Measuring the Productivity of IT Services

From an enterprise perspective the productivity of IT services is determined by the interplay of the following factors:

• Efficiency: Regards the economic efficiency concerning a cost/benefit ratio. When looking at a software development process the benefit corresponds with the output of created software and the costs are the development effort (input).
• Capacity: Depends on the provider’s flexibility in addressing changes in demand and concurrently utilise the capacity of his resources (employees) optimally.
• Effectiveness: The ratio between an achieved and the targeted result. Depends on external factors as the provider’s market position and image, the opinion on the service quality by the customer, the quality of customer interactions, etc.

According to this model productivity measurement requires the consideration of more areas than only the delivery: marketing, sales, staff planning, etc. The challenge is to find feasible metrics e.g. for rating the opinion of the service quality by the customer.

Factors influencing the productivity of IT services

For controlling of the service productivity it is important to understand how these factors are influencing each other. E.g. standardisation can improve the efficiency, but it can be perceived as negative by customers. Furthermore, the weights must be identified, i.e. how strong each of these factors affects the total productivity. This depends on the type of services, customers, industries, the business and payment model of the provider, the type of contracts, market position, etc. For more information I recommend the PAC Research Report for the project “ProdIT” supported by the German Federal Ministry of Education and Research (http://www.berlecon.de/studien/downloads/121212_ProdIT_Master_Final.pdf).

For measuring the productivity of software development processes usually it is sufficient to focus on the efficiency (see: Measuring Productivity in Software Development). This simplification is possible if influences by the disposition and utilization of employees are negligible and if the process finishes with a defined quality. Otherwise, if the productivity measurement is being used for supporting decisions beyond the delivery, e.g. regarding the market position of a standard software or the cooperation with a (major) customer, external factors as achieving the customer’s objectives, the flexible consideration of new or changed requirements, the quality and reliability of customer provisions, transparency of intermediate results, etc. must be considered.