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IT Performance Management Research

How can executives measure, control and increase the value IT brings to the business?
How can they take the initiative in aligning IT investments with business strategy?
What concrete actions will successfully address increasing budget pressure, skepticism and higher expectations regarding IT performance and accountability?

IT performance management, optimizing the management of IT, holds the key to answering these questions. IT performance management is a closed loop process where strategy drives program selection. After execution, value measurement feeds back to create a learning organization.
IT performance process
We surveyed 179 Fortune 1000 firms and 44 Federal government agencies on IT performance management best practices, these data correspond to more than $70 billion of annual IT spending.

The survey findings reveal a significant gap between intent and action:
• 41 percent do not have a centrally overseen IT budget.
• 47 percent do not track projects centrally.
• 57 percent do not have criteria to define project success.
• 68 percent do not track project benefits.
• 81 percent never consider a project's option value.
• 89 percent do not use earned value to track project success.
• 46 percent of respondents do not have applications and infrastructure well documented.

The key question, of course, is why? What has been holding back adoption of techniques and practices a vast majority of IT executives say they believe in so strongly? The answer, in short, is that adopting these practices means changing people's skills, attitudes and behaviors.

The research identified and prioritized specific barriers that have hampered many implementation efforts. In summary, the key to making IT performance management work in practice is to tear down these barriers by following a phased adoption path. An example of such a path is described in more detail in the Sloan Management Review paper Best Practices in IT Portfolio Management (link to library part of the web site) paper. “Phased” should not be read as “slower.” On the contrary, it enables organizations to drastically speed up adoption of new capabilities – by focusing on the right sequence of steps and addressing anticipated hurdles before they arise.

We show that synchronized organizations at the highest level of maturity for managing IT performance have better return on assets, better sales growth and shareholder equity than competitors.

Factor Maturity Level Table

The payoffs, as the study results show, can be significant. Beyond the ability to measure, control and increase the return on IT investments, successful practitioners have earned respect and recognition as fellow business leaders in the board room.