How to Create CIO KPIs in 3 Steps
For the CIO, KPIs can be a challenge, particularly since the IT function is playing an ever-widening role in the modern business.
As IT takes a more central role in the modern enterprise, CIOs are also playing a more strategic role in the C-suite and the business as a whole. This added complexity makes it even more crucial to have an accurate and comprehensive set of KPIs.
Below, we’ll look at a simple way to understand CIO KPIs and metrics, then follow that up with a few examples of these KPIs.
A simple way to create CIO KPIs
Naturally, every CIO’s role is different. Yet as Gartner, IDG, and others have observed, the CIO’s role is becoming increasingly business-oriented. At the same time, many CIOs are still responsible for operational IT activities, such as IT services management and cybersecurity.
Today’s CIO, is a hybrid – part business executive, part IT delivery manager.
For CIOs whose responsibilities fall into these two areas, this is a good starting point for creating KPIs.
Namely, CIOs can begin from a top-down perspective and create two main categories for their KPIs based on their overarching responsibilities.
1. Take a top-down view of the CIO’s job responsibilities
Assuming a CIO is responsible for two main types of activities, strategic programs and IT operations, we could create KPI categories such as:
- Digital strategy vs. IT operations
- Business vs. IT services
- Organizational vs. operational
The terms will, of course, vary from organization to organization. What matters more is that the categories of KPIs accurately reflect one’s job duties. If a CIO has three primary responsibilities, for instance, it may be useful to create three function-based categories.
Each category, in-turn, will have two essential “orders” of KPIs:
- Higher-order KPIs focus on outcomes and offer strategic insights
- Lower-order KPIs measure operations and focus on areas such as inputs, process efficiency, and productivity
Once the categories and orders have been understood, it’s time to actually create the KPIs.
2. Develop the KPIs
Developing KPIs is a step-by-step process that begins with the performance target, then works backwards to assign the most appropriate performance measurements.
Strategy Management Group suggests following six steps when developing KPIs:
- Describe the intended results in specific, concrete language
- Understand the different ways that results can be measured
- Select the right measures for each objective
- Define composite indices as needed, which group different measures together under one heading to simplify analysis
- Set targets and thresholds that define which ranges are acceptable and unacceptable
- Define and document selected performance measures in a single location, such as a virtual scorecard
After the KPIs have been decided upon and defined clearly, they must then be implemented properly.
3. Implement KPIs, track, and adjust as needed
Here are a few points to keep in mind when implementing the newly developed KPIs:
- Mechanisms must be established to collect data, and these can include everything from surveys to software analytics
- The frequency of measurement will directly impact the output and depth of information offered by a KPI
- Data must be shared, reviewed, and discussed regularly to inform decisions and have an actual impact on performance
Finally, KPIs are not always perfect the first time they are used. They can certainly be adjusted, refined, or redefined if need be.
Examples of CIO KPIs
Based on what we’ve covered so far, let’s see how these KPIs might look in practice.
IT operations, services delivery, and services management are the traditional focal points of the CIO.
IT system performance metrics, for instance, can include:
- System uptime vs. downtime
- System maintenance events, such as backups and upgrades
- System maintenance costs
Cybersecurity, another common IT function, can include:
- Security response times
- Security incident rates, both major and minor
- Average cost per incident
- Customer impact per incident
Customer KPIs that are affected by IT performance should also be measured. These can include:
- Technical support calls
- Technical support response and resolution times
- Customer satisfaction rates
Technology deployment KPIs can track the deployment of IT upgrades, projects, and services, and these can cover areas such as:
- New deployment success rates, and failure rates
- Deployment costs, actual vs. projected
- Satisfaction rates
The majority of the metrics covered here would be considered “operational.” That is, they are concerned with lower-order business activities such as IT maintenance and services delivery.
However, as mentioned above, the CIO’s role is becoming more strategic, so there are other higher-order metrics that should also be tracked.
Technology-driven business strategy
On the one hand, it is important to track the higher-order strategic KPIs.
On the other, it is just as important to monitor the lower-order operational KPIs that are associated with these projects.
Digital transformation KPIs, for example, should track strategic impacts such as:
- Objectives met vs. objectives failed
- Project ROI, projected and actual
- Impact on external external business functions
KPIs that track outcomes such as these are considered higher-level strategic KPIs. They can help assess the performance of the program and its impact on the business.
For instance, if a company is overhauling its sales department’s digital workflows, it is important to track how such a project would affect the sales department, their financials, and the organization as a whole.
When implementing such projects, though, it is as necessary to track lower-order operational metrics which focus on areas such as efficiency, productivity, and processes.
For instance, KPIs that track software implementation could include:
- Employee training performance and costs
- Employee time-to-competency
- Project costs, projected vs. actual
- Timelines, projected vs. actual
- Employee productivity and engagement
Measures such as these can help CIOs understand how effectively their projects are being implemented. Those insights can then be used to optimize the program and improve overall outcomes.