Business Metric Driven Customer Engagement for IT Projects

It is the general case that business process improvements can be achieved through a range of possible projects ranging from pure business process reengineering through to IT deployment. When IT forms part of the process improvement project Service Level Agreements (SLAs) and functional solution requirements provide the means of linking the business performance goals to the IT project. In this paper we show how competitive benchmarking and standard operations reference models can be combined with Business Activity Monitoring (BAM) in order to capture the value of an IT solution in terms of key business metrics agreed with the business stakeholders at the outset of a customer engagement. 1 Benchmarking and Metric Driven Engagements Performance benchmarking provides a powerful technique for obtaining customers’ attention and is based on 1. the use of standard, well understood and accepted metrics 2. access to sufficient data from a number of customers in a similar business area in order to make meaningful comparisons. An example of this approach can be found in the PRTM benchmarking service [PRTM 2004]. Typically, measurement of a customer’s actual performance against these benchmark metrics would be obtained and comparisons made to median and/or ‘best in class’ performance – which represents the competition. Significant gaps in the specific customer’s performance against one or more metrics would then be highlighted and used to trigger a project to improve performance. The metric improvement would thus be used as the project driver and could reasonably be used as the means of measuring the impact of the project post completion – did it achieve the objective of improving performance against the benchmarked metrics? It is not the intention of this paper to describe the analysis required to elicit what project is needed to achieve the desired improvement in performance metrics. However, we make two assertions that we use as guiding principles in this paper. 1. There must be some financial equivalence or calibration of the benchmark metrics if the metric is not itself a financial one. For example, cash to cash cycle time is usually measured in days and is literally the difference between the amount of time taken to receive cash from customers for goods and the amount of time taken to pay suppliers for raw materials. However, the financial impact of improving cash to cash cycle time performance is reasonably easy to understand and can thus be used as a project driver with well understood financial benefit if the project achieves its objectives