Analytics for IT: Cobbler’s Children Need Shoes
May 12, 2011

As part of our largest-ever research study on business analytics, which surveyed more than 2,600 organizations covering the maturity and competency of business, IT and vertical industries,we looked at how IT is applying analytics to support their own businessactivities. One of the things we found is that, charged with enablingbusiness units to use information systems as effectively as possible,the IT department, like the shoemaker’s barefoot children in the oldtale, typically stands last in line for resources to manage its ownperformance. In trying to understand and tune the collection ofnetworking and operating systems, middleware and applications anenterprise needs to operate, IT professionals usually have to make dowith small sets of historical data stored in spreadsheets and datawarehouses and marts that are not as well managed as the systems theymaintain to support the business. In most cases IT cannot apply thesame level of analytics to its own operations that it provides tobusiness units. This also has effects beyond IT itself: To the extentthat the result is subpar performance of its core information systems,the business will suffer.

To break out of this frustrating cycle, IT needs to make the rest ofthe organization aware of the role it actually performs, of course, andit needs metrics and measurements, which require analytics tostandardize and routinely generate them. IT needs to be able to analyzeboth historical and real-time events involving data and processes somanagers can determine the right level of automation and efficiency todemand from the technology. And IT needs the capability delivered by predictive analytics  toanticipate situations and outcomes so it can prepare properly for them.In short, the CIO and IT staff need to manage their portfolio as abusiness asset, not merely a collection of technologies.

Metrics about its own operations and systems also enable IT todetermine priorities for improvement. To fully understand the state oftheir existing investments and processes, IT organizations should notjust measure them but analyze them to develop insights on futureoutcomes of their systems. This more sophisticated approach toanalytics can help IT determine where to focus resources and what to dowith legacy systems. Knowing this, it is possible to prioritizeprecious budget dollars and justify IT investments more convincingly.

Our research found that IT’s concerns currently center on cost andoperational efficiency. The most important financial metrics are returnon investment, cost per project, budget utilization and adherence tobudget. The most important process metrics address timeliness in IT’score function of service to the business: delivery of projects on time,speed of technology implementation and help desk response time.

In our research, which we presented in this webinar on IT analytics,of the participants’ perceptions of which metrics are most importantfor executives and managers, two loomed large: business usersatisfaction and compliance with service level agreements (SLAs). Theexecutives themselves rated the two metrics nearly equal in importance,but their management reports (vice presidents) by a slight margin mostoften named adherence to governance and risk management requirementsrather than either of those. These responses suggest that people maywork somewhat at cross-purposes in pursuing IT analytics.

The research also finds strong suggestions that organizations oughtto involve more people in the process of establishing requirements fordefining analytics. Research participants asserted overwhelmingly thatthey and the head of their business unit are involved in establishingrequirements important to their jobs, but percentages drop for heads ofother business units and business analysts in other business units.This disparity takes on more weight when we recall that business usersatisfaction and SLA compliance are important metrics for leaders.

For analytics to deliver value, they must be available to those whoneed them; the research shows that this is an issue for manyorganizations. No more than half have analytics generally available toaddress any of seven major IT management tasks, and only for budgetanalysis are analytics completely available in even one-fourth oforganizations. In a related finding, more than half said it is veryimportant to make it simpler to provide analytics and metrics; lessthan 10 percent said that is only somewhat important or not important.As well, over a third said they can significantly improve their use ofanalytics and performance indicators, and over a third are notsatisfied with the process currently used to create analytics.

The process of applying analytics also impacts IT’s effectiveness. The IT Analytics benchmark researchfound that users in nearly two-thirds of all organizations spend mostof their time in unproductive chores that precede analyzing their data:preparing it for analysis, reviewing it for quality and consistency andwaiting for it. And before that, issues in collecting the data raiseanother roadblock. In more than half of organizations, doing that isvery difficult or a challenge that impedes creating metrics andperformance indicators.

These functional barriers also can get in the way of analystsperforming important tasks. Among capabilities they need in order towork effectively with analytics and metrics, 42 percent said access tosource data is the most important, and at least one-third identified asmost important the abilities to search for existing data and analytics,to take action based on analytics and to design and maintain bothbusiness models and metrics for analytics. Applying predictiveanalytics to project future outcomes, a hallmark of advanced maturityin the use of IT analytics, was cited by 31 percent.

IT professionals need appropriate tools to facilitate these andother analytics-related activities. In more than half of theseorganizations, business intelligence technologies for query, reporting,analysis are the most important of these tools. Yet even in thistechnologically astute environment, desktop spreadsheets are often usedto generate analytics and are an important information source forbuilding IT. But spreadsheets require manual effort to populate thedata and are prone to error, and thus are not appropriate forcollaborative and enterprise-wide activities. We think their widespreaduse is a factor in half of organizations being only somewhat satisfiedor not satisfied with their organization’s current technology forcreating and applying analytics.

As part of our benchmark research methodology,Ventana Research has developed a model for assessing maturity thatclassifies organizations at four maturity levels (from bottom to top,Tactical, Advanced, Strategic and Innovative) in each of fourcategories: People, Process, Information and Technology. With respectto their use of and plans for IT analytics, our Maturity Index analysisfound only 15 percent whose responses place them at the highestInnovative level of maturity. One important finding reflecting onorganizations’ maturity is that two-thirds said the data used inpreparing metrics and performance indicators is only somewhat accurateor somewhat inaccurate. As well, it takes 35 percent of organizationsmore than one week to provide updated metrics and performanceindicators to people and nearly as many up to a week to provide them.

It is a positive sign that improvements, if made, will be done mostoften to improve business processes or decision-making rather than foroperational efficiency and cost savings. The first two motivations aremore likely to produce better business results. Similarly, maximizingIT effectiveness and improving the value of IT to business managers aremore important than issues involving resources, costs and budget.

However, these opinions come from organizations that plan to changethe way they generate and apply analytics in the next 12 to 18 months,and they comprise only 28 percent of the total; another 36 percent saidchanges are needed but are not currently a priority. The primarybarriers to such an initiative are both fiscal (lack of resources andbudget) and perceptual (lack of awareness and a sense that the businesscase is not strong enough). Recognizing a problem but not being willingor able to remedy it is another sign of immaturity.

To maximize its value, IT should use analytics and metrics to helpset its own goals and objectives and to ensure they serve the businessstrategies of the organization. This innovative path is embracing ITperformance management. Few organizations have taken the necessarysteps to actually manage performance and align, optimize and understandthe range of their IT processes and resources. We believe, and thisbenchmark research confirms, that it is time for them to take thosesteps, supported by executive management in providing resources. 

Regards,

Ventana Research


 

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