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How to define Metrics?

Kishore C.S.

I have written couple of articles on metrics based management. I had a question from one of the readers, like "How to define Metrics?"

Defining metrics need to be "purpose driven". You need to have a problem definition like a business problem to solve. Irrespective of domain or what business you are in, you are always trying to solve problems. Without a problem to be solved, just having numbers published does not serve any major purpose.

Metrics are typically used for baseline, comparison and defining goals and monitoring. 

Example:

IT department receives complaint that there are lot of system inefficiencies. There are not enough hardware systems. At same time there are complaints that existing systems are not fully utilized and there are lot of initiatives.

To manage this problem, IT manager decides to define, track and monitor inefficiencies. 

Stage 1:

Collect information of existing systems. There is a project identify to gather information of existing hardware. This can be done by using sophisticated systems or even by using a simple excel sheet.

After inventory is done, a quick analysis shows that across departments there are a total of 120 systems.

Department 1 50 systems
Department 2 30 systems
Department 3 40 systems

Though information has been collected, this does not help solving the business problem.

Stage 2:

Define inefficiency: Inefficient use of systems will be possible by defining it carefully and then measuring it.

Inefficiency 1: System that is not used for any project and is lying idle
Inefficiency 2: System that is used ineffectively.

Capture information that

System ID Comments No. of Projects using Utilization Factor OS Last Update Date
S1 Project 1, Project 2 2 90% Windows April 2005
S2 Project 3 1 50% Linux April 2005
S3 Project 1, Project 3, Project 2 3 100% Windows April 2005

New Analysis

Department Number of Systems Number of Unique Projects Avg. Utilization Factor
Department 1 50 systems 5 50%
Department 2 30 systems 6 80%
Department 3 40 systems 3 70%

Stage 3:

Define goals and Monitor this on timeline (either weekly, monthly, quarterly)

Goal: Ensure 90% utilization of systems across departments and projects.

Department\ Avg. Utilization Factor Jan 2005 Feb 2005 March 2005
Department 1 50% 60% 75%
Department 2 80% 80% 70%
Department 3 70% 75% 90%

Summary

It is exciting to use metrics based management. Make sure you do it right.

  • It is important to define right metrics.

  • Irrelevant metric collection can cause problems.

  • Numbers and metrics can lead to misleading interpretation.

  • Continued monitoring of these metrics is needed to ensure the problem does not surface again.

  • One should not be stuck on a standard set of metrics. There will be need to refine metrics as business problems change.