Digital transformation has forever changed the role of the chief information officer, and the role continues to evolve. As a business leader, the CIO must not only collaborate with other departments but also prove the business value the IT department provides.
CIOs have changed the way they’re reporting value because boards and CEOs want to understand the dollar value of what they’re providing, not how many applications were written, for example. While traditional technology-centric metrics remain valuable for IT operations, in the bigger picture, business value is where it’s at.
CIOs are starting to realize that they have to act and operate more as businesspeople and less just as technologists, says Eric Johnson, CIO at digital operations management company PagerDuty. He adds that he has teams that are managing metrics and measuring the value of their individual functions, all the way down to the individual contributor. “But as a CIO, my first question is always, ‘What impact is this specific line item going to make?’”
Reporting is done quarterly, in tandem with business partners, with each team ranking the impact of their projects.
Johnson says that there’s a lot of close coordination with the business about what’s important for them. “Why should [those projects] be prioritized over other things?” he asks. He adds that it’s important to make sure that you have a good operating cadence and operating model around planning, so you can have the highest impact that’s most important to the business. “Real planning [also ensures] that you don’t end up working on urgent things that are unimportant, which is too often the case.”
Eric Johnson, PagerDuty
Joe Locandro, global CIO, enterprise software support provider Rimini Street, made a point of measuring business value in 2008. He even developed some frameworks that would help him measure it.
“There are three main drivers to value. The first is reducing risk — technical debt, systems outages, and cyber risks. The second category is about operational efficiency and lowering the cost to serve, which requires data and analytics,” says Locandro. “The third one is innovation, [such as] using technology to create value by creating new customer journeys or experiences through mobile apps, B2B customer portals, and lately AI and agentic workflows, which really is a paradigm shift in the way enterprises [and] customers interact in the ecosystem.” He adds that it’s true innovation, because it creates new market segments with products that weren’t there in the past.
KPIs and Monitoring Are Key
Though boards and CEOs want to understand the monetary value IT drives, not all value is quantifiable, and not all value derived is cash based. That’s why Rimini Street’s Locandro measures both cash and non-cash benefits.
According to Locandro, value measurement makes the business more disciplined when thinking about the opportunity cost of capital. “You can spend $10 million more on marketing, supply chain optimization, or an IT project, because there’s finite capital in the organization. When you have a CIO with a seat at the executive table who can argue that for every dollar he receives the business will get $1.30 or $1.80 in return, other leaders such as from marketing or production must do the same thing [when competing for budget].”
Early on, Locandro mapped metrics over quarters and years, so he could show the cost/benefit ratio using a Boston grid. One axis was value (low to high). The other was strategic (upper right-hand corner) and compliance (lower right-hand corner).
Locandro says that when you map your portfolio over one, three, or five years, you can see if the investment is moving up the quadrants or still stuck in that same quadrant. It gives an indication of its maturity or the view of it in that organization. “Every company I’ve gone into, when I first get there, I look at the roadmaps [and] reports. It’s all about activity, how busy they are, but what’s the outcome? Changing from activity reporting to outcomes reporting is a paradigm shift. CIOs today must be just as financially and business proficient as technically proficient to understand the cost/benefit ratios and opportunity cost of capital.”
Focus on Outcome Versus Output
Orla Daly, CIO at corporate enterprise learning company Skillsoft, reminds her team often that outcomes are more important than output, so instead of reporting in terms of project delivery, they’re reporting on progress made on the expected impact.
“As we think about our transformation initiatives, there are KPIs set at the beginning which could be around productivity enhancements but also can be more aligned to drive better customer experience, increase revenue, etc.,” says Daly.
Daly says that they have their own operational metrics that are more standard activities around uptime and automation. “We have a dashboard that allows us to see the number of hours we saved through automation, or risk reduction.”
Orla Daly, Skillsoft
Marco Bill, CIO at open-source solutions provider Red Hat also makes a point of working closely with the business to define and track business outcomes. He says that instead of just looking at IT metrics in isolation, they work closely with the business to identify key areas where technology can drive tangible improvements. “For example, a significant measure for us is order cycle time. By optimizing our systems and processes, we aim to reduce the time it takes from a customer placing an order to its fulfillment, directly impacting customer satisfaction and operational efficiency. This allows us to clearly demonstrate how our IT initiatives contribute to the organization’s strategic goals.”
Bill meets with business stakeholders to share transparent, data-driven reports that clearly articulate the following:
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The IT initiatives undertaken
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What IT did to impact the outcome
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Benefits to the business, such as a rising customer satisfaction score, improved on-time delivery rates and how those things contributed to increased revenue and/or reduced operational costs.
“These QBRs serve as a critical platform for open dialogue, ensuring that our IT efforts remain aligned with business priorities and that our contributions are clearly understood and validated by those we serve,” says Bill. He adds that while some core KPIs might remain consistently important, they frequently adapt their measures to reflect new strategic priorities, emerging technologies, or shifts in the market. “This ensures our IT value reporting remains highly relevant and continues to demonstrate our contribution to the most critical business outcomes at any given time. Our QBRs are key to discussing and agreeing upon these evolving measures with our stakeholders.”
Other Approaches
Mark Sherwood, CIO at professional information, software solutions, and services provider Wolters Kluwer, says since IT can’t drive revenue, successes tend to be measured in terms of reduced costs, cost avoidance, and customer satisfaction.
“I want us to be seen as a value center, [because] I hate [the term], ‘cost center.’ Cost center makes it sound like all we do is sit around and spend money,” says Sherwood. “I like the idea of a ‘value center’ because I think it drives the right sort of thought process and culture within the organization.”
Sherwood meets with the CEO monthly to review the value proposition and progress made toward it. He says that they do a CSAT survey twice a year and send it out to everybody in the company. “The scores are great to see. We’re always trying to make sure we’re providing value back, but it’s the comments people take the time to put in, whether it’s a complement or constructive feedback.”
When it comes to cost avoidance, Wolters Kluwer replaced a major carrier with an SDN.
“We can easily show what the cost reduction value is on an ongoing basis, so not just the first year, but the second and third and so forth,” says Sherwood. “We’ve also moved on from an on-prem data center, so the vast majority of all our work is in the cloud now.”
Both Sherwood and the CTO at Wolters Kluwer make a point of aligning to the same set of goals, so they can provide a united front back to the business.
He says that how they report has become more of a real process than maybe it used to be. “I don’t necessarily want us to be in people’s faces all the time, but I think it should be something that’s viewed as value provided to the company,” says Sherwood. He adds that the critical piece has been around the relationship with the finance organization and the CFO. “He’s been a solid partner in terms of saying what value is. It’s a team effort that’s much more formalized, so when you start to add up the numbers over a whole year, it’s impressive.”
Wolters Kluwer also has a team of business relationship managers whose job it is to maintain the relationship between IT and the business. “These teams have a foot in both camps and can speak the language of both teams. Having that is important to providing value,” says Sherwood. “I think it helps us bridge that gap.”
Mark Sherwood, Wolters Kluwer
Kristen Costagliola, CTO of MSP and IT platform provider Syncro, measures IT value by looking at how well her team is hitting their SLAs on daily work. More strategically, she also assesses whether key projects have achieved the desired business outcomes. This includes looking at project delivery timelines, performance metrics, quality results, and overall ROI.
She says that the proof depends upon which success metric they are evaluating. “For delivery timelines, we measure how initial estimates compare to actual delivery time. For performance, we use monitoring tools to ensure that non-functional requirements are met,” says Costagliola. “Linking a direct correlation to increased revenue or retention is trickier to measure because there often isn’t a single reason that moves the needle. So, we look at indicators such as customer adoption and usage of new features to determine success.”
Costagliola’s team reports on project status weekly to understand how projects are tracking towards completion. For success metrics, they generally report after a project wraps up, depending on the project size.
For major initiatives, she says they continue tracking results for at least a quarter post launch to ensure things are going well. “I have made changes to report on value more frequently and more regularly across the organization. It is important for all company stakeholders to understand what we are doing and why we are doing it. This is essential when you are making significant investments in technology,” Costagliola says.
However, the largest catalyst of change was the repeated questions across the organization on what IT was working on and how success was being measured. “We realized that people weren’t seeing the full picture of what our teams were delivering. This feedback spurred us to improve how we communicate progress and value,” says Costagliola. “The more transparent and aligned you are, the easier it becomes to earn trust, justify investment and demonstrate the strategic importance of your team’s work.”
