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  • CFO.com | US

Judging Tech? It Ain’t Easy

Measuring the ROI on tech projects is tough enough. Now some companies are looking to evaluate the performance of their IT employees.

Neal Ganguly understands that battle. The CIO at CentraState Healthcare System, Ganguly concedes that it’s often difficult to affix a number to what tech does. “Many of the benefits of IS are often soft, [like] improved workflow and organizational efficiencies, which are difficult to measure,” insists Ganguly. At New Jersey-based CentraState, which operates a 241-bed acute care hospital, a nursing home, an assisted living facility, and a continuous care retirement community, finance and tech do work together pretty closely, however. And for the most part, Ganguly says the business side “appreciates that ROI is generally elusive and that we’re looking for general benefits to the organization.”

Nevertheless, management at CentraState has been looking at different options for measuring how IT delivers services. So far, says Ganguly, “we haven’t found a magic solution.”

Maybe not. But Ganguly does note that finance now works with his group to help justify projects and initiatives and to build an ROI case. He characterizes the pairing as a “challenging but cooperative relationship.” He has no reporting responsibility to the CFO, and believes tech should not be part of the finance hierarchy. “IS is a strategic business unit and should be part of operations,” Ganguly argues. Hence, he thinks that tech departments should answer to a company’s CEO or COO.

That’s not the case at Solvay America, a chemicals and plastics and pharmaceuticals manufacturer in Houston. Ben Gilbert, vice president and CIO of Solvay Information Technologies, an IT services company that provides support for four units at Solvay America, reports to the CFO of the parent company.

To get a handle on tech’s performance, Gilbert says Solvay uses “critical success factors” for different projects. For example, one metric/goal the company is discussing: doing 15 percent of sales orders over the Internet. “IT is an enabler in that process, and this is in the discussion stage presently,” says Gilbert. Any new projects for the business would also have critical success factors, which Solvay management determines.

For example: In 2001, as part of a joint venture deal with BP Worldwide, Solvay acquired a specialty plastics business. Gilbert set a number of goals for IT that included integrating the new company into the Solvay environment and completing the transition in nine months. By April 30, all employees must be moved to the Solvay worldwide network, and the computer processing environment must be transitioned over by October 1, 2002.

Setting these sorts of specific IT targets appears to be helping Solvay management gauge the contributions of its tech workers. Says Gilbert, “We have a much more objective measurement of the performance of internal staff and external providers than we’ve had in the past.”

The CFOs at the four units take a look at budget performance. “We establish each year what they expect of IT in terms of goals and objectives, and we have quarterly status committee meetings and make any adjustments as necessary,” says Gilbert. “I report on the measurements that are important to them at the global level,” meaning the status of projects and budget performance.

While Gilbert has had past experience with balanced scorecards, Solvay management has only started looking at the measurement tool recently. Applying a balanced scorecard approach to tech performance would be a substantial change for the company. He points out that at Solvay, IT is mostly a back-office operation, “so the strategic advantage of IT hasn’t lent itself in the past to rigors of a balanced scorecard.” But he does like the approach for measuring all human performance — not just IT’s. He believes it gives employees a better idea of a company’s overall goals — and how they can help meet those goals.

Still, Gilbert doesn’t expect a balanced scorecard approach at Solvay America anytime soon. “You have to get consensus from people that this is how they want to manage.” But he does believe such an approach would be “much more objective than critical success factors, which are based on a business unit telling me to do a certain project.”

And The problem with Solvay’s critical success factors? “It doesn’t tell me if we’re doing the right projects,” Gilbert asserts. “We execute very well, but the question is: Are we executing the right things?”

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