Performance alone does not count in today’s competitive business environment. What matters is results. Poor results will soon lead to competitors drowning the business. Many traditional IT metrics focus on performance metrics such as cost and efficiency. Such metrics are transactional, depicting how well a specific process executes. They do not capture the full picture or how the process realizes the business objectives or impacts the bottom line. Cost-minded IT metrics may, in fact, work at cross-purposes with digital transformation goals. Most benefits of digital transformation come in the medium to long run. In the short run, digital transformation may erode profitability but keep the company afloat. Without the intervention, the business may sink altogether, in a changing environment. Conventional metrics rarely capture such facts.

Here are seven key metrics to focus on, in today’s digitally charged and highly competitive business environment.

1. Top Line Impact

Every core business process or intervention directly or indirectly aims to make profits for the business. As such, the best IT metrics relate to business outcomes, more specifically the impact on the top line or bottom line.

Measure the revenue impact of any intervention. Trace the revenue growth or profitability before and after a specific intervention or over time. Topline impact measures the gross sales or volumes. For instance, measure the number of digital interactions customers conduct in a specific period, say a week or a month. Correlate it to attrition and or revenue. If a higher number of digital transactions correlates to lower revenue, it could indicate issues with IT performance. A positive correlation could show the success of the digital transformation strategy.

Consider Intel’s IT annual report, delivered each May. The report documents IT’s operational performance over the previous year and also its top-line impact. For instance, the 2016-17 report mentions an enterprise predictive analytics platform creating $656 million in business value.

The conventional metric of cost per customer or user is still useful. But in a dynamic business environment, having a low cost per customer may lead to poor business outcomes. Cost-cutting, to improve the cost-per-customer ratio, may lead to customers going elsewhere.

2. Response Time

Some common metrics associated with IT include server capacity, I/O, uptime rate, and network throughput. These metrics focus on availability. Such metrics become irrelevant in the cloud era. Service providers abstract infrastructure components and deliver them as a service. What matters in such a set-up is the response time.

What matters in cloud computing environments is speed, scalability, and security. Of these, a very critical metric is response time. Response time is the measure of the server response for a transaction or query. The time starts when a user sends in a request and ends when the application completes the request. Higher response time powers productivity and cust OPEX.

Cloud infrastructure that scores high on response time powers productivity and cuts OPEX. It also offers flexibility to support digital initiatives.

3. Downtime Costs

Not all conventional metrics are obsolete. Only such metrics may no longer deliver value on a stand-alone basis. To get the complete picture of the impact of a specific intervention, tie metrics to business outcomes. For instance, counting the lines of code matters for efficiency. But such efficiency is useless if the software does not realize the business outcomes.

Downtime rates are a time-tested metric to measure IT success. But measuring downtime rates in isolation do not capture its impact. What matters is not downtime per se, but the cost per minute of downtime. Also, the definition of downtime matters. Degraded performance and slowdown have the same effect as downtime.

Identifying the cost of downtime allows enterprise IT to make intelligent decisions. It allows cost-benefit trade-offs, to invest in tools and processes to detect and mitigate downtime scenarios.

4. Ticket Volumes

For enterprise IT, the customer is not just the end-buyer who buys the company’s products. The employee who uses the services developed by IT is an internal customer. Satisfying the internal customer is the first prerequisite to satisfying the external customer.

Measuring customer satisfaction is not as simple as taking feedback surveys. Tie the operational metrics to the management metrics, and create a value picture.

The customer ticket volume is a good indication of internal customer satisfaction. Customers file tickets for shortcomings. Many tickets indicate underlying problems with the service.

Similarly, tracking customer ticket volumes for end customers quantifies external customer satisfaction levels.

5. Shadow IT Spending

Digital transformation eases processes and promotes internal efficiency. Seamless operations improve performance. This, in turn, delivers better products and more value for the customer.

Tracking independent spending on IT solutions shows how well IT meets such business needs. If shadow IT spending is less, it shows enterprise IT keeping up with business needs. But if enterprise users buy their own IT resources, it indicates the inability of enterprise IT to serve internal customers well.

Comparing before and after shadow IT spend indicates the success of digital transformation interventions.

6. First Time Right (FTR) Ratio

Automation and machine learning helps IT scale more effectively and improve the user experience. FTR, a ratio that has its roots in Six Sigma, measures the impact of automation.

As the name indicates, the First Time Right (FTR) ratio measures the accuracy of the process and the extent to which users get it right on the first attempt.

The FTR ratio offers a dual focus. Externally it focuses on customer satisfaction. internally it pin-points errors. Consider FTR for software download requests. If only 15% of users get it right the first time, it shows something wrong with the set-up. Automating the series of cumbersome interactions and interfaces might improve the FTR. Side-by-side, a high FTR may also indicate high customer satisfaction.

Measuring FTR over time offers a trend-line of quality.

7. Innovation Investment Ratio

Differentiation and innovation are keys to survival in today’s fluid business environment. Most CIO’s adopt the 80:20 rule. They spend 80% of the IT budget on routine maintenance and keeping the enterprise systems running. They spend the remaining 20% on innovation. There is no hard and fast rule on adhering to such a ratio though. In fact, for start-ups trying to make a niche, the golden rule may be to inverse the ratio.

Successful CIOs set a target percentage for innovation each year, and track the ratio. Such an “innovation investment ratio” will render clarity on funds for innovations. It also becomes easier for IT leaders to identify and quantify the savings achieved through innovation.

There is no set of “right” metrics to measure the efficacy of IT. Deploying a set of metrics depends on the business and circumstances. Also, the success of any IT intervention depends on the extent to which it meets business objectives. This technology blog lists out five key reasons for IT-business disconnect.