For the CIO, KPIs are a crucial tool for measuring the performance of IT services and operations. Yet many CIOs are also tasked with leading digital transformation efforts.
In this post, we’ll look at the best metrics to use when evaluating the performance of digital transformation efforts.
A Guide to CIO KPIs: How to Drive Digital Transformation
Many CIOs self-identify as a transformational CIO, according to IDG’s State of the CIO 2020 report.
This report also found that 56% of LOB executives are more involved in leading digital transformation initiatives, up 9% from the previous year.
Along with this new level of responsibility comes a need for new performance metrics – let’s compare those to the typical CIO KPIs.
What are typical KPIs in a CIO dashboard?
It should go without saying that CIOs manage metrics that cover their core job functions, such as:
- IT operations – System uptime, downtime, maintenance events, maintenance costs.
- Cybersecurity – Incident rates, incident response times, average cost per incident.
- Customer service – Technical support calls, technical support response times, customer satisfaction rates.
CIOs will typically include these under a single CIO dashboard, or an admin panel that includes the most essential metrics.
As CIOs incorporate more projects into their portfolio, however, they will usually add those metrics into the dashboard.
What are common digital transformation KPIs?
Digital transformation metrics have a completely different focus from IT service management (ITSM).
While ITSM focuses on the performance of IT services, digital transformation initiatives are focused more on outcomes.
Common digital transformation metrics focus on areas such as:
- The ROI of a software investment, projected vs. actual
- The impact of projects on IT services
- Objectives met
- Deadlines
- The costs of specific aspects of the project
- Employee productivity indicators
- Revenue attributable to new digital investments
The choice of KPIs should depend on the actual project in question and be based upon the actual aims of the project.
How do you choose which KPIs to focus on?
There is no one-size-fits-all solution to choosing digital transformation KPIs. Each CIO should focus on their own priorities and goals, then establish KPIs based on those prerogatives.
Gartner advises:
- Choosing metrics that interest the “intended audience,” such as CEOs
- Settle on a few core metrics, between 5 and 9, and focus primarily on those
- Picking metrics that work as leading indicators, not lagging indicators
- Using KPIs that can be understood by a non-IT audience
Not only should metrics be designed to track the actual progress of the digital transformation effort, they should also be able to influence decision-making.
Does this mean that CIOs should only choose a handful of metrics and stick to those?
Not necessarily – every business has their own approach to designing metrics.
Microsoft, for instance, took a very different approach.
When developing KPIs for digital transformation, they had a very different set of criteria.
For instance, among other things, their metrics:
- Must reflect the goals of the organization
- Should be actionable
- Need to be current, actionable, and valid for at least one year
- Must have a single owner
The dashboard that they used included more than twenty metrics that were broken down into categories such as:
- User engagement
- Compliance
- Service excellence
- Business key results
Microsoft’s choice of metrics – like Gartner’s – should just be used as a source of information, rather than a template to follow.
Instead, as mentioned, CIOs should evaluate their own situation and create a suitable set of KPIs.
What process should you follow when assigning KPIs?
One useful point that Gartner made was the fact that every business initiative has its own audience, so it is best to choose KPIs that can be understood by all stakeholders.
That point aside, however, there is a general process to follow when creating any metrics.
According to KPI.org’s guide on creating KPIs, one should follow these steps:
- Describe the intended results. These are the goals of a digital transformation program, which can include aims such as reducing costs or improving employee productivity in a specific area.
- Understand alternative measures. In some cases, there are several ways to measure an outcome. If there is, choose the most appropriate.
- Select the right measures for each objective. When selecting the most appropriate KPIs, it is important to find the ones that best show the impact on strategic performance.
- Define composite indices as needed. In some cases, metrics are only useful when examined in conjunction with other metrics. Composite indices group together metrics and can provide that context.
- Set targets and thresholds. A target is a desired performance objective. Thresholds, on the other hand, are boundaries that define ranges such as good, satisfactory, or poor performance.
- Define and document selected performance measures. Once KPIs have been chosen, they should be documented and defined clearly, so that all stakeholders can understand and reference them.
Following a step-by-step process such as this – while keeping in mind some of the other points mentioned above – is an excellent way to define metrics, whether they are intended for digital transformation or, for that matter, any other business initiative.
