In recent weeks I have asked a series of questions about IT strategy: How does your IT strategy accelerate value delivery? What new capabilities will be available from your IT strategy? How will your IT strategy reduce business risk? And how does the IT strategy align with the business strategy?
These questions define the strategic direction and establish a justification for the recommendations. The next question that we must answer involves measuring success and progress against the plan.
Measuring accomplishments and their impact is necessary to motivate the organization, maintain momentum, and, when necessary, enable mid-course corrections. Experienced CIOs clearly define how to measure progress in the simplest, business-oriented terms before embarking on transformational or strategic initiatives.
Milestones
One of the simplest forms of measurement is recognizing completed milestones. Be sure to cross-reference any milestone back to the strategic objective it supports. CIOs need to balance recognizing short-term, technical milestones against client expectations and needs for business benefits. Agile organizations often track sprint completion, burn down rates, and technical debt; how these relate to strategic objectives is often obscure.
Organizations often track minimum viable product (MVP) implementations but leave internal clients wondering when the full scope of the initiatives will be implemented. IT often tracks internal metrics that fail to recognize the time necessary to roll out and adopt implemented capabilities. Project teams need to celebrate achieving milestones, but these should not be the only measurements that IT tracks.
Benefits Realization
Benefits realization metrics are beneficial because they are easy for all parties to understand. These metrics can help establish shared responsibility for what may otherwise be perceived as an IT initiative.
Few insurers have the discipline, data, or expertise to track the expense or utilization impacts of individual initiatives or implementations. Insurers can overcome this by identifying leading indicators that all parties agree they can use to predict future benefits.
Revenue growth over time may be a desirable strategic outcome, for example. Tracking new business conversion rates as a leading indicator for revenue growth is appropriate and leads to more actionable outcomes. Stating objectives and measures in terms of expected benefits also helps the project team make scope decisions.
Customer Experience
Organizations often measure customer experience indirectly with net promoter scores (NPS). A positive impact on NPS is desirable, but it may be too indirect a measurement for smaller initiatives. A/B testing, surveys, and focus groups can measure the customer impact of smaller initiatives but may be too costly or time-consuming for smaller organizations. Measuring the adoption rates of new procedures by customer is an important proxy for customer experience. This type of measure is easy to track if strategic initiative requirements include it.
External Factors
External factors can positively and negatively impact the success of strategic initiatives. For example, new business increases may be the target objective of a new rating factor or program. However, many external factors like competitor actions and economic changes can also impact this metric. Organizations can consider external factors if they document their initial assumptions for market conditions as part of the metrics definition and adjust their targets based on changes in these factors.
Change Control
Business priorities often change due to changes in business conditions. These changes can impact the priority of strategic initiatives, funding, and the rollout schedule of promised capabilities. It is important to track these changes over time, reporting the initial goal, revisions, and actual accomplishments. Doing so will increase transparency and maintain accountability to the original plan.
Measurement systems are not perfect. Organizations need to be willing to accept proxies for progress and avoid creating unnecessary bureaucracy around measurement programs. A good measurement system contains a short but diverse list of metrics to appeal to multiple audiences and keep the IT strategy on track. CIOs need to negotiate success measures in advance to guide the team and manage long-term expectations.
If you have answered my previous strategy questions, you are ready for the final question: How will you communicate your IT strategy?
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