behavior and culture the KPIs are driving. If behavior and culture are off, and politics is becoming more and more dominant, then you know that performance indicators are perhaps just not the right one to achieve business effectiveness. Even if you choose the right KPIs, you must change them from time to time accordingly. Otherwise, your business is going to be driven by that specific set of KPI even the business circumstances have changed a while ago. It will decrease business effectiveness and decelerate business speed.

Frivolity - this happens when leaders don’t take metrics seriously. It is important to track the right metrics and know what to do with them for making performance improvement by taking a step-wise approach. Fundamentally, the management needs to determine why they are doing it, which strategic business goals or objectives are they trying to reach, as well as how to make things happening. Performance metrics should directly link to the ultimate business goals they want to achieve at the strategic level. From a performance management perspective, a balanced scorecard helps business executives laser focus on understanding critical business issues in a tangible way and determining to fix issues effectively. A well-defined scorecard should contain a good mix of long-term strategic value measures along with performance drivers to keep track of the progress in the short term operational value in spite of capturing multiple perspectives, to enforce a healthy “measure - understand- improve” performance cycle.

Performance Management is not a bunch of paperwork, but a combination of management approaches leading to constantly improving business results. Performance management should take a multidimensional approach, to connect all important dots with multifaceted perspectives. Select the right set of indicators of business improvement, innovation, and investment, really focus on key metrics that correlate to better business outcomes and measure them effectively.