Non-financial metrics or indicators can provide management with additional insights into the health, performance and capacity of a business process or system. Organizations may use these to improve budget predictions, augment a 'Balanced Scorecard' or help manage an outsourcing program. They can be powerful problem-solving tools. In general, there are four major reasons as to why organizations would develop a metrics program:

1. Characterization: Establishing a set of simple measurements or indicators can help understand the current state or behavior of a business function or system -- current processor utilization, for example or ratio of sysadmins to equipment counts or IT staff compliments provide a vital tool for communicating an invisible reality to other business areas. This is always the first step for more sophisticated applications.

2. Evaluation: Measurements or indicators would be used to manage the business process. Report production times, error rates, staff hours worked, enqueued service call counts are examples of measurements that could be used on an ongoing basis to manage a process. Evaluative measures may also be compared to standard or benchmark information in an operational framework. Service level agreements often contain standards of performance that ongoing operations must manage to.

3. Improvement: Measurements can be used to guide or manage a process improvement program and show when objectives are achieved.

4. Predictive: Predicting future costs, system performance, storage requirements or staffing are common motivations for establishing a metrics program. Effective predictions requires an understanding of the relationships between the ultimate business or technical drivers and the predicted characteristics. Models can encapsulate this understanding, but it is prudent to validate against historic information.

How metrics can be used to address operational problems is shown in a personal anecdote:

During the 1990's I managed the computer operations and technical support organizations for one of Bay Street's major brokerage houses. Perpetually short-staffed and suffering from excessive turnover and poor relations with the rest of the operations area, requests for additional staff, let alone timely replacements, fell upon deaf ears. The not unusual problem was that the efforts of staff to keep the shop running were invisible to management -- normal reporting processes just did not represent an accurate picture of the challenge. To combat this a suite of metrics were developed that provided a concise view of the operational workload over time -- both as totals and by available staff. Coupling this information with operational error logs and system activity reports provided a palpable view for senior management of how precarious the environment could become. These indicators became a part of regular production reporting and were a useful tool for addressing both staff levels and the complexity of the operational environment.

In this instance, establishing a metrics program formed the basis of enhanced communications with management that eventually lead to addressing fundamental operational problems.

Further information on this and related topics may be found on our website http://www.tekstrat.com

Is this topic of interest to you? Your comments on this or suggestion of topics for future newsletters are invited.

Current topics for future newsletters - 'Operational Metrics -- further insights' and 'Business Continuity -- How Mature is Your Program?'

Gregory Latiak

Technology Strategists, Inc.

http://www.tekstrat.com/

Tel: (416)540-7384