IT Efficiency

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The claim that information technology's benefits are real but not measurable is faint and, in this economic climate, dangerous praise. Luckily, it's also no longer the case: Corporations, analysts and academics are relying on tangible, new IT metrics to

IT Efficiency

Metric: Technology Core Business Spending
Definition: The amount of technology spending versus the main unit of work, or type of transaction, in a given line of business. In the package-delivery business, for example, divide the number of packages delivered by the amount spent on IT for those divisions and projects related to package delivery; in the auto business, use the number of cars produced, and so forth.
Example: units of work
$ spent on IT

Significance: Judging spending against the main way your company's product or services are consumed by its customers shows the effectiveness and efficiency in which IT is being applied. If the percentage is in decline, you're getting more efficient; if it's rising, you're not. Examine why.

Metric: IT Productivity Support Metric.
Definition: The productivity of IT in supporting the main unit of work in a particular line of business. Divide the units of work by the number of employees; divide again by the IT spending (including training) related to that line of business.
Example:             units of work            
                # of employees               
$ IT spending related to units of work

Significance: This tracks your ability to support overall productive operations of company. A larger number is better: If the output is more packages, with fewer employees and less technology spending, you're headed in right direction.

This article was originally published on 2002-02-04
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