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strategy through measurement, it can be sure that it is doing exactly the
right things for the business, with its measures and activities driven by busi-
ness strategies. See Exhibit 10.10.
Critical Success Factors: Right Decisions/Right Results Principles

EXHIBIT 10.10 Goals and Practice Principles
Goals Practice Principles
Actionable, 1. Actionable Strategic Intentions
Commonly 2. Actions Tied to Strategy
Understood Strategic
3. Common Understanding of
Strategic Intentions
The Right Business 4. Business-Focused Outcomes
Results from IT 5. Value-Based Resource
Management Culture 6. Role-Based Culture
and Consensus View Management
Portfolios and 7. Value/Portfolio-Based
Portfolio Management Resource Management
The Right Actions 8. Responsive to Change
and Results

Common Understanding of Strategic Intentions. Leadership team consensus
on the goals for performance is the basis for a performance management
process. Additionally, measuring the right things, and communicating and
reviewing performance with business management, leads to a better under-
standing of: (1) what IT is about, (2) the business strategic intentions that
IT is supporting, and (3) IT™s ability to get there.
Impact-Based Resource Allocation. Performance Measurement works to sup-
port the achievement of planning, prioritization, and alignment, all aimed
at achieving resource allocation consistent with strategic intentions. Perfor-
mance Measurement provides the information that supports decisions regard-
ing the reallocation of resources.
Portfolio-Based Resource Management. Performance Measurement applies
to all the portfolios and tracks the performance of all portfolios against
strategic intentions. Performance Measurement is at the center of portfolio
management; it is a necessary tool to using portfolios throughout IT and
business management.
Business Outcomes. Performance Measurement data indicate the success of
the enterprise in establishing the cause and effect between business and IT.
Responsive to Change. Performance Measurement™s contribution is based on
enhancing IT™s ability to detect and respond to changes in business priorities
and strategic intentions. Performance Measurement substantially improves
IT™s responsiveness and flexibility.
Role-Based Culture Management. A key component of the Performance
Measurement practice is the active involvement of business managers in
shaping and providing the context for the specific measures for perform-
ance. Too often, IT performance measures are developed from IT™s inward-
looking perspective. The Performance Measurement practice balances this
existing inward perspective with an outward perspective that reinforces the

important role that business managers should play in establishing relevant
performance measure for IT.

Improving IT™s contribution to the business is a complex task that requires a
set of robust management tools. The power of the Performance Measurement
framework comes not from its individual pieces but from their integration.
Managing IT™s contribution to the business is a process of understanding cause-
and-effect relationships and continually balancing and (re-)allocating resources.
The effectiveness of the framework comes from looking at cost, service level,
quality, alignment, and process measurements as a set of interrelated elements
that, taken together, form a holistic model for managing and improving IT per-
formance. The Performance Measurement practice provides IT and business
management with the tools necessary to improve IT™s performance with respect
to achieving strategic and operational effectiveness.

Where is Performance Measurement applied?
The practice is embedded in company processes that produce portfolio
assessments, metrics, and annual plans.
What outcomes does Performance Measurement produce?
Practice Description
–« Measures IT performance in ways related to the business and its strate-
gic intentions.
Desired Management Process Outcomes
–« IT™s performance measurement methods connect IT to business require-
ments and strategic intentions.
–« All IT assets and resources are described in portfolios, covering both
new investments and current resources and assets.
–« IT is able to clearly communicate its performance goals and achieve-
ments with the business.
–« IT™s performance measurement and portfolio frameworks provide data
for continuous improvement of IT service delivery and management
Desired Business Outcomes
–« IT is aligned with the company™s strategic intentions.
–« Applications are abandoned or renewed because of poor alignment or
service/quality levels.
–« The overall IT portfolio is regarded as high-quality.
–« Overall, the entire IT investment is considered as valuable to the com-
Keep Score : Management Agenda


If No, What Is
Yes or Our Plan for
Management Question No? Correcting This?

Por tfolio information is actively used at all levels of IT
management. Por tfolio information includes measures of
annual cost, service level, quality, intensity of use, and
categories of use.

Resource allocation decisions and project priorities are
regularly reviewed between budget cycles.

IT performance measures are linked to business impact using
cause-and-effect linkages and alignment assessments.

Responsibility for the ongoing management of IT performance
measurement is clearly defined.

The tracking of IT performance occurs regularly through
documented measurement processes for which training and
suppor t are available.

Management has made a commitment to one or more IT
process maturity models (e.g., COBIT, SEI/CMM).

IT management is able to answer the question “Are we doing
(working on) the right things?”

IT management is able to answer the question “Are we doing
things right?”

Business-oriented measures of service level and quality are
in place.

1. For the Software Engineering Institute™s Capability Maturity Model, see Software
Engineering Institute, Carnegie Mellon University, The Capability Maturity Model:
Guidelines for Improving the Software Process (Reading, MA: Addison-Wesley, 1995).
2. Information Systems Audit and Control Foundation (ISACF), Control Objectives
for Information and Related Technology (COBIT) ” Management Guidelines, 3rd
edition (Rolling Meadow, IL, 2000).
3. See Chapter 8 for detailed discussions of Strategic Alignment.
4. See Chapter 8 for detailed discussions of Functional Alignment.

Deal with Culture

M anagement culture can be defined as the “underlying values, beliefs, and
principles that serve as a foundation for the organization™s management
system, as well as the set of man-
agement practices and behaviors that Control Spending and Maximize
both exemplify and reinforce those Impact on the Bottom Line
principles.”1 Using this definition as a 1 Define the Goals
starting point, Chapter 11 covers
2 Ask the Right Questions
management culture in four parts.
3 Connect to the Bottom Line
First, we describe the impact of cul-
ture and explain it as a set of factors 4 Understand Costs and Resources
that need to be identified, understood, 5 Focus on the Right Things
and dealt with in the course of apply- 6 Adopt Effective Process to Produce Action
ing the five NIE practices. Second, we 7 Tackle the Practical Problems
explore the need for management cul-
8 Make the Right Decisions
ture change in the Strategy-to-Bottom-
9 Plan for the Right Results
Line Value Chain, and how this affects
the ability of a company to change its 10 Keep Score
processes and adopt NIE practices. ¤ 11 Deal with Culture
Third, we introduce 15 categories of 12 Char t the Path to Implementation
culture issues that separate business 13 Define What™s Next
and IT managers. Fourth, we define
14 Answer the “So What?” Question
the culture management support prac-
tice to deal with the culture issues.
Our intention is to offer a set of diagnostics that enable a management team to
understand the specific cultural hurdles they face and what they may do to over-
come them.
We examine a very small slice of the overall culture issues facing a company,
focusing narrowly on how we can do something about influencing the attitudes
managers have about IT and their role in managing it. We need to change the
way managers work with IT, their role with respect to IT, and the mental mod-
els that managers have about IT.


Four basic themes about the impact of management culture have been discussed
in this book. These themes focus on the barriers that culture can erect to the
Strategy-to-Bottom-Line Value Chain, and they will lead us to the best approaches
for reducing these barriers.

1. Weak management support for processes causes disconnects in the Strategy-
to-Bottom-Line Value Chain. Such disconnects are based in culture, where
the culture discounts the importance of connecting IT to business strategy
or the importance of business and IT management working together to meet
business strategic goals. Without management support and commitment,
processes don™t work, and the outcomes of processes such as planning and
prioritization simply don™t make it to the next steps, such as budgeting and
annual planning.
2. Culture restricts management roles. The Strategy-to-Bottom-Line Value Chain
depends on business and IT managers playing specific roles throughout the
steps of planning, innovation, prioritization, alignment, and performance
measurement. This is partly a disconnect, where the culture discounts the
importance of playing the planning and decision-making roles about IT, and
partly management misunderstanding, where the culture gives predefined
limits and boundaries to the levels and categories of roles management plays.
This is especially true in siloed organizations, where NIE practices have
managers playing roles across silos.
3. Culture limits IT™s role. Business and IT management can have inappropri-
ate or conflicting views about IT™s role in helping set and fulfill business™s
strategic directions, and in management processes. Culture predefines IT™s
role in the business, and limits what and how IT can contribute.
4. Culture resists change. Management groups are reluctant to change how
they do business, particularly if the initiative to change is not theirs. To the
extent the Strategy-to-Bottom-Line Value Chain requires process and role
changes, this resistance kicks in.

The most critical resistance is to changes in how decisions are made. Reluc-
tance to accept the results of decisions made in new NIE-based planning and
prioritization processes, which is a great change in “how things are done,” is a
great inhibitor to connecting strategy to results. This is especially apparent in
siloed organizations, where managers are reluctant to change how decisions
affect individual (especially their own) silos.2
These four culture themes can determine whether an individual manager
believes that business/IT processes are important enough to spend time on, and
devote energy to, whether those process outcomes should be paid attention to,
and whether there is enough importance/incentive to change or affect the assign-
ment of resources based on those process outcomes. The four themes, which
obviously overlap, can be traced throughout the management culture discussions
Part 1: The Impact of Management Culture

in Chapters 1“ 4. The bottom line, however, is that management culture looms
large, and we have to be able to deal with it.

New Management Processes Alone Are Not Sufficient
In order to embed NIE practices in a company™s processes, we need to affect
how business and IT view each other within the context of their respective roles
and responsibilities. We need to influence the beliefs that each management
group has about managing the impact of IT, the processes needed to produce
that impact, and the belief in the needed outcomes.
The particular importance of dealing with culture is more than whether a
process works. In particular, culture determines whether the sort of changes rep-
resented by NIE “take” in the company and become a permanent change in
management behavior. Often, a new process works in its first cycle, when man-
agement is trained and there is a support team to help in using the new tools
and methods. Whether the process change persists, however, is not dependent
on the training, or even on the management support for the process, but rather
on whether the values, roles, and objectives have become a part of the mental
models held by management about business and IT.
In short, change in management process does not persist without culture


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