In the rapidly evolving world of Information Technology (IT), strategic planning plays a pivotal role in aligning IT investments with business strategy. Key Performance Indicators (KPIs) are the essential metrics that allow businesses to measure the effectiveness of their IT strategic planning. This article provides an in-depth exploration of the ten essential KPIs for IT strategic planning and how they drive business value.
The Importance of KPIs in IT Strategic Planning
In the context of IT strategic planning, KPIs serve as the scorecard. They provide actionable insights that enable businesses to adjust their plans and make informed investment decisions. Without KPIs, an IT strategic plan risks becoming a mere governance exercise with fleeting value.
To keep pace with the rapid rate of business change, organisations need their IT strategic plans to be agile, flexible, and frequently assessed with the essential KPIs for strategic planning. This continuous alignment is one of the significant benefits of using KPIs in IT strategic planning.
The Ten Essential KPIs for IT Strategic Planning
The following are the ten essential KPIs that should be leveraged in your IT strategic plan. These KPIs are not mere operational measures of "feeds and speeds", but proof points that IT is delivering business value.
1. IT Spend vs Plan (OpEx & CapEx Variance)
This KPI measures the variance between the planned and actual IT expenditure, both operational (OpEx) and capital (CapEx). It provides an indication of how well the operational plan aligns with the strategic plan. Any significant variance shows that the two plans are out of sync, putting the strategic plan at risk.
2. Application and Service Total Cost
Understanding the total cost of each application and service is vital for informed budgeting decisions. This KPI provides insights into the costs associated with maintaining and running each application and service, enabling better allocation of resources.
3. % of IT Spend on Cloud
Cloud services are an integral part of modern IT strategies. This KPI measures the proportion of IT spending allocated to cloud services. It helps businesses understand their reliance on cloud services and manage any potential overspending surprises.
4. Product Lead Time
Product lead time is the duration between the request for delivering a product and its actual delivery. Regular reviews of product lead times are essential for ensuring the IT strategic plan remains responsive to business needs.
5. Business Value Delivered by Portfolio per Quarter
This KPI measures the business value output of the product portfolio each quarter. It enables product managers to improve estimation accuracy, identify resource constraints, and meet delivery commitments.
6. % of IT Investment on Run, Grow, and Transform-the-Business
This KPI assesses the distribution of IT investment across running the business, growing the business, and transforming the business. It provides insights into how IT is supporting the broader business strategy.
7. % of Projects Spend on Customer-Centric Initiatives
Customer satisfaction is a leading indicator of IT value. This KPI measures the proportion of project spending that is customer-centric, providing insights into how well IT is supporting revenue growth.
8. IT Spend by Business Unit
This KPI provides a breakdown of IT expenditure by business unit. It helps to ensure that IT resources are appropriately allocated and aligned with the business strategy.
9. Customer Satisfaction Scores for Business-Facing Services
Customer satisfaction scores for IT services indicate the perceived value of IT in supporting business operations. High scores suggest that IT is effectively supporting the business strategy.
10. % of IT Investment by Business Initiative
This KPI measures the proportion of IT investment allocated to each business initiative. It helps to ensure that IT investments are aligned with strategic business initiatives.
The strategic use of KPIs in IT strategic planning can deliver substantial benefits. It enables continuous alignment with business strategy, drives stakeholder accountability, and supports informed budgeting decisions. By leveraging these ten essential KPIs, businesses can ensure their IT strategic plans are agile, flexible, and responsive, delivering maximum business value.