Metric: measurement or calculation that is monitored or reported for management and improvement

Indicator: metric that is used to assess and manage something

Key performance indicator: important metric that is used to evaluate the success in meeting an objective

Performance: measure of what is achieved or delivered by a system, person, team, practice, or service

Measurement is just one aid to successful management, consider leadership, communication, design, intuition…

Why measure:

• Influence behavior
• Justify change
• Validate decisions
• Intervene

Measurement categories:

• Performance
• Maturity
• Compliance

1. Metric types

Effectiveness: degree to which an activity (or group of activities) fulfills purpose and achieves objectives

Efficiency: how resources are utilized to perform activities and manage products/services

Productivity: show amount of work performed and resulting outputs (throughput of a resource or system)

Conformance: how managed object meets pre-agreed rules and requirements

2. Lagging and leading metrics

3. Outside-in and inside-out metrics

Outside-in:

• Customer view of the organization’s services
• Use to drive priorities and actions to meet customer needs
• Customer reports should be based on outsidein metrics highlighting the value and outcomes achieved that the customer wants

Inside-out:

• Internal organizational view of services
• Can be a constraint when used to force customers to comply with the way the organization works, rather than changing the way the organization works to meet the customer need

4. Metrics and indicators

Metrics useful when used to support decisions by indicating something important:

• They become indicators -> key performance indicators (KPIs)
• Metric is a KPI when it’s crucial for assessing an object’s state (good, bad, acceptable…): must have an agreed target value and tolerance range

Using metrics as KPIs:

• Identify key metrics
• Define target values, trends
• Define tolerance (range of performance)

5. Cascading/linking measurements

Understand that different audiences need to see the metrics that allow them to measure and change. Different metrics for the same thing may be needed to fit the individual needs

6. Metric examples

Focus	Purpose	Objectives	Indicators	Metrics
Strategy	The purpose of the organization defining the strategy	Strategic objectives, such as ability to operate in a particular market or grow a particular line of business	Outcome-based	Organizational achievements (such as revenue growth level attained, market share), benchmark results
Strategic initiative	To implement an aspect of the organization’s strategy (e.g. build a new product, create a new customer engagement model)	Project objectives, such as time to complete, budget, specifications	Achievement-based	Milestones met, money spent, resource utilization, specifications complied with
Function/department or team operations	To use the resources, tools, processes, etc. defined by the organization to perform the roles assigned to them (e.g. manufacture products, sell products)	Operational objectives, such as work rates, production levels, output quality	Performance-based	Revenue generated, expenses, productivity (quantity, quality, and timing), audits
Order/service request/incident/change/etc.	To identify, process, and complete items of work assigned to a function, team etc.	Process objectives, such as ticket duration, quantity, frequency, maximum cost	Occurrence-based	Number completed, time to complete, cost per ticket, revenue per ticket, occurrence patterns

 

7. Objectives and key results (OKR)

Key message: a framework for defining and tracking objectives and their outcomes

Focused on defining strategic objectives and outcomes (what the organization does with their associated effects)

The successful achievement of an objective must provide clear value for the organization

Objectives are whats. They:

• Express goals and intents
• Are aggressive yet realistic
• Must be tangible, objective, and unambiguous; obvious that an objective has been achieved

Key results are hows. They:

• Express measurable milestones that, if achieved, will advance the objective(s)
• Must describe outcomes, not activities
• Must include evidence (available, credible, and easily discoverable) of completion

7.1 OKRs bridge strategy and execution

8. Measuring a strategy

Measurement frequency should match the organizational volatility (annual vs. quarterly vs. monthly)

Adjust and evolve existing strategy (guiding principle: start where you are)

Budgeting policies must link with strategy cycle, must meet financial reporting requirements as well as the changing demands of strategic initiatives and the potential for changed operations

Align operational reports to the strategic report (easier to see impact of a strategy)

Why measure a strategy ?:

• Has it been implemented as planned (progress) ?
• Is it achieving its defined objectives (performance) ?
• Is it still relevant/suitable given changes in the internal or external environment (relevance) ?

8.1 Measuring progress

Are strategic initiatives proceeding on time, to specification and to budget ?

If there is a deviation, leaders can:

• Allocate additional funding to an initiative
• Revise the timelines of the strategy
• Alert key stakeholders of delays (or acceleration) to the delivery of a particular outcome
• Decide on whether to continue with the initiative or switch to an alternative
• Adjust the strategy as appropriate

8.2 Measuring performance

All initiatives are on track but is the strategy still meeting its objectives ?

If there is a deviation, leaders can:

• Change the strategy to respond to a particular event (delaying one new product line while doubling efforts to launch another on time)
• Move to implementing an alternative scenario
• Allocate additional resources to one part of the organization
• Withdraw from an opportunity or market (cancels that part of the strategy)

8.3 Measuring relevance

Are initiatives progressing to plan ? Is the strategy meeting its stated objectives ? Even if the answer is yes, internal/external environmental changes can quickly impact that success and RELEVANCE

Determine via regular strategy reviews: volatility of the market determines the frequency of the review

Realize the strategy itself the causes changes. During the review, focus on environment changes that are independent of the strategy as well as the cause-and-effect relationships within the strategy

A strategy that is no longer relevant is not viable, regardless of how well it was implemented. Every review cycle should evaluate whether the effect of the strategy was as intended

9. Instrumenting strategy

Collected information (data) is typically used for reports but also useful:

• Audits
• Quality management
• Continual improvement
• Service validation

Metrics used should be relevant to the recipient and presented in a manner that easy to use/understand

Reports contain measurements but also outputs. Comparisons between actual and target values (highlight deviations), actual and previous performance (trends), different indicators (evaluate correlations, identify bottlenecks)

Reports are operational or analytical

10. Operational reports/dashboards

Operational reports identify deviations from plans/objectives as they happen which allow quick corrective action:

• Typically automated, reports are fact-based, so little human interaction needed
• Can be delivered often, ensures best information is used to support decisions

Dashboards report but:

• Present only important indicators
• Displays information on a single screen
• Available online
• Real time updates (or close to it, as agreed)

11. Analytical reports

Identifies hidden issues, defines causes, discovers improvement opportunities

Understands facts to deliver conclusions and recommendations

Full automation is not possible

Requires analyst and time

Report is typically printed and may require release authorization

12. Operational vs. analytic reports

Property	Operational report	Analytical report
Purpose	To deliver information to evaluate the current state, to identify bottlenecks, and to support operational decisions	To deliver analytical evaluation of the managed object, to identify hidden issues and their causes, and to suggest improvement options
Activity to produce	Ongoing measurements of resources and operations	Targeted analytical research
Content	Measurement results Comparisons with the target and historic values Matching different indicator values to identify correlations and bottlenecks	Content is driven by the research goal and analysis method; a sample table of contents can be as follows: A structure of goals related to the management object, and its current state description Industry benchmarking Identified issues and their causes Conclusions and recommendations
Production technology	Automated, with minimal human labor	Manually created by a qualified analyst; such a report requires both data collection and human involvement in the form of interviews, workshops, and brainstorming
Production time	From several seconds to several hours	From several days to several months
Decision horizon	Not exceeding a quarter; normally within a month	From a quarter to several years
Authorization	Not required	Sometimes required

 

13. Strategy review

Purpose: to ensure the ongoing relevance and effectiveness of strategy

Every strategic cycle contains a review step. Optimize the initiative fulfillment within defined/agreed scope

Review should examine the impact of the metrics that have been defined for the previous cycle, specifically to detect unintended consequences (metrics shouldn’t influence behavior to deliver unintended results)

Data provides a basis for review, but means little without insight (insight: ability to gain an accurate and deep understanding of the situation):

• Result of intelligence, emotions, experience, feelings
• ALOE (ask, listen, observe, empathize) and development of emotional, social and system intelligence support an organization’s performance and evolution

Go back to ITIL 4 Strategic Leader Certification Course: Implementing a Digital Strategy to finish this chapter or to the main page ITIL 4 Strategic Leader Certification Course.