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Here’s an alarming statistic that I read recently: 81 percent of everyone surveyed thinks their IS organization is average or below average. If “below average” translates to “below the mean,” only 20 percent of us are in the top 50 percent.

Since human perception is a pretty dull scalpel, “average or below average” may not be quite as precisely defined as “worse than or equal to exactly half the total number.” Let’s try a different interpretation. Figure anything within one standard deviation of the mean counts as average. In round numbers about two-thirds of any sample falls inside one standard deviation. The remaining third splits in half, so one sixth of any sample is above average. The remainder – five sixths, or just over 83 percent, are average or below.

Mystery solved! The 81 percent who figure their IS departments are average or worse are almost exactly the number who ought to think so according to the inviolable laws of statistical sampling.

The authors of the paper reporting this statistic made no further comment, so we don’t know if its absurdity escaped them or not. That three college professors who specialize in business metrics resorted to this kind of number, though, speaks poorly of the state of the art in IS measurement. I certainly didn’t do anything like that in my new book, Bob Lewis’s IS Survival Guide from MacMillan Computer Publishing (nor would I ever stoop to shamelessly plugging it in this column).

As we found last week, we have plenty of measures to choose from, all internal ones that tell us how good our processes are compared to internal baselines or external benchmarks. What we lack are external measures that assess the value we create for the enterprise. The measures we have tell us, to borrow a phrase, whether we’re doing things right, but not whether we’re doing the right things.

We do have one external measure at our disposal. The cost of technology is depressingly easy to measure, and our detractors gleefully proclaim it during budget season. But the value we create? That’s a lot tougher.

The purpose of any measurement system is improvement (ignoring its important use in political self-defense). The point of calculating the value we deliver to the enterprise is helping us increase it. How do we create useful measures of value? It’s tough. At the highest level, the formula for calculating value is Bang per Buck. We know how to measure the buck part, which leaves the bang as the part we need to measure. Start by listing the major categories of benefit we provide:

  • Capabilities needed so the company can achieve its strategic goals.
  • Capabilities needed for effective marketing efforts.
  • Fully automated (and therefore high-efficiency) processes.
  • Capabilities needed by redesigned processes.
  • Capabilities for improving communications with customers and suppliers.
  • Capabilities for improving internal communications.
  • Capabilities that allow individual employees to be more effective in their jobs.

See a trend? Except for the rare situation that allows for complete process automation, the value we deliver is capabilities. They’re enablers – necessary but not sufficient conditions for success. To measure the value we deliver, we need to understand how to measure the value of a capability when that capability may or may not be used effectively.

How will we go about that? In principle, we need to list every contributor to success in each of these categories, then assign a weighting factor to each of them that reflects its relative importance or contribution.

Great theory. Can we turn it into practice?

Oh, gee, we’re about out of space. Too bad … you’ll have to tune in next week to read the next installment.

Mark Twain missed the big one.

As he pointed out, lies, damned lies and statistics can certainly give people the wrong impression. But if you really want to convince someone that up is down, they’re flimsy tools compared to the really big deceiver: Surveys.

I’m not talking about the well-understood practice of asking biased questions, like Burger King’s famous, “Would you prefer to eat a delicious hamburger, cooked from a quarter pound of fresh ground beef on an open flame, or a disgusting, greasy, fried, hockey-puck-like mess?” (I might have the exact phrasing wrong — I’m working from memory) that led to its not-very-effective “The Whopper beat the Big Mac” ad campaign some years back.

Sure, it’s a useful technique. It’s simply second-rate compared to one exemplified by a recent Gartner survey, reported in the January 14th issue of Processor magazine in an article titled, “The End of the IT Department as We Know It.”

The survey asked the popular question, “What’s your biggest frustration — something you’re supposed to accomplish but don’t, or something someone else is supposed to accomplish but doesn’t?”

The exact phrasing was a bit different. Gartner asked corporate executives to identify what gets in the way of strategic change in their companies, and IT failures beat out changing the culture. Since the culture changers are themselves and IT is someone else, the response is less than surprising.

Perception, of course, is reality, so you need to pay attention to this, especially since Gartner sells the perception to the executives with whom you work, also sells its solution, and, unlike you, has a paid sales force and PR machine. According to the article (and to be fair, it’s possible Gartner’s actual findings had fewer logical holes than the article that presented them) what’s going to happen is:

New technologies, that deliver pre-packaged workflows to businesses, and let businesspeople reconnect the process flows by manipulating visual tools and pushing a button (Ta-Da!!!) will fundamentally change the responsibilities of IT departments.

Since today most IT organizations spend the bulk of their budgets on operations and applications, something fundamental needs to change. Mix in outsourcing and the end of IT is at hand.

Oh, and the career solution for technical professionals? Get an MBA.

Let’s deconstruct this, shall we? First of all, suggesting that IT should spend most of its budget on something other than applications and operations is a bit like suggesting that Toyota should spend most of its budget on something other than designing and manufacturing cars. Applications are what people use to do their work. What, other than running the applications you have while enhancing them and delivering new ones, are you supposed to be doing? Raising chickens?

Second, workflow tools (just another class of application, by the way) don’t automate work. They automate the process of assigning work. Once the work arrives at employees’ desks, they still need business applications to help them do it.

Maybe the point is that businesses will start to view internal processes as commodities. Instead of figuring out how you want to run your business, you’ll just buy best-practice processes off-the-shelf, pre-automated and pre-integrated, with no work required from IT other than to install them and no work required from anyone else other than training the end-users.

Yeah, that’ll work. Your COO will buy Wal-Mart’s supply chain processes, Nordstrom’s customer relationship management, Amazon.com’s e-commerce, and Dell’s build-to-order. Voila! Like magic, out will come a lean, mean, fighting medical-devices, cosmetics, or maybe janitorial services machine.

There’s an old saying in the consulting business: It looks great on the PowerPoint.

So here’s some advice you might find a bit more practical regarding how to keep the joint running, from your old keep the joint runner:

Keep on spending most of your budget on operations and applications. Shift as much out of operations as you can every year — but only what you can shift through improved efficiency and not a penny more.

Spend as much as you can on applications — not just coding, of course, but all the associated disciplines that spell the difference between code that runs and successful business change.

And most important of all, pay attention to the “biggest frustration” that started this chunk of rant ‘n roll. Many IT organizations still haven’t mastered the fundamental discipline of managing projects to successful conclusion.

If you haven’t, perception really is reality, and while your IT department might not go away, you probably will. Soon.

And not under your own steam.