The 4 essential KPIs to measure the success of your ITFM
More and more companies are realising that success in the age of digital transformation is tied to how they leverage their IT and how they manage their IT finances. CIOs see the need for deeper insights into how their technology is adding to the company's success while CFOs wish to see the financial benefits of efficient IT operations. As a result, many companies are implementing specialized IT financial management tools to support them in these endeavors. However, implementing a solution will not magically increase savings and profits. From our experience here at Serviceware, we have developed four key metrics to help guide CIOs and CFOs on their journey to more efficient ITFM.
1. RETURN ON INVESTMENT (ROI)
This measure is of course not entirely specific to ITFM solutions, but rather an integral part of general financial analysis for all sorts of investments. If you implement an ITFM solution into your organization, you want to see what the company actually has gained from the software. A high ROI is a key indicator to measuring whether the solution did streamline your operation and whether you save money and free up investment for innovation elsewhere in your IT spend.
2. TIME NEEDED FOR TOTAL PAYBACK
This metric puts an emphasis on the time aspect of the success of the implementation of your solution. Usually, ITFM solutions take an investment of time and money, so you want to make sure that you get this investment back as quickly as possible. If you invest half a million into overhauling your financial management, you do not want to wait for years before the investment pays off. While implementing IT financial management solutions pays out bigger in the longer term, a short time for a total payback is a pointer towards whether you made the correct call investing in the new software.
3. TOTAL COST REDUCTION
Yes, IT finances are now easier to handle, you made your money back, but how much money did you actually save? In the realm of ITFM, cost reduction can be reliably measured in relation to any given IT budget. However, while the benefit of cost reductions is obvious, this KPI might be seen as circumstantial or unrelated to changes in IT operations so it is useful to view it in conjunction with another metric...
4. IT SPEND REDUCTION
While the previous KPIs are arguably more meaningful for the company (and its budget) as a whole, the IT spend reduction achieved is more directly tied to the changes made to IT management itself. Similarly to total cost reduction, IT spend reduction can be measured as a percentage of the IT budget and - naturally - a higher number here indicates bigger success with your ITFM strategy, i.e. getting rid of redundancies in your IT spending or re-allocating IT costs towards more reasonably priced and more intuitive cloud solutions.
Realizing the urgency of proper ITFM and bringing up the determination - and the budget - to invest into a solution is important for the long-term success of any growing enterprise. However, jumping blindly into this venture can prove detrimental. You need a solution that scales with the size of your organization and can deliver on the key metrics above in a reliable manner.
Serviceware Financial has recently been analyzed by Forrester Consulting. In the study The Total Economic Impact of Serviceware Financial, 12 large Serviceware customers were put under the microscope. Companies who deployed the solution achieve an ROI of 571% over three years and were able to register at least €33 million in savings based on a €1 billion IT budget, thanks to benchmarking of IT services as well as improved cost and service transparency enabled through the software.
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