KPI for IT: brief description

One of the sessions on Microsoft TechEd 2012 Russia was dedicated to KPIs in IT. It has interested me rather greatly, as in my role as Team Lead I have to deal with them at least weekly. So I’ve decided to dwell on this topic and in the first post I’ll try to list all main IT KPIs from my point of view, by uniting the session from TechEd with my own experience and examples.

First I would like to make some speculations about KPIs in IT:

• KPIs are often needed when something is going wrong. When everything is ok, nobody worries about how your team is doing.
• KPIs can help to show what benefits IT brings to business.
• IT KPIs must always be linked to business goals and included in individual performance management plan (PM) of employees.
• Also speaking about setting KPIs it’s important to keep in mind the following phrase: do now fear large spending, but fear small income. In other words, KPIs must not only help business to save money, but also help to increase profits.

So, how can business measure and estimate IT? Below I would like to list main IT KPIs that can be used for this purpose.

Some business KPIs for IT.

1. Level of confidence (trust). The fundamental point, as if business does not trust IT – it’s the way to nowhere. So what metrics can show how we deal with it?
   1. Whether we keep promised dates or not.
   2. How many bugs and issues we are receiving after deployment of significant change or project into production.
2. Customers’ satisfaction. It’s rather clear, as we just have to receive customers’ evaluation feedback and analyze the results. But it does not show the real level of IT service as shown in the example below:
   1. First IT system was working unstable and was having performance issues every three days. Then team made some modifications and performance issues are occurred every two weeks. Users are happy and estimate IT team with rather high marks.
   2. Second IT system did not have performance issues, but then problems have started to occur on monthly basis. Users are rather angry and estimate IT service with low marks.
   3. But in fact the second system works still better then the first. Customers’ satisfaction is rather subjective, so it’s not good to analyze it separately from other KPIs.
3. Service-level agreement (SLA). Keeping SLA is rather important – as it is the main document regulating the relationship between IT and business. It also influences business level of confidence in IT.
4. Percentage of projects completed on time, budget and scope. I think no additional comments are required.
5. Amount of new IT services implemented, and degree of their demand. Life goes on, and IT goes on very quickly. New services, new software and infrastructure platforms, new solutions are suggested all the time. So it’s very important to develop your IT platform for better meeting the needs of business. But while implementing something new, you must always analyze whether the new service is used, and you must be able to estimate this usage.

Some finance KPIs for IT:

1. Execution of the IT budget. It must be +-5%. Larger deviations show that we failed budget planning phase and our estimations were incorrect.
2. The percentage of the investment and the operating parts of the budget. Usually the larger investment part the better.
3. IT spending per company’s employee or IT budget as a percentage of company’s turnover.

Some staff KPIs for IT:

1. Staff turnover. Great KPI for IT Lead – it’s ok if turnover is less than 10%.  Of course, this KPI cannot be used for Help Desk group, as specific of its work means greater staff turnover.
2. Total amount of employees in company to amount of IT employees. This proportion can differ for companies depending of the specifics of their work. But ordinarily this KPI is considered good when it is between 1/150 and 1/200.

In the next posts I’m planning to dwell on specific examples of KPIs I’m using in my development team with the help of TFS.