Leaders Employ Governance
The Upside of Being Average
Barnes isn't alone in her love affair with numbers. Tony Young, the CIO of Informatica Corp. in Redwood City, Calif., is an advocate of using metrics to align technology with business. Twice a year, the $300-million data integration software maker hires a market research firm to gather data about other midmarket software firms.
The other companies cooperate with Informatica, which spends $15,000 a year on the survey, because the market research firm shares its data with them for free. "You continuously need to demonstrate value back to the business for what you're doing," Young says. "If you can't, you need to make changes. Benchmarking is very important."
Benchmarking can uncover merely average results. But in fact, that's what Young hopes for. A typical question on the survey, for instance, might be, "How many people support your financial enterprise resource planning system?" Young compares the survey information with internal data and then looks at in-house customer satisfaction surveys to see if his team is performing at least as well as his peers.
"The industry average is six people to support a financial application," he says. "I have three. And my customer satisfaction rating is a four out of five. Other people do it with six, and I do it with half that many at a very good level of customer satisfaction. I can show the executives the kind of value they're receiving from my group." On the other hand, when research showed that his company's number of systems analysts was higher than the industry average, Young started to reduce staffing levels to meet the norm.
Young also believes in setting realistic customer satisfaction levels. Last year the department score averaged 4.2 out of 5. Young's goal is to score between 3.8 and 4.2. His premise is that scoring higher than 4.2 means that the company is probably investing too many resources in a project, leading to high customer satisfaction but poor shareholder value. "If I score 5 across the board, I'm overdelivering to the group," he says. "The group might be extremely happy, but I also need to deliver to our shareholders. It's a fine balance."
Young audits IT projects and priorities every six months to ensure that business and technology are aligned. Each new project is given a roadmap created by IT and business, which is reviewed by the CEO and executive team twice a year. "These aren't IT systems; they're business systems," says Young. "Some people can embellish their cases. There has to be some control."
This was first published in July 2006