Most executives rely on a key report or set of reports delivered on a weekly basis to keep their finger on the pulse of the business. The weekly report is a highly visible deliverable, and, if the package is late, the CIO’s telephone will ring. Such a report package generally depends on many corporate systems functioning properly throughout the week, with each system or team passing data to the next, processing the raw data so it comes out as helpful information for those running the company. This report is a good control point for measurement; the expectation is that either the aggregation process succeeds – or it fails. Few executives are interested in why it may have failed; it is the ability to deliver the report that is important. In the end, the party responsible for late delivery of the report is deemed to have failed its service-level commitment.

Measuring a final deliverable like a key report requires negotiation between each of the contributing parties, but it doesn’t require spending money on additional hardware, software or services. The parties must simply document each element of the service chain and agree to its performance parameters.

The benefit of this type of measurement is twofold: 1) it is inexpensive to implement, and 2) it ensures everyone is focused on the business deliverable. The deliverable to the business is the “value” everyone expects IT to deliver, and it represents human-readable value, not abstract statistics that often mask significant failures in the delivery of business expectations.

IT organizations are under constant pressure from their customers in the business to measure and report on IT services in a way that has meaning to business leaders. Of course, people do what they know, and — because they are human — IT managers measure what they know. This often results in the use of many dozens of metrics for each outsourcing relationship, few of which accurately reflect the overall quality of the service received by the company.

Sourcing relationships often show metrics that are “green” – or on target – but the service still isn’t meeting the customer’s minimum expectations. This means either the wrong metrics are being reported, or the customer has purchased the wrong service. It is usually the former. Read this ISG white paper Making Service Levels Work for the Business to find out how to measure IT performance with a business metric.