As usual, I’m a bit behind in my business magazine reading. But the April 1, 2006 issue of CIO has a great article by Christopher Koch on "The Metrics Trap…And How To Avoid It."
It tells the saga of TRW Automotive CIO Joe Drouin, who — at every turn — applauded the fact that his company’s IT spend was less than the industry average. Then, the shallowness of the benchmarked metric became apparent to him when the CO asked him to break out IT spending as a percent of revenue for each business unit. Suddenly, he realized that costs were all over the board.
The article provides a guide to popular IT spending metrics and a useful list of reasons why your IT spending might be out of whack.