How to assess IT performance

Why do we need better measurement of IT performance?

Over the last decade, IT has increasingly become both a driver and differentiator of business. Most industries – banking, finance, insurance, and consumer goods, to name a few – are entirely dependent on IT for their operations. A company’s IT performance has become a factor of competitive advantage. Still, the majority of CEOs have little or no knowledge of complex systems development and almost no way of knowing whether their IT department has sufficient capacity for present and future development, or whether they use allocated resources efficiently.

The Nucleon formula

In Nucleon, the CEO and CIO have a common vehicle of communication that they can use to allocate IT a specific performance number and understand which improvements will have the most impact on performance.

The Nucleon formula was developed by Jeppe Hedaa, owner and CEO of 7N, an international agency for top-performing IT specialists. An in-depth description of the Nucleon formula can be found in his book
Nucleon – The missing formula that measures your IT development team’s performance.

The Nucleon formula gives you a hard performance number and shows the optimal way to improve your IT development capacity.

Free trial: The online Nucleon assessment provides IT project managers with an accurate overview of IT team efficiency in less than 20 minutes – at no cost.

We calculate everything in business – except for IT

Within departments such as Finance, Sales, and (due to the digitalization also) the Marketing function, we can now allocate a number to almost anything. This subsequently helps us to gain insights into the efficiency and performance of that particular part of the business. Even in large organizations, with thousands of employees, senior management has the ability to drill down and evaluate the performance of a single salesperson. However, what about team efficiency in your IT department? Can you drill down and evaluate team efficiency of your IT projects? Or that of a single individual? Most companies do not have the ability to do this, which is why many IT projects experience delays and why actual costs can be many times that of the original estimate. Knowing how big an IT project is, or your headcount, will not tell you if your IT department has the development power to execute a project on time and within budget. 

The Nucleon formula assigns an individual, a team, or an IT department a number – a specific measure of Nucleons. Nucleons can be compared to horsepower in a vehicle. The difference is, however, that horsepower is a metric or mechanical power unit, whereas Nucleon is a tool that you can use to assess the performance potential of your IT department or team. Any CEO, CFO, CIO, and IT Project Manager should be interested in understanding the development power of their IT department, or team, as IT has become one of the most important differentiators in business today.

The nine major contributors of IT performance

Nucleon measures IT performance for an IT team or an IT department across three areas – people, organization, and complexity – with a total of nine performance drivers according to the following:

The People Factor

People are the most important factor in determining your IT performance: an expert in any business can deliver many times more than an amateur. In IT, the difference is exponential –a top-performing IT specialist can deliver results 20-, 40-, and even 80-times that of an average IT professional [1].

Consequently, in complex systems development, a headcount is a meaningless number, as are narrow salary brackets. If one individual can deliver 80-times that of an average IT specialist, that person could, in fact, be paid 80-times the basic wage.

In the Nucleon formula a more conservative scale has been used to measure an individual’s performance level. Individuals are assigned a numeric category between 1 and 10, where 10s perform at a level that is almost two times greater than 9s, 20 times that of an average IT specialist (a 5), and 100 times that of an individual who is classified as a 1.

When calculating the people factor, Nucleon uses established assessments that have been verified by academia, and by years of use, to be accurate predictors of performance. The people factor is assessed by combining estimates of an individual’s experience, skill, industry understanding, personality, cognitive ability, and professional behavior. Read more about how to calculate the people factor in Nucleon.

The Organization Factor

In the Nucleon formula, the organization factor is a summary of the performance drivers presented above that are related to team size, bureaucracy, decision-maker proximity, and optimal people allocation. Depending on how your IT department is organized, “O” in the formula could either have a lift or drag effect on team efficiency and the number of Nucleons. 

Team size

Studies across thousands of IT projects have revealed that the optimal team size consists of three to five developers. Having more than seven developers in a team will harm performance.

Bureaucracy

The Nucleon formula reduces your performance level by up to 20% when bureaucracy shifts focus away from the output. 

Decision-maker proximity

If the decision-maker on a project does not liaise closely with the team, team efficiency will be significantly reduced. The Nucleon formula calculates a maximum of a 32% reduction in performance.

Optimal people allocation

Team efficiency is dependent on team members. A common error is to use “pyramidal thinking”; the idea that a 10 will elevate everyone else. But a 10 will be able to perform at a completely different level when grouped together with another 10. Teams of 10s will make a substantial difference to your business. According to Jeppe Hedaa – if you find 10s, hire them and pay them what they want. How to find 10s is explained thoroughly in the section on the people factor in Nucleon.Nucleon.

The Complexity Factor

Complexity can never increase but only reduce IT performance. Compared to the other factors, complexity is much harder to change, and the changes will take longer to implement. As described above, the complexity factor is the summary of the four performance drivers: culture, methodology, legacy, and architecture.

Culture

Culture has a significant impact on IT performance. Good IT people cannot thrive in an unhealthy culture and will leave your company.

Methodology

In the optimal scenario, all teams throughout the organization use the same methodology. It is, however, crucial to use the same methodology within a team. The Nucleon formula helps you measure the implementation of your methodology and its impact on performance.

Legacy

The legacy score is measured by calculating the share of systems that the individual is working and interfacing with, which are not state-of-the-art systems with strategic value for the IT infrastructure and the future development of the business.

Architecture

The architecture is the overall picture or the masterplan of your IT. In the formula, architecture is measured by the level of state-of-the-art APIs, the ability to use code from other projects or repositories, and whether future use of current projects is enabled.