Measuring Value to Quantify IT Success

For organizations that deliver software, the key measure of success is the amount of value delivered to customers. Even if you’re an internal or service organization, you should be constantly focused on the amount of value you’re delivering to your stakeholders.  

How do you measure value? There are several ways, depending on your team’s responsibilities. For example, SaaS companies can measure value via Monthly Active Users or Customer Success Sentiment. Internal organizations, on the other hand, may measure value based on the satisfaction of the teams they are supporting or the efficiency of the supported team.

Why is it important to measure value delivered?

Focusing on the value delivered is crucial in determining the ROI for the team. Every business decision is based on making a sound investment, and, with IT teams, it’s often difficult or complex to identify the return on the actual investment. If you’re able to directly track the value delivered to customers, you can make effective, focused decisions that are aligned with business objectives.

Many organizations mistakenly focus on activity metrics and cost metrics to try to measure value. Both are important - activity is critical to know where teams are focusing and if individuals are struggling, and cost is important to understand the structure of the team. However, neither of those metrics produces outcomes for stakeholders. If you only look at the “investment” part of ROI, you can never really know how effective your organization is.

Kodak is one such organization that mistakenly focused on outputs over business objectives.  Kodak, with its strong position at the top of the film market, focused on improving the efficiency and capacity of its film production capability, while ignoring the key market trends in digital photography.  While they likely saw some pretty amazing improvements in film production, they ultimately were focused on efficiency of the wrong product, which led to their bankruptcy in 2012.

Quantifying What “Success” Means Is Critical

Organizations need to agree upfront on the methods for measuring value to precisely define success for any given project. Teams should be in sync with leadership on how to measure value and leadership should be communicating constantly about how essential it is to quantify success. Once a team can track the value delivered, almost all critical organizational decisions can be based on that information. Knowing what the parameters of “success” are for any project can help a team become more efficient and deliver the best possible outcomes.