[CSG Spring 2007] Metrics and Activity Based Costing & Measuring the Value of IT to the Institution, part 2

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Bernie Gulachek from Minnesota is talking about how they’re demonstrating value of IT to the institution.

Why measure value? It’s not all about cost or efficiency, but it’s a balanced approach to show that the IT group is a strategic part of the institution, and can help the institution make strategic decisions. This is about making sure that IT has a seat at the table.

Look at definitions of value – bottom line (Gartner), educause documents.

IT Portfolio Management –

– understanding costs, and allocating costs to campus units, who don’t have a choice of what pieces they pay for. Once a year the units receive a bill that itemizes a rolled up version of what they’re paying (on a per-fte basis) for communications, productivity applications, business applications, and student, faculty, and staff support. That allows them to have a conversation of what the services cost (around $70 million/yr total, which works out to be $44.93/head/month). Portfolio services are framed in this way. That brings them to a conversation with the deans and IT directors in collegiate units – everyone is a stakeholder. If they have to pay for the services, then the value must be demonstrable. The administration is trying to get the institution to concentrate on the mission and to get to the right level of standardization by removing non-value-added duplication, and this allows that conversation to move forward.

Measuring the performance of the IT unit is done with the balanced scorecard construct. They’re breaking the conversation into four quadrants:

– service quality (measured by customer satisfaction);
– IT expenditure (productivity) (percentage of technology spend compared to total institutional spend – total IT spend, not just IT unit) – they can provide each collegiate and administrative unit’s budget spend on technology and what that percentage is, so that the deans can see the impact of what they choose to do locally. Works out to about $1682 per year per head (student, facult, and staff), of which about $600 is the central IT unit spend, the other $1000 is in the units. Good conversation about what the value is gained for that.
– Staff engagement – regular survey of staff satisfaction
– Improvement processes – developing tools for best practices for particular management disciplines and their adoption, plus understanding what the best practices for IT are and how they’re propagated to the units.

Impact of strategic initiatives / Projects

– what projects are out there that would be strategic to work on, given the impact to the institution. Working on institutional tools that normalize the language and measures of impact. Costs will always be realized in the IT world, but what are the functional benefits delivered to the functional unit. What they’re working on is a set of descriptive language that the President has been using to talk about these projects – frames up the elevator speech about specific projects. They walk through a work sheet form that highlight the impacts over the lifecycle of a project and where the costs are borne. Projections are over 3-5 year interval.

Example of an event ticketing system, where there are benefits realized in athletics and performing arts, and the costs are realized in IT.

Same process used for a shared data center project.

Benefit categories for checkoff include: improved productivity; reduced costs; enhanced revenues; improved service or product quality; engaged employees

IT Strategic Alignment to Support the Institution’s Goals

Strategy mapping is conceptual and fluffy, but it helps communicate.

The institution has set a goal of being one of the top three public research institutions in the next ten years and has set out four strategies to get there. IT has developed communication tools that demonstrate alignment with those goals. Simple maps that allow articulation of organization’s strategies and how they’re aligned with the institutions, and how the projects, measures, and operational goals are mapped to those strategies. This has led to a list of initiatives that they know are out there (whether defined or undefined) on a “pipeline” chart. This allows expression of all the requested initiatives. They’re working on an institutional process for deciding which initiatives to engage. The hope is to help decision makers understand priorities to weigh pet projects against the other data.

When projects are mapped to institutional strategies, they receive hugely positive response by presenting this in a very simple way from the President and other decision makers. Enables them to facilitate a conversation across different functional owners, encouraging them to work with each other. Allows them to see commonalities across projects, and maximize the use of scarce resources.

They’ve been asked to develop a collaborative informed decision and priority setting framework for large (more than $1 million) projects, similar to the process used for deciding building projects. The output from that would go into a full-blown analysis and RFI process.

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