Brief: IT Business Performance Management--What Is It?

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There are two sides of IT performance management: technical and business. Since this web site is concerned with IT’s business management issues, we will discuss IT "performance management" from that perspective.

Purpose of IT Business Performance Management

The intent of IT business performance management is to assure that IT projects and activities deliver the results promised, on-time, and within budget. This requires that approved and funded IT projects / activities are effectively controlled by senior organization management as well as IT management.

Effective managers know that it is too late to manage IT performance once a project grossly exceeds cost estimates, is seriously delayed, or fails to deliver promised results. That’s disaster management, not performance management.

The word "manage" is a verb. To be effective it must be dynamic and continuous, proactive and not reactive.

What does that involve?

There are five prerequisites for effective IT business performance management:

1. top management and IT management that is willing to change the way that IT is planned, controlled, and evaluated
2. a performance management process and supporting systems
3. the motivation and skill to analyze IT performance
4. willingness to make tough decisions based upon the analytic results
5. the ability to implement the decisions timely

It involves the continuous assessment of IT projects and activities to answer two deceptively simple-sounding questions:

• What is working as expected?
• What is not working as expected?

How can an organization hope to answer those questions?

Recent surveys report that the "average" IT budget for large organizations is about $250,000,000 (US). How can senior management and the CIO hope to manage the performance of thousands of technically complex projects and activities?

The answer is that they implement performance management processes and systems that are designed to routinely:

• compare actual financial and project / activity performance to predefined plans
• quickly identify significant deviations from planned performance
• analyze the significance of the deviations
• provide decision-makers with clear and insightful explanations of significant deviations, their potential consequences, and recommendations for corrective action

What is an example of performance management?

To illustrate the concept simply, we’ll pick an activity that we are all familiar with - driving a car to a particular destination. Here are some of the elements:

• results that you want to achieve (your chosen destination)
• criteria that you have established (when you want to arrive)
• a plan that maps the way to get there (your intended travel route)
• milestones along the way (places you use to mark your progress)
• indicators that give you important data about what is going on (the car’s odometer, speedometer)

Armed with the knowledge of where you want to be, when you want to get there, how you will get there, and the key checkpoints along the way, you now have a plan. But simply having a plan doesn’t get you there on time.

Together, these elements provide you with sufficient data to monitor, analyze, and control your journey:

• As you drive, you continuously gather data on your speed, the distance you have traveled, and the map. (Monitor)
• At key points, you check your actual location vs. where you planned to be and when you estimated to be there. If there is a significant deviation you plan corrective action. (Analyze)
• If you miss a milestone, or are behind schedule, you decide to take corrective action to meet your target (e.g., adjust your route or speed). Sometimes, you might need to call ahead and tell someone that you will be a bit late. (Control)

Making sure that you arrive where you want to be, when and how you want to get there, is the essence of performance management. Although decidedly more complex, effective IT performance management is a necessary and attainable goal.

Refer to our tutorial, "Introduction To IT Performance Management And Measurement", for more information.