18/02/2010

Metrics and indicators are more than corporate statistical instruments

By Ernani Ferrari

Metrics and indicators are more than simple mathematical and statistical elements. They are also elements of psychological and behavioral impact to people and organizations as the way in which they are measured strongly determines their reactions. Metrics and indicators play an essential role in company management whether for statistical analysis or to align people and teams to common visions and objectives.

We learn to monitor grade averages at school, our current accounts and car fuel meters as teenagers and adults, and cholesterol and triglyceride levels when we get older or when faced with health problems. Amazingly enough organizations manage to survive, albeit sometimes precariously, with management models that overlook performance indicators and results. The current corporate culture of the software industry promotes strict financial control, but tolerates slack monitoring of commercial process and, many times, non-existent knowledge of software production processes. This managerial behavior puts the benefits of metrics and performance indicators to waste, some of which include:

• Identification of productivity and quality levels that allow understanding and comparison of organizations and teams.
• Identification of processes and areas that cause faults and problems to pinpoint investment needs and proprietary corrective action.
• Identification of high performance processes and areas to identify competitive advantages and turn them into key success factors.
• Creation of parameters of planning, projection and estimates to increase quality of plans, projects, services and orchestration of corporate activity.
• Establishment of criteria and parameters to set clear objectives and goals that allow us to:
• create corporate process performance evaluation mechanisms;
• improve exposure of corporate strategies and tactics, including the use of scorecards (such as BSC – Balanced Scorecard);
• establish a basis for compensation, benefits and participation for professionals and teams from business line, operational and company results;
• evaluate suppliers and business partners; and
• establish SLAs with clients, suppliers, partners and internal clients.
• Identification of results that show final impact of corporate action include:
• financial results of the organization;
• internal and external client satisfaction; and
• in relation to corporate image in the market, attained market share and tendencies regarding concurrent or replaced solutions.

While some swear by the impossibility of managing without metrics and others consider the feasibility of managing with little available information, one thing is certain in software management processes: metrics and indicators do not simply facilitate management, they are also essential for process evolution and, consequently, fundamental for organizations to reach high quality and productivity levels.

Ernani Ferrari, specialist and consultant in integrated software management and author of Guia Mondo Strategies de Métricas e Indicadores de Software, a guide to creating indicators and reports for the Brazilian and foreign markets (www.mondostrategies.com).

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