When ICT metrics make no sense

(an alternative approach)



There are several 'classic' metrics that organizations use when they go through their annual budgeting - for example:

  • ICT spend as proportion of organizational revenue (or expenditure),
  • ICT spend per employee,
  • ICT staff to total employee ratio.

These are relatively easy metrics - they are easy to track internally and can be augmented with relevant external benchmarks.

Shortcomings of these metrics become evident when we analyse performance of peer organizations. The above metrics are tied to the number of employees and revenue. But when we compare two 'peer' organizations (eg same industry, geography and 'size' bracket measured by the number of employees) with different revenue/ profitability profiles, neither can 'relate' their ICT budget to the industry average/ 'benchmark' level of the ICT spend.

The comparison of organizations under financial stress with their more successful 'peers' might look like dealing with statistical outliers. But, 'classic' ICT metrics fail increasingly as their simplicity has become a limitation to understanding ICT operations in the context of changes that affect businesses. On one hand, complexity of ICT continues to grow, and on the other hand increasing automation and streamlining of organisational processes, changes in the service mix and delivery models, productivity gains and other factors lead to lower staff numbers. As benchmarking the number of ICT staff required to support X number of employees becomes less useful, metrics that put ICT resources (spend and staff) in the context of ICT capabilities that they enable represent a more meaningful alternative.

There is a little bit of 'art and science' behind this approach and it might lead to/ necessitate a bit more involved communication between CFO's and CIO's. But it is an option for organizations who feel they 'do not fit' into conventional ICT benchmarking methodologies.

web dashboard

The ICT capability in the above figure is a composite normalized index that takes into account both the range of technologies supported by an ICT team (broken down by capability area: data management, ICT security, end-user device management, Disaster Recovery and others), as well as volume indicators (such as projects that have been completed, systems in use, volume of calls to the ICT Help Desk, user devices). The 'value for money' (ICT spend and resourcing levels) is then evaluated based on data from other organizations with ICT of a comparable 'magnitude'. The ICT engagement in the above figure would typically take into account user satisfaction with ICT (including satisfaction with core ICT systems and contribution of ICT teams to business initiatives).


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