THOUGHT LEADERSHIP WHITE PAPER

A Guide to Building Management Metrics for Improving IT

By Atwell Williams, Solutions Architect for the Oce of the CTO, BMC So ware

TABLE OF CONTENTS

EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

STRIKE A BALANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Do the Right Things Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

IDENTIFY GOALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Recognize Dierent Points of View . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Make Goals Specic and Measurable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Understand Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

ESTABLISH THE METRICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Provide Metrics for All Perspectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Assess Available Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Consider Both Sides of the Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Keep Value in Mind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

TAKE ADVANTAGE OF AVAILABLE RESOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 ITIL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 itSMF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 BSM Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

CONCLUSIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

EXECUTIVE SUMMARY
Businesses have placed increasing demands on their IT organizations to help meet corporate goals and objectives. IT has responded by delivering the services the business needs when and where they are needed and with the required functionality, reliability, and performance. To keep up, however, many IT organizations have traded o IT operating eciency for alignment with the business. As a result especially in light of the current economy most IT executives are now under pressure to reduce costs. They face an ongoing challenge to strike a balance between business alignment and IT operating eciency. They have to not only do the right things, but also do things the right way. That means improving IT eciency while maintaining (if not improving) business alignment. Achieving and maintaining a balance between business alignment and IT eciency is a fundamental tenet of Business Service Management (BSM), a comprehensive approach and unied platform for running IT based on business priorities. By following a BSM approach, business-aligned IT services are delivered in an ecient manner resulting in increased business impact and lower service provisioning costs. How do you know whether youre striking the right balance? How do you know whether your IT initiatives are yielding value to the organization? Identifying and tracking the appropriate metrics can provide insight to help ensure that you are focused on the right areas. With the right metrics, you can make better-informed decisions regarding investment in BSM initiatives, gauge progress in implementing the initiatives, and accurately assess the value realized from these projects. Choosing the correct metrics, however, can be a daunting task. Todays IT service management tools are capable of producing a large variety of data points. But just because something can be measured, doesnt mean it should be measured. How do you know which metrics to choose? This paper presents an approach for identifying the metrics most important to your initiatives. While clearly there is no onesize-ts-all method, and specic metrics vary widely with each IT organization, the guidelines presented in this paper will be applicable across most IT organizations.

STRIKE A BALANCE
Driven by intense pressure to meet increasing business demands, over the past 1824 months IT organizations have focused almost exclusively on achieving alignment with the business. Now, largely as a result of the current economic landscape, businesses are under greater pressure than in the past to reduce costs. IT management must respond by striking a better balance between business alignment and IT operating eciency. (See Figure 1.)

Figure 1. Balancing business alignment with eciency

Recent studies have shown that when IT organizations are able to strike a balance between alignment and eciency, the overall organization receives maximum value from its IT spend.

DO THE RIGHT THINGS RIGHT To strike a balance, however, IT management needs to take a wider view of the IT organization. This view must extend beyond alignment with the business (doing the right things) to also include achieving higher operational eciency (doing things the right way).
As a technology deployment approach, BSM is based on the ability to map business services to the underlying infrastructure components. This provides visibility into IT from a business standpoint and gives IT the ability to focus on the infrastructure and operations that matter most to the business. With this visibility, IT organizations can accurately measure their progress in balancing alignment and eciency.

IDENTIFY GOALS
The late, noted Harvard Professor Theodore Levitt was once quoted as saying, People dont want quarter-inch drills. They want quarter-inch holes. A common mistake made by many IT organizations when trying to assess value is to start gathering data without rst determining what data is needed. Before collecting data, you have to understand what purpose it will serve. This requires clearly understanding the initiatives you plan to undertake and the associated goals of those initiatives. In other words, dont get obsessed with the drill; focus on the goal the hole in the wall. Further, when setting goals, make sure to take into account all aspects of the IT organization, including people, processes, technology, and business partners.

RECOGNIZE DIFFERENT POINTS OF VIEW Its important to recognize that people in dierent functions will have dierent perspectives on how best to measure progress toward a given goal. For example, if an individuals overall personal goal is to lose weight, a nutritionists goal for that individual would be to reduce calorie intake, while a personal trainers goal would be to increase the duration and intensity of exercise.
Likewise, in IT organizations, dierent managers have dierent perspectives regarding goals. Consider, for example, an IT organization that sets out to reduce costs. The CIO may look at this goal from the high-level perspective of lowering the overall cost of running the IT organization while delivering quality service. That involves lowering costs across the entire organization, including operations costs, support costs, and vendor costs. The IT operations manager views the same goal from the perspective of lowering the operations cost portion of the IT budget, while the IT support manager views the goal from the perspective of lowering the support cost portion. Consequently, when setting goals, be sure to consider the perspectives of all involved managers and their individual goals.

MAKE GOALS SPECIFIC AND MEASURABLE Each goal you set should be measurable; that is, you should be able to gauge to what extent you have achieved (or missed) the goal. Understand exactly what you are trying to achieve in each area. Assess your current situation (Where are you now?) and determine the desired situation (Where do you want to be?). For example, you may set a goal to increase server utilization from 30 percent to 50 percent in one year, increase the help desk rst-call resolution rate by 15 percent, reduce service outages by 25 percent, or lower IT lifecycle costs by 10 percent. UNDERSTAND VALUE In setting goals, look at your implicit understanding of a desired outcome (destination) that is of value. Ask, What do you want to accomplish? and What value do you expect to realize? For example, the value realized from increasing the eciency of the help desk sta might be a signicant cost reduction. It might also be an improvement in customer satisfaction. Understanding value up front gives you greater insight in setting and prioritizing goals, and it enables you to assess your return on investment in the initiatives you implement to achieve the goals.

ESTABLISH THE METRICS

Once you have established your goals, identify the metrics necessary to measure your success in achieving them and in evaluating their value. The appropriate metrics should allow you to answer important questions, such as the following: Are you focusing on the right areas to achieve the desired outcome? Are you moving in the right direction? What is your progress? How much further do you have to go? Is what you are doing of value?

When identifying metrics, be sure to look at all aspects of your IT organization people, process, technology, and business partner areas as possible sources for inclusion in your set of metrics. Also, make sure the metrics chosen can easily tie back to the original goal. Think carefully about the goal(s) of your initiative(s), and identify the few most important metrics that will help you measure progress and determine success. How many metrics should you identify? Just include enough and no more. Avoid the urge to report on a metric just because theres white space on the scorecard. Make sure the metric truly matters in measuring the ultimate goal. As Albert Einstein said, Everything that can be counted does not necessarily count. Further, be sure to distinguish between leading and lagging metrics. In the weight loss example, calorie intake and exercise intensity and duration would be considered leading indicator metrics while actual weight lost is a lagging indicator metric. Both are important, but recognize when to measure and report on each type.

PROVIDE METRICS FOR ALL PERSPECTIVES Because dierent managers have dierent perspectives on goals, you need to provide all managers with metrics that enable each to measure success from his or her perspective. Heres an example. The CIO sets an overall goal to increase the quality of service. The support manager may see that goal from the perspective of reducing the number of unplanned system outages. Knowing that a major cause of unplanned system outages is improper change management, an appropriate metric for the support manager to improve might be the number of unauthorized changes. The operations manager, on the other hand, views the quality goal from the perspective of increasing system availability. For her, an appropriate metric to improve could be the time required to restore down systems. ASSESS AVAILABLE DATA Its important to know what data is required to provide the needed metrics and what data is currently available. You may discover that you do not have the required data available for some metrics that you wish to track. As Einstein noted, Everything that counts cannot necessarily be counted.
Perform a gap analysis between the data you need and the data you have available. To identify data available, look at the technology solutions in place, such as those that support service management, component monitoring, reporting, and analysis. You may already have BSM technology in place that gathers, analyzes, and presents much of this information. Also, recognize that you can derive, from readily available data, some metrics that are not easily measured. This is analogous to determining the fuel eciency of an automobile by dividing the miles you have traveled (as measured by the odometer) by the amount of fuel you have consumed (as measured by the pump at the lling station). You may have to resort to manual data gathering for some of the needed data. But manual data gathering is error prone and labor intensive, so it should be avoided wherever possible. If you have to resort to manual data collection, be sure to implement and enforce strong data-collection processes to minimize errors.

CONSIDER BOTH SIDES OF THE BALANCE To balance business alignment with operational eciency and eectiveness, you need to understand the relationships between them. Insight into these relationships enables you to make better-informed decisions in attempting to achieve the balance. Heres an example. A support manager sets out to improve the eciency of the service desk and establishes three measurable goals: increase the number of calls each agent handles per hour, increase the rst-call resolution rate, and increase the percentage of calls resolved by Level 1 support sta. If the manager gauges success by measuring only these increases, he may drive the increases to the point where they begin to erode customer satisfaction. It is important, therefore, that the manager understand the relationship between service desk performance and customer satisfaction by also tracking satisfaction through customer surveys. KEEP VALUE IN MIND At the end of the day, most IT initiatives are going to be evaluated on the merits of their perceived value to the organization. Organizations are reluctant to spend additional funds until they can empirically show that they received value from previous expenditures. Therefore, in addition to establishing metrics to measure success in meeting goals, you need to be able to assess the value of achieving the outcome you identied. Value has many forms, depending on the organization. It may be nancial, such as cost reduction due to increased IT sta productivity, or an increase in revenue due to a reduction in unplanned outages. It may be quality related, such as an increase in customer satisfaction due to an improved online self-service capability in a government system.
Value assessment is important for measuring your successes in implementing current initiatives and in communicating that success and using it to justify future initiatives. You can leverage the metrics you established to assess value. Here are some examples of improvements IT organizations have achieved and the implied value: Increasing the server/administrator ratio through the successful implementation of a service automation initiative permitted an IT organization to make a 20 percent reduction in full-time equivalent (FTE) administrators. The resultant value is equal to the fully burdened cost of the administrator FTEs eliminated. A company launched a virtualization initiative that dramatically increased asset utilization. The resulting value was a 40 percent reduction in asset purchase costs.

 Successful implementation of an initiative to improve change management processes resulted in a 35 percent reduction of unplanned outages. The resulting value can be determined from the number of outage hours eliminated multiplied by the cost of each outage hour. In addition, reducing outages may have also increased customer satisfaction. By improving incident and problem management processes, an IT organization reduced mean time to repair by 45 percent, and that lowered the overall system outage time by 20 percent. Here again, the resulting value can be a savings in outage costs as well as an increase in customer satisfaction.

TAKE ADVANTAGE OF AVAILABLE RESOURCES

One o en-cited reason for not getting started in measurement is an inability to know where to start. One way to accelerate your progress is by taking advantage of the guidance provided by industry best practices, such as the IT Infrastructure Library (ITIL) and industry organizations, such as itSMF. Additionally, look at the information available about your existing technology.

ITIL A good place to start is with IT process improvement. The ITIL book entitled Continual Service Improvement1 provides detailed guidance in establishing and using metrics for measuring success in IT process improvement. Although this approach deals specically with process improvement, the concepts presented apply to other areas as well. The ITIL volumes provide specic metrics for virtually all of the IT processes in your organization. This is a great starting point. itSMF You can also obtain guidance from the IT Service Management Forum (itSMF), an independent and internationally recognized forum for IT service management professionals worldwide. itSMF International has published a book titled, Metrics for IT Service Management.2 Based on ITIL and with support for other frameworks such as Control Objectives for Information and related Technology (COBIT) and ISO/IEC 20000 this book examines the basic concepts around measurements for business/IT alignment. It presents case studies and checklists along with a scorecard accelerator so ware tool to further improve the learning experience and accelerate the adoption of measurements. BSM TECHNOLOGY BSM technology is available that supports service management processes based on best practices, such as those outlined in ITIL. BSM solutions are available that implement these processes out of the box, greatly speeding implementation and time to value. These solutions gather much useful data and provide a variety of important metrics.

CONCLUSIONS
You no longer have to trade o IT eciency to meet the rapidly increasing demands of the business. With the right metrics as a guide, you can improve IT eciency without adversely impacting business alignment. This paper has presented an approach to deriving those metrics. With the right metrics, you can not only assure that you are doing the right things, but also validate that you are doing those things the right way. Ultimately, this will enable you to assess and communicate the value of your organization. For more information about BMCs BSM solutions, visit www.bmc.com/bsm.

END NOTES
1. Sharon Taylor, Gary Case, and George Spalding, Continual Service Improvement, Office of Government Commerce (OGC), UK Government, May 30, 2007. 2. Peter Brooks, Metrics for IT Service Management, ITSM Library, 2006.

Business runs on IT. IT runs on BMC So ware. Business thrives when IT runs smarter, faster, and stronger. Thats why the most demanding IT organizations in the world rely on BMC So ware across both distributed and mainframe environments. Recognized as the leader in Business Service Management, BMC oers a comprehensive approach and unied platform that helps IT organizations cut cost, reduce risk, and drive business prot. For the four scal quarters ended June 30, 2009, BMC revenue was approximately $1.88 billion.
Visit www.bmc.com for more information.

About the Author Atwell Williams is a solutions architect within BMC So wares Oce of the CTO, where he focuses on ITIL and other best-practice frameworks for improving IT processes. Williams consults with customers on how best to derive value from their technology investments. Additionally, he works closely with the BMC development organization to ensure that BMCs solutions continue to solve real-world customer problems. In both capacities, he brings a unique combination of IT process expertise (having served as an ITIL instructor and being ITIL Foundation, Practitioner, and Service Manager Certied) and real-world IT experience (having served as director of service management in BMCs internal IT organization).
Prior to joining the Oce of the CTO, Williams was an ITIL instructor and education manager within the BMC Educational Services group. Williams is a frequent speaker at industry conferences and customer briengs. He has also published several white papers on IT service management and continuous IT service improvement. Prior to his tenure in Education Services, he was the director of IT service management within BMCs IT department and was responsible for ensuring the overall performance, availability, security, and recoverability of BMCs internal production applications. Before joining BMC, Williams was a partner with PricewaterhouseCoopers (PwC), where he spent 13 years focused on delivering IT infrastructure and process design and development services to PwCs numerous clients. He holds a bachelors degree in computer science from the United States Air Force Academy in Colorado Springs, Colorado.

BMC, BMC So ware, and the BMC So ware logo are the exclusive properties of BMC So ware, Inc., are registered with the U.S. Patent and Trademark Oce, and may be registered or pending registration in other countries. ITIL is a registered trademark, and a registered community trademark of the O ce of Government Commerce, and is registered in the U.S. Patent and Trademark O ce, and is used here by BMC So ware, Inc., under license from and with the permission of OGC. IT Infrastructure Library is a registered trademark of the O ce of Government Commerce and is used here by BMC So ware, Inc., under license from and with the permission of OGC. All other BMC trademarks, service marks, and logos may be registered or pending registration in the U.S. or in other countries. All other trademarks or registered trademarks are the property of their respective owners. 2009 BMC So ware, Inc. All rights reserved.

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