InformationWeek

August 17, 1998

IT Metrics For Success

When done right, project-management measurement can boost a company's productivity

By Deborah Asbrand

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espite years of coaxing, IT organizations are largely reluctant to institute project-management metrics programs. IT departments at small and midsize companies in particular seem disinclined to institute policies to track the performance of development projects. With limited management resources available and the pressure to quickly deploy new business solutions, productivity measurement often becomes a low priority for many organizations.

But some companies are bucking this trend--and reaping the benefits of improved productivity.

Belk Inc., a national retailer, was forced to adopt productivity metrics as a means of staving off devastating system failures. Conda Lashley, the veteran IT consultant that Belk hired, was used to nursing client organizations through crashes that periodically downed their systems. But nothing could prepare Lashley for the failure rate at Belk. Soon after joining the company as senior VP for systems development, Lashley discovered that Belk's batch systems went down an astounding 800 times a month.

The Charlotte, N.C., outfit, a private company with estimated annual revenue of $1.7 billion, paid a heavy price for the constant bandaging: In 1997, Belk spent $1.1 million of its $30 million IT budget on unplanned maintenance.

To steady the systems, Lashley instituted a series of tracking measures. Programmers began logging their time. Software function points were carefully counted in application development projects. Belk compared its cycle time, defect rates, and productivity with competitors' figures. And systems managers were required to draw up blueprints for reducing the crashes--with the results reviewed in their performance evaluations.

Costs Under Control
The transition to tracking the IT department's performance was painful but worthwhile, Lashley says. Belk's systems are becoming more stable--monthly disruptions are down to 480 incidents, a figure Lashley hopes to slash by another 30% this year. Unplanned maintenance costs also have been brought under control. Belk has cut unplanned maintenance expenses by $800,000 so far this year.

Among IT organizations, however, Belk's is the exception. Stern warnings and parental cajoling from consultants and academics on the importance of productivity measurements have been largely ignored for years by many organizations' IT executives. The adoption rates for productivity measurement tools and procedures are bleak. The perceived ease of object-oriented application design and the Wild West atmosphere of Internet development further discourage the discipline that the use of metrics requires, say observers. Still, experts hold out hope that more organizations will get the message about the importance of tracking performance metrics.

The advocates of application development metrics have their work cut out for them. In the United States, fewer than 9% of companies use metrics to measure and monitor software development, according to a 1997 poll of 1,100 companies by market research firm Rubin Systems Inc. That's not surprising given metrics' dismal ranking among technology priorities. On a list of 19 issues that included recruitment, productivity, and project management, metrics rated dead last.

What's more, three out of four measurement programs fail, according to research by the Yankee Group, translating into 1.5% to 3.7% of IT expenditures being wasted. Many IT management teams lack either the experience or the will to ensure the success of a performance tracking system. IT shops that succeed at measuring development output often bring some outside consulting expertise onboard to get things rolling. Once the initial implementation is under way, the consultants transfer knowledge to the IT manager so that he or she can use the metrics in future projects.

Why aren't more shops successful? "Application development is poorly managed--period," says Alan Gonchar, president of Compass America, a business-performance consulting group. Most organizations do a poor job of time reporting, he says. Even basic metrics--such as how and where programmers spend their time, and how many lines of code the organization maintains--aren't done, he adds. One of the first steps of year 2000 remediation, for example, is to figure out how much of the system must be fixed. "If application development was properly managed in the first place, you would already know that," Gonchar says.

Indeed, metrics make a lot of sense. In other parts of a company, the use of various performance yardsticks is routine. Sales representatives are compensated based on their ability to meet quotas. Marketing departments and other units that service internal customers regularly track their billable hours in an effort to account for their time and gauge their productivity. Profit and loss statements serve as universal benchmarks for overall company performance.

Air Of Mystery
With failures so common, why is there such stubborn resistance to applying a few measurements to application development, which typically consumes 10% of overall IT budgets? For starters, software development has long had an air of mystery about it. Software developers are often viewed as creative types who should be left to their own devices. Many developers who pride themselves on creating elegant technical solutions chafe at the notion of measuring their output.