Those poor guys in IT. They keep the computers running, the e-mail flowing, the databases working and your applications up-to-date. And all they ever seem to get is criticism for running projects over time and over budget.

IT might have transformed the way we do business, but it has one major drawback: it is expensive and management wants to know what they get for their money. Peter Wiggers, consultant for IBM Business Consulting Services and co-author of IT Performance Management, says that most companies today still regard IT purely as a cost. “Its performance in the business is managed in financial terms with limited budgets and strict controls,” he explains. “This suits some companies well, but there are other ways to look at the place of IT in an organisation, and this affects how you track and manage its performance.”

Mr Wiggers says that, for many companies, IT is not just a cost, but provides an important service. In these cases, performance management focuses on maintaining agreed service levels: servers keep running, data is secure, projects are completed on time.

These operational metrics are the ones that IT managers like to tout. If they fulfil their service level agreements, then IT is performing well – irrespective of the performance of the rest of the company. But Richard Sneider, director of InterUnity Group, a research company, argues that these measures of IT performance only look at the efficiency of the IT itself and the presumed improvements that the technology delivers to other employees. “It is easy to make these measurements,” he says. “But what is the effect of IT activity on the overall business? Can these kind of metrics demonstrate the effectiveness of the IT department in helping the company achieve specific business goals?”

According to Mr Wiggers, when companies start to think like this they are recognising that IT is an important partner in the business, sometimes even an enabler. Suddenly, all the technical data becomes meaningless. Instead, the assessment of IT performance becomes much like performance management for any other department or business unit. In other words, activity must be aligned with the business objectives.

“IT performance management is something that CIOs have always been doing, but not in a most disciplined fashion,” Mr Wiggers continues. “Most CIOs are still trying to figure out what to measure, how to measure it and communicate it to senior management. But the real question is how to align the operational activities of the IT department to particular business and financial performance targets.”

Mark Smith, CEO of Ventana Research, agrees. IT managers are faced with a wealth of data but a dearth of understanding. “Before you go about measuring anything, you need a clear framework for the IT performance management programme,” he says. “You need to understand why you are doing it and there needs to be commitment from the top to resource and back the programme.”

After obtaining the support of management, perhaps the trickiest part of establishing an effective IT performance management process is deciding on key indicators – the essential “numbers” that reveal to senior management whether IT is delivering value to the business. “What indicators you choose depend on what sort of company you are,” says Mr Sneider, although meaningful questions will not include dollars per megabyte or the number of attempted viral attacks.

Once the indicators are agreed, gathering the data is relatively easy. Every software package, operating system and piece of hardware will produce and collect operational information. Calculating key performance indicators is merely a question of accessing the appropriate data sources and finding the numbers you need.

Mr Sneider suggests, however, that good performance management programmes should not be entirely inward looking. He says that programmes should also include a competitor benchmarking exercise. He cites a client that was spending $2bn on IT, about twice the industry average for their sector. “Some companies would look at that and say they needed to cut $1bn out of the budget, that they must be wasting it. But the main issue was to find out whether the extra billion was spent to gain competitive advantage. Were they getting an effective return from the investment?”

As more companies have started to implement formalised IT performance management, numerous tools have appeared to help management monitor how well the IT department is doing. These can range from relatively simple balanced scorecard display software to asset, services or risk management packages.

Experts tend to agree that portfolio management packages are the most useful tools available today. This software helps managers to develop a holistic view of all projects and analyse them from a strategic business perspective as well as a financial or functional one. Thus, instead of managing projects on an individual basis, managers can see how the combined performance of all the IT activity in the business is contributing to business objectives. Using this analysis, managers can make informed decisions about project priorities that will best achieve business goals. Nevertheless, there is still no fully consolidated management infrastructure for the CIO. “It will be interesting to see who will provide for the CIO what SAP does for the CFO,” comments Mr Smith.

But Mr Smith also believes that the proliferation of IT performance management tools is hindering managers as much as helping them. “I am not sure that IT performance management today is any better understood,” he says, “because of all the clutter and confusion of vendors of business information tools and all the applications that are supposed to be doing performance management. Organisations tend to buy tools with no idea of how they are going to use them.”

Michael Bitterman, founder of IT Performance Management Group, says that tools are only useful once you have the whole performance management process in place – they can make the data analysis more automated and visual. “A lot of the software is just stoplights, dials and fancy graphics.

“Unfortunately, the underlying understanding of the users is at the beginning stage. Measurement by itself is not going to get you anywhere. You have to use your observations to improve good decision-making.

“The goal of IT performance management is for the CIO to say, ‘I use indicators that tie in directly to the performance of the business as the basis of my decision-making.’ Most CIOs are overburdened and too busy to do this. They are like mechanics trying to change the tyres on a car still going at 60mph.”

So spare a thought for the guys in IT who daily have to deal with irate employees and temperamental technology. At least with well structured performance management they will know where their work fits into the bigger company picture. And if all goes well, they might finally receive some credit for their efforts, too.