The KPI Conundrum: Are You Really Moving the Needle?

In an evolving digital landscape, are we measuring the right things? Key performance indicators (KPIs) can seem staid and old-school, but credible measurement of results is a common struggle for any organization managing change.

Recently, our SFG team participated in an informal panel discussion with product and service companies to talk about the best metrics to understand digital transformation progress, challenges and failures. The consensus of the group’s discussion is that leaders today advocate action-oriented and defined approaches to measurement centered around revenue or the customer. It’s no longer the era of implementing a new system and simply hoping for long-term ROI to show up in a non-specific indicator six months later.  So how do you do it?

If you aren’t measuring the right things during a digital transformation, is the needle really moving? 

 Successful transformation simply must be driven by tangible goals with outcomes in mind from the start. But a big challenge centers around what to measure in order to quantify success.  Are transformational initiatives streamlining the business, delivering on product or services, and monetizing efforts?  The argument for using traditional KPIs is to tap metrics already in place so data will be consistent with stated corporate goals. On the other end of the spectrum, many standard KPIs may be too traditional for the changing digital landscape and won’t correctly analyze the information that transformational advancements create. In addition, it often takes too long to harvest and analyze the data. Many in the group complained that their metrics are outdated, oriented to infrastructure or basic service and simply no longer relevant, or altogether nonexistent.

Can We Solve the KPI Conundrum?

A few of the more experienced members of the panel said that data collection, feedback and monitoring work best when it is intrinsic to the DT effort itself, with two to four data collection points at critical release junctures, feature activations and phases for client/customer response about satisfaction and service.

These are all big questions for today’s IT leaders.  In fact, the Wall Street Journal recently looked at how IT executives are finding value in real-time metrics.  According to the WSJ, as CIOs need to prove the value of IT as a revenue generator, metrics are key.  New tools are allowing CIOs daily visibility into their organizations.

Across the board, both panelists and audience members agreed that alignment on quantification is instrumental to success and progress, as is early course correction, in digital projects. The bottom line is that every business, and every transformation, is unique.

Defining your expected outcomes from the start is key to how you can measure more effectively to actually see the needle move on your transformation progress.

Maureen Vavra

Solving the Cybersecurity Talent Paradox

CISO Panel Announced, Future of Cybersecurity Career Day Nov. 2 at Merritt College in Oakland, 

Every day it seems like headlines report about jobs being replaced by AI and other transformative technology.  While some types of jobs may see change, other areas, like cybersecurity, will see incredible growth in coming years. By 2021, it is estimated that there will be 3.5 million cybersecurity positions available in the U.S., while college institutions are expected to matriculate only 35,000 students with a Bachelor’s degree in computer and information services. Regardless of the latest trend or newest tech, one thing is clear: cybersecurity will be increasingly important to business and talent that is on the cutting edge will be in high demand.

To help industry identify and fill this gap, the faculty at Merritt College has teamed with Consortium of Information Systems Executives (CISE) to develop a fully accredited, two-year Associate of Science degree in Cybersecurity.  On Nov. 2, 2018, the College will host a Cybersecurity Career Day in Oakland, Calif.  Attendees will have the opportunity to meet highly-qualified students and learn firsthand of their training, experience and determination to enter the cybersecurity field.

CISO Panel Announced:

During the event, thought leaders will be part of an engaging Chief Information Security Officer (CISO) panel that will offer companies and students important insights into the future of cybersecurity and the coming IT talent crisis. The panel includes:

• Eddie Borrero, Robert Half
• Jimmy Sanders, Netflix
• Michael Armer, Barrick Gold Corporation
• Kwame Fields, Federal Home Loan Bank of San Francisco

This event underscores the important role that IT and cybersecurity experts will play in the economy moving forward. Our stellar panel will share unique insights for industry and job seekers based on years of real-world experience. While there is no cost to attend the event, space is limited. If you’d like to reserve a spot, please email your name, company name and contact information to info@ciseeducationfund.com.

Benchmarking the Benchmarks

StrataFusion clients span just about every industry, and we hear from them frequently asking for assessments and benchmarks so they can compare their performance, cost, or compliance information with similar companies. While business overall is relying on data and insights more than ever, benchmarking information can be scarce for mid-sized companies.

In our research, we see current benchmarking information is formed around basic performance or cost, and that is not a good reflection of today’s IT challenges; or, more importantly, the direction IT needs to go to achieve future business outcomes. As companies across industries continue to deal with the complexity of digital transformation, and even the transformation of their own IT departments, we know most benchmarks out there aren’t actually addressing the issues they face. What’s needed are benchmarks that identify and drive the strategic value of IT services.

Partnering with our clients and industry thought leaders, StrataFusion is developing benchmarks and metrics that address the key business concerns that are challenging IT leaders and organizations.  Areas of focus include revenue generation and management, digitization, process change, collection and use of data, velocity of change, responsiveness and customer focus.

As we continue benchmarking, we have some additional topics on the radar, such as communicating with the Board, transformation and Cloud readiness, and easy no-brainer IT wins.

Your input is welcome, so feel free to share your thoughts and questions at SFGBenchmarking@StrataFusion.com.

Maureen Vavra

IT for Post-Internet Boom Organizations

A lot has changed in the business world following the Internet boom almost two decades ago. It’s been said frequently that all businesses are now technology businesses, like it or not. From the IT perspective, we see significant philosophical and operational differences between companies that were around before the internet boom vs. those that got started during and after. It’s logical to expect that the IT challenges for a post-internet boom company like Netflix differ greatly compared to General Electric.

Leaders need to be clear not only in how IT is operating in their organizations but also how it should be working for future success and aligning to business strategy. The characteristics of post-internet boom companies highlight clear challenges and opportunities.

For example, software development companies are finding that they spend increasing time in operational tasks competing with their directive to provide more company differentiation. In addition, infrastructure and governance aspects are scattered around various areas within the company creating significant inefficiencies.

Mature organizations now operate with a better understanding of the appropriate use of infrastructure as a service, like cloud, and recognize that a decentralized set of common skills, processes and infrastructure technologies is not the most efficient way to continue operating. Now there is a huge opportunity to integrate IT more deeply into the business with the goal of creating efficiencies in common skills, process and technologies across business organizations with the development of common platforms and services.

Successful and forward-thinking IT infrastructure organizations must continue to benchmark their progress, augment skills and reorganize around more agile and software-oriented practices. For example: adopt machine learning capabilities to facilitate continual improvement, invest in automation skills to increase deployment velocity and adopt a “rapid recovery” philosophy over a “prevent every failure scenario” attitude.

When that happens, organizations will finally be able to achieve the goal that everybody was so excited about in the early 80s and the boom of the 90s:  to unlock efficiencies, drive differentiation and unleash business innovation.

Edward Wustenhoff

Big Data that Support Key Business Results

By Doug Harr

CIOs have a tremendous opportunity to harness Big Data. But CIOs are also wary of buzz words and heavily marketed trends which often lead to pursuits that are secondary rather than those aligned to key results. And while it may not be clear to everyone in the executive ranks, CIOs are keenly aware that all systems (not just business systems) in an organization spew out data, much of which can be mined for useful information. When I was CIO at Splunk, we called this systems-generated data “machine data” and I had the chance to witness just how many brilliant things can be done by harnessing it. So when and where does it make sense for CIOs to embark on data driven projects? How can a CIO choose where to focus efforts?

In a typical corporation, CIOs look after everything from business applications, operations and infrastructure, security, and the infrastructure that supports their web presence. Looking across the vast portfolio of services they support, a CIO’s primary concern will be to properly implement capabilities, and then manage them in such a way that the business is effectively and efficiently supported. Taking on analytics becomes the next layer to tackle once each fundamental service is in place. Where the rubber meets the road is when you can use machine/big data to determine more than just the status of your infrastructure. That is, when you can see the opportunity to mine data for services that support the portfolio and ultimately the corporation’s key results.

Getting Started

Select a Use Case: Focus on high-value use cases first. External-customer facing use cases are particularly well suited as first forays into data mining programs. Making the customer experience as compelling as possible is key for all organizations. Developing deeper insights into this experience has enormous potential and will garner support from your marketing team and other internal customers.

Work with Your Internal Business Partners: Meet with your internal team, and departments such as marketing and engineering, to select a use case they care about. Choose a project that will impact their external customers—typically the customers of your company. While internally focused use cases for Finance, HR, Sales or other teams can be instructive, prioritize programs that address the company’s core product or service and customer experience.

Put the Technology in Place: Don’t place all your bets on one solution. Consider your approach and look at real-time products (such as Splunk), cloud offerings, and batch-oriented systems (such as Hadoop). Before you make any purchases, do a proof-of-concept. Ensure you have support staff from the vendor working with you and try a sample set of your data in their engine.

Review the Reports: Step back and review reports from the solutions you are considering. Analyze the insights, both qualitative and quantitative. For example, if you use a customer support system for your proof-of-concept, ask questions like these:

• How long does it take a customer to get through the online sales cycle? How much time elapses from engagement to first customer support call?
• How long are customers spending in our systems?
• How many orders are placed per month? What’s the typical amount of time it takes to book an order? How long does it take to book an order at month end?
• Does it appear anyone is trying to infiltrate our systems?

Demonstrate What You Can Produce: Share your proof-of-concept results with your internal team. There’s no greater fun than giving your sales and marketing customers something they didn’t have before, something that helps them make better decisions more quickly. Note that there are some use cases you will never be able to share widely. For example, security use cases can only be shared with security personnel and auditors.

Delivering Value

Bringing Big Data programs into your company is worth the effort. These data can tell you things about your business and systems you can’t learn any other way. Chosen and managed carefully, these programs can improve customer service (internal and external) provide a qualitative view into the customer experience, offer clearer insight into the products and services, and even enable a company to better understand its own employees.

Doug Harr is a partner at StrataFusion. He has more than 25 years of technology leadership experience both as an executive-level technology practitioner and in senior leadership roles for professional services organizations. Contact him at dharr@stratafusion.com; follow Doug at twitter.com/douglasharr.

Why I Never Look at the Value Case or ROI

By Mark Tonnesen

When evaluating potential IT initiatives, the most common approach is to focus on the numbers and look at the return on investment (ROI) or value case. For example, say your company is considering implementing a new Enterprise Resource Planning (ERP) system. Chances are the CEO and CFO will ask, “What’s the ROI?” Or, “If the new system will cost $10 million, can you show me how it will produce a much greater gain?”

As far as I’m concerned, though, if you’re asking about the value case or ROI when evaluating IT initiatives, you may be asking the wrong question and looking at the wrong things.

What You Should Be Asking when Evaluating IT Initiatives

What gets lost in the value case or ROI approach to evaluating IT initiatives are the bigger questions that are more important than the finance-driven calculations:

• What problem(s) are we trying to solve?
• What is the value to the business of solving this problem?
• What objective/end state can we achieve with this initiative that we don’t have today?
• What’s the best way to achieve our business objectives?
• How important is solving this problem or achieving this objective for the business’ ability to reach its goals?
• How will this help us make better decisions and run our business more efficiently?

Not Everything Can Be Measured (Using the Same Yardstick)

A problem with the ROI or value case approach is that you might be trying to quantify the unquantifiable. For example, say you are considering implementing wireless internet service throughout your office for $XX per month. How do you calculate the ROI on this? You can take a best guess at how this might improve productivity and come up with a number. But that would just be a guess. And it would ignore other factors, such as the positive impact this might have on employee satisfaction or addition benefits such as mobile applications. Once new capabilities are in place and available to the full team, they may lead to unexpected innovations and enhancements that further improve productivity. It is difficult to predict the benefits new capabilities unleash.

The Numbers Can Tell You Anything You Want to Hear

Your team’s best guess regarding the ROI of a proposed IT initiative is just that: a guess. As an example, I once worked with a large high-tech company that was big on ROI. The team worked on a series of technical support initiatives to develop self-service tools for customers. To justify these projects the team put together graphs showing a reduction in customer support cases and calls, and an increase in customer satisfaction.

Knowing what the cost of a support call, the team developed analyses that showed that the cost of each initiative was lower than the cost savings it would deliver and the projects were approved. Unfortunately, the projected savings never materialized. The team neglected to include factors such as growth, customer adoption rates, issue severity addressed by the tools, continuous improvement costs and operational support costs for the tools. An analysis that included all the right factors—beyond just cost—would have helped the company make a better business decision.

Where to Focus: Business Impact

When evaluating IT initiatives, I recommend steering clear of the value case and ROI approach. Rather than pulling numbers out of the air to justify (or kill!) a program, take a hard look at the business impact that the initiative will have. Ensure you are solving the right problem and include measurement points along the way to check whether the expected goals are being achieved.

Mark Tonnesen is a partner at StrataFusion. Contact him at mtonnesen@stratafusion.com; follow Mark at twitter.com/mtonnese.

Conquering “Big Hairy Audacious Goals”

An IT Transformation Starter Guide

By Mark Egan

• Complete a “Big Hairy Audacious Goal” within 90 days
• Clearly define the goal
• Recruit your best staff to work on the project
• Remove all barriers and set up the team to operate like a start-up

We all face “Big Hairy Audacious Goals (BHAG)” in our careers. However, many of them turn out to be crises we have to address rather than proactive initiatives that make significant positive impact on the organization. At StrataFusion, we believe in order to transform your IT organization successfully you need to set some BHAGs. At a former employer, we had a goal to set up the first private cloud and were asked to use company products. This was a big test of using all of the company products together for the first time and provided a showcase of this technology for our customers.

Step 1: Define the Goal (and Secure Support)

First, we started by clearly defining the goal: in 90 days, set up an operational private cloud that supports a mission-critical business application. We selected a business intelligence (BI) system supporting our marketing organization due to its critical requirement to understand our customers’ buying behaviors and design marketing programs to gain their attention. We then set up a regular cadence of meetings with our R&D organization to ensure we were using the products as designed. With R&D’s buy-in, we got support when we ran into issues, as many of these products had never been used together before.

Step 2: Recruit your Best Staff

Next we formed a BHAG team with the very best staff within our organization, recruiting them to the project full-time. Initially there was a lot of push-back as we pulled these key staff members out of their existing roles and key projects. We engaged the team and gave them a free hand in bringing in any staff from other organizations inside/outside the company.

Step 3: Remove Barriers

Finally, we removed all barriers for the team and allowed them to operate like a “start-up,” eliminating internal process constraints. The BHAG team did not have to follow change control processes, and was allowed to use non-standard hardware/software and bring in third-parties as required. We provided strategic management support for the BHAG team and held weekly meetings to remove any obstacles from completing their project.

Success

The private cloud project was completed on time, and the mission-critical applications continued to support key functions in marketing. We had developed a showcase for our customers demonstrating how to set up a private cloud in 90 days.

StrataFusion has worked with clients to develop big goals and transform their IT organizations so they can focus on key areas such as revenue growth, customer satisfaction and innovation. With the right team and the right strategy, conquering a “Big Hairy Audacious Goal” is achievable in 90 days.

Conquer your IT Transformation Project. Let StrataFusion show you how.

StrataFusion IT Transformation Practice