IT reporting is an essential way for organisations to communicate the impact and progress of their technology initiatives to their board of directors and executives. Decision-makers need to understand the IT department's objectives, strategies, and outcomes, as technology plays a critical role in an organisation's success. They also need to see the connection between those IT objectives and the company goals. This information can help make informed decisions about technology investments, track performance, identify areas for improvement, and provide means to show how IT can support achieving business goals.
Creating an effective IT report is not a trivial task. PwC's CIOs Pulse Survey in 2022 found that IT leaders identified the misalignment between business and IT, limited business involvement and the lack of visibility into IT performance as major pain points for their IT organisations, among others. These issues often lead to reduced productivity, missed opportunities, limited revenue growth or costs reduction, and difficulty in achieving business goals.
To avoid such consequences, it is essential to establish IT reports that are clear, concise, and easy to comprehend for non-technical stakeholders. Building collaboration between business and IT stakeholders is critical to align their strategies, priorities, and goals. The report should highlight the key metrics that matter most to the organisation’s goals and objectives and present the information in a visually appealing way.
The Need for Executive IT Reporting
Executive IT reporting is a critical tool for organisations seeking to optimise their technology investments and achieve their business objectives. By providing a clear and transparent view of IT activities, performance and outcomes, it helps to ensure that IT initiatives align with the organisation's goals, and helps to build trust between IT and other stakeholders.
The key drivers for IT reporting could be summarised as follows:
1. Steer IT strategy: Executive IT reporting provides a clear picture of the IT department's goals, objectives, and achievements, which can help align the technology initiatives with the organisation's overall strategy. This allows for IT visibility and an effective steering of the IT strategy in a way that supports the business goals.
2. Provide transparency and align stakeholders to create a shared understanding: Executive IT reporting allows IT leaders to present a clear picture of their department's progress and impact on the organisation, creating a shared understanding between IT and other stakeholders (incl. business, operations, finance and tax, etc.). This helps to build trust and communicate the value of IT initiatives, and ensures that all stakeholders have a common understanding of the department's goals and achievements.
3. Exploit opportunities to maximise IT resources usage: Without proper reporting, IT initiatives may not align with the organisation's goals and objectives, leading to underutilization of resources and missed opportunities for growth. Executive IT reporting helps to ensure that technology investments are being used effectively and efficiently, and are contributing to the overall success.
Challenges in Executive IT Reporting
While Executive IT reporting is essential for steering the IT strategy of an organisation, there are a number of challenges that organisations face when trying to effectively communicate the value of IT to the business.
1. Misaligning IT and business strategies: Misaligned IT and business strategies can hinder executive IT reporting from aligning with the overall business strategy. This challenge arises due to a lack of clear understanding of business goals and objectives. Furthermore, IT departments often operate in silos, leading to fragmented reporting to the executives.
2. Identifying strategic key performance indicators (KPIs): IT leaders must identify strategic key performance indicators (KPIs) that reflect the impact of IT on the business and translate them into meaningful and actionable metrics. This involves a comprehensive understanding of the organisation's goals and objectives, as well as the application of appropriate methodologies to collect data and calculate KPIs.
3. Setting up the adequate goals for KPIs: the leaders must ensure that goals are SMART (specific, measurable, assignable, realistic, and time-related) to effectively steer IT towards success. Well-defined KPIs can assist in this task. However, a common issue is establishing a baseline from which to set the initial set of achievable goals. This reference point is crucial in ensuring that goals are realistic and attainable.
4. Best practice benchmarking: to provide a context to the business and to set-up a baseline, IT leaders could leverage on benchmarking. However, it can be challenging to obtain IT benchmarks for specific KPIs that are relevant to an organisation, as other organisations might have different measurements. Furthermore, obtaining accurate benchmarking data can be difficult as it may require access to confidential information from other organisations.
5. Communicating the right key message in the language understandable for the business: IT leaders need to articulate the impact of technology initiatives in terms that are meaningful and actionable. The key messages should be relevant to the business, clearly communicating the value of IT (e.g. contribution to revenue growth, risk reduction, cost savings), and proposing any necessary actions to be taken.
6. Data quality and integration: Poor data quality can lead to incorrect conclusions and decision-making. Therefore, it is essential to ensure that data used in reporting is accurate, complete, and up-to-date. However, integrating data from various sources can be a challenge as it may be stored in different formats and systems. This can make it difficult to create a unified view of the data for reporting purposes.
In order to overcome these challenges, organisations need to adopt a more strategic approach to IT reporting, focusing on metrics that accurately reflect the impact of technology on the business and presenting information in a way that is meaningful and accessible to all stakeholders.
The Solution: IT Strategic Reporting
PwC's solution to overcome the challenges in IT reporting lies in the implementation of the IT Strategic Reporting. This comprehensive solution offers a holistic view on IT by integrating operational, steering, and strategic KPIs depicted in the following figure. This quantitative reporting needs to be explained and supported by descriptive insight from IT leaders. This insight should as well indicate the potential impact on the operating model of IT.
1. Operational KPIs: Operational KPIs focus on the day-to-day activities of IT and measure its efficiency and effectiveness. These KPIs provide insight into the operational performance of IT and help IT leaders identify areas for improvement.
2. Steering KPIs: Steering KPIs provide insight into the alignment of IT initiatives with business goals and measure the impact of IT on the organisation's performance. These KPIs help IT leaders ensure that technology initiatives are aligned with the organisation's goals and objectives and help measure the effectiveness of these initiatives.
3. Strategic KPIs: Strategic KPIs demonstrate the value of IT to the business, providing a high-level view of the impact of IT on the organisation's overall strategy. These KPIs help IT leaders communicate the impact of technology initiatives to the business and demonstrate the value of IT to the organisation.
One way for an organisation to align its IT strategy with its business strategy is by linking their respective objectives and key results (OKRs) with capabilities extracted from IT4Business (challenge #1). Furthermore, the organisation can link OKRs with initiatives that fulfil the expected objectives. This creates a top-down decomposition of the business strategy to IT strategy and initiatives, and a bottom-up reporting system (see figure below) that shows how projects fulfil objectives. It helps identification of the strategic KPIs (challenge #2) linked with clearly defined goals (challenge #3) backed by third party benchmarking (challenge #4). At the end IT leaders need to invest time to analyse KPIs and collect insight from their team to create relevant messages to be reported to the executive stakeholders (challenge #5).
Finally, when having identified KPIs (operational, steering and strategic), we should compare them against available data sources. When data gaps identified (challenge #4), the organisation can:
a. Adapt / modify KPI to rely on existing, good quality data (if possible); or
b. Establish a process to generate missing data in automatic manner;
c. Provide manual reporting.
The following figure presents an illustrative example of a dashboard with strategic KPIs, which provides a helicopter view on IT performance from the business strategy perspective (compiled from multiplied sources).
In conclusion, effective IT reporting is essential for organisations to communicate the impact and progress of their technology initiatives to their board of directors and executives. Misalignment between business and IT, lack of visibility into IT performance, and poor data quality are the major pain points for IT organisations. To overcome these challenges, organisations need to adopt a more strategic approach to IT reporting, focusing on metrics that accurately reflect the impact of technology on the business and presenting information in a way that is meaningful and accessible to all stakeholders. The implementation of the IT Strategic Reporting is a comprehensive solution that offers a holistic view of IT by integrating operational, steering, and strategic KPIs. It helps IT leaders to demonstrate the value and progress of their initiatives to executives and board members, leading to a better alignment of IT and business goals. Ultimately, IT Strategic Reporting facilitates linking business and IT objectives and initiatives through a top-down decomposition of the business and IT strategies.
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