The Metrics Trap … and How to Avoid It

CIO.com on April 01, 2006

While using IT as a percentage of revenue as a baseline metric is a common practice, it tends to encourage an executive perception of IT as a cost to be controlled rather than an area that can benefit the business. CEOs who rely on this metric have "already decided to cut IT spending and they use the data as a justification," says a Gartner research vice president quoted here. CEOs like to have a single, simple metric to reference, says the Gartner VP. Problem is, there is no such thing for IT. The percentage of revenue metric generally reveals little if anything about the effectiveness of IT spending, says another source. More specific measures, such as the per-employee cost of providing a particular IT service, are becoming increasingly popular, according to this article.