In today’s fast changing IT sector, decision makers are facing a growing demand for both
IT and administrative information in order to comply with legal and customer-specific
Requirements. Performance Management (PM) is thus becoming increasingly important to catch upwith the rising informational demands. However, little is known about the PM usage in IT since the constituent research about PM is primarily focused on the industrial sector.
The adoption of information and communication technology (ICT) in IT is currently seen as an opportunity to improve not only effectiveness, efficiency, and quality of IT services but also the transparency of the economic activities and the availability of information in real time. Organizations with integrated information systems (IS) have higher total margins and operating margins than those IT industries that do not have them. However, the causality between ICT investment and economic profitability could not be rigorously demonstrated yet. The question whether IT organizations with greater profits from operations and total assets can afford more sophisticated ICT investments or whether ICT itself has a positive effect on the IT performance is still unanswered. As PM is becoming increasingly relevant for the IT sector, we wanted to know what the current state of PM adoption is and how IT organizations will develop their PM in future. For this purpose we first discuss, based on the constituent literature, different definitions and approaches of PM in the subsequent section. In a next step.
- Understanding Performance Management in the Context of IT Industry
2.1. Defining Performance
Public sector organizations are differentiated in comparison with their commercial counterpart’s in the private sector. “There is no profit maximizing focus, little potential for income generation and, generally speaking, no bottom line against which performance can ultimately be measured”. Measureperformance is therefore considered to be a somehow daunting endeavor. However, from a management perspective performance is defined as valued contribution to reach the goals of an organization. Contributions to performance can be made by individuals or groups of employees as well as by external groups. Using this perspective, performance management can be seen as sequence of activities for
- planning the value creation,
- taking action to control value creation,
- Measurement of value contribution, and finally
- rewarding the value contribution.
But what is performance in the context of IT? As the goals of IT organizations
often are not clearly defined and the value of IT service delivery is difficult to allocate, public sector PM literature tends to use the three E’s −economy, efficiency, and effectiveness −to define performance for the non-for-profit context .Performance therefore has to be perceived as a multidimensional phenomenon where the financial, respectively value perspective (economy) is only one dimension of the whole. It is also necessary to consider patient-related aspects (effectiveness) and procedural and knowledge-related aspects (efficiency).
According to this, potential areas where performance in health care can be measured are:
- IT Industry financial strength (economy): Revenue optimization, productivity
Improvement, streamlining claims processing, waste and cost control, activity-based
- IT Services operations (economy): Partner management and measurement, collaboration
Opportunities, agility improvement, working capital and asset management.
- IT Industry people development (efficiency): Provider experience measurement, provider
loyalty and the voice of the provider analysis, learning and growth measures, innovation,
knowledge, culture and intangible value analytics
- Customer service and satisfaction (effectiveness): Including patient experience, engagement, delight, loyalty and relationship measurement, as well as the most important of all – measuring and tracking the voice of the patient.
- IT marketing(effectiveness): Measuring and developing the growing importance of healthcare branding, reputation and trust management, patient/customer segmentation, patient profitability and patient lifetime value.
2.2. Defining Performance Management
Performance management in health care is not only aiming at the systematic generation and control of an organization’s economic value but also at the optimization of the efficiency and effectiveness of service delivery. Therefore PM, like other management approaches, only can be implemented successfully, if strategic planning is closely linked to operational execution and controlling
While on the strategic level key performance indicators (KPI) for shaping the economy, efficiency, and effectiveness of service delivery have to be defined (strategize) and process redesign and process operationalization has to be initiated (plan), the operational level concentrates on the measurement and reporting of performance (monitor and analyze) and on optimizing and adjusting processes (take corrective action) .By the linkage between strategic and operational level, PM provides feedback based on specifics rather than generalizations. Thereby clinical as well as administrative decision makers are given the ability to know at any point whether the strategy they have formulated is, in fact, working, and if not, why.
- Operational level
To successfully implement PM, it is necessary to link strategic planning with operational execution. However, as discussed in the prior section, only a small part of the IT organizations really accomplish the full range of strategic PM activities. Therefore, the operational excellence of PM is highly important as it often builds the basis for improving the strategic level (in many other industries the concept of PM emerged bottom up, i.e. starting with performance measurement as means of monitoring and maintaining organizational control and not till then to ensure the fulfilment of the organizational strategy .Thus, operational PM is not an end in itself but an instrument for more effective strategy realization.
- Conclusion and Outlook
In other industries PM is generally regarded as an important driver, or at least as a trigger, for
Understanding organizational performance in order to better fulfil the strategic targets. Thus,
technology to support PM activities like business intelligence platforms, dashboard solutions, data mining tools etc. are seen as commodity with less than 2-5 years to mainstream adoption As in IT significantly differs from other sectors, the aim of this contribution was to analyze the
current state of PM .On the other hand, future and present adoption of PM is influenced by a wide range of factors such as the regulatory setting where the IT organizations is embedded, the complexity and compatibility of new technologies, the strategic targets of the organization, the attitude of the employees, and the organizational structure. It was found that especially the changing regulation and the increased market dynamics are major drivers for the PM adoption. However, the needs ofthe employees and the organizational structure still are important parameters to consider.From a strategic PM perspective, it can be said that IT organizations realize that isimportant to define business goals and KPIs in terms of economy, efficiency and effectiveness of Customer service delivery. However, the design of appropriate processes (e.g. how is data collected,analyzed and communicated?) and the planning of the operationalization (e.g. which tools supportthe data collection?) is practically omitted. Performance measurement, analysis and reporting are conducted by more thanthe half of the surveyed organizations. The use of sophisticated tools for measurement (e.g. workflow management systems) and analysis (e.g. business intelligence, dashboards) is ratheruncommon yet. Again, this raises the question about the quality of data generated by such a PMsystem but also about the efficiency (e.g. how much time is used to manually collect and analyzedata?). Another interesting result from the survey is that only a third of the respondent affirmed toactively use the output of the performance monitoring and analysis phase to enhance strategyformulation and planning. Thus, the effectiveness of the PM in use can be doubted as well, since thecrucial link between organizational level and strategic level does not exist.Building on the results presented in this paper, future work should be directed at prioritizing areasfor action in the sense of a roadmap for optimizing PM quality, efficiency, andeffectiveness of the IT organizations.
Operation Systems Support & Performance Management Products:
• NPM & APM
• WAN Optimization