Relationship between application and organizational performance

Many CEOs claim to be in the people business. It’s a clear statement that an organization relies on its employees to achieve revenue and margin growth, improve business practices and boost customer satisfaction. Yet, it’s now abundantly clear that an organization’s performance is no longer restricted to people. In fact, using the same logic many fast growth businesses, selling anything from regular to low cost flights, could just as easily claim to be in the technology business.

The simple fact is that organizational reliance on technology, rather than people, to deal with customers, partners, employees and suppliers is growing.

The growing dependence is illustrated by the significant loss in productivity form application performance issues. Alarmingly in 2006, a survey conducted by Yankee Group found that the typical multinational losses more than one million hours of employee productivity a year as the result of poor application performance.

This is because poor application performance translates into poor organizational performance that directly and negatively impacts bottom line measures that include sales, productivity and customer satisfaction. There are many examples that illustrate the potential problems. One famous account saw a US retailer record of 19 per cent drop in profits after a new application deployment caused a string of order fulfillment problems.

Another horror story saw a manufacturer lose ground to competitors after finished products gathered dust in a warehouse instead of sparkling in the showrooms of its retail customers.

The relationship between application and organizational performance is likely to intensify as more companies, old and new create and implement technology led business models to serve new markets and channels with global supply and demand chains.

Single applications are generally reliable, but when they begin interacting to process transactions, problems often occur. A single transaction can result in thousands of interactions, meaning businesses must have an end-to-end view of application performance to understand the impact of deployment problems and resolutions.

The end goal is to relate application performance directly to customers’ strategic goals. For instance, we are working towards service level agreements based on the end –to-end performance of our customers’ application. We want to report performance in terms of customers finding it easy to understand such as the average time that would take an agent in the field to access customer information.

But the issues run even deeper. At what point does delayed response time on a typical website cause dissatisfaction? Emerging standards such as APDEX will help to address these challenges. APDEX – shorthand or Application Performance Index – is an industry initiative focused on understanding the impact of application response times and other technical metrics in business terms like the elusive user satisfaction.

New research informs these initiatives. One study fund that insurance claim processors who require a one second response time, would abandon what they were doing if the delay exceeded four seconds. Another found that a financial services firm whose website usually responded within three seconds started to lose business entirely if response times stretched beyond 12 seconds. In fact, fluctuating response times cause bigger headaches than consistently slow ones.

Insights like these are a start of the drive to measure performance accurately in terms that mean something to senior executives including, but not restricted to, customer satisfaction.

Researchers are continuously looking into possibilities such as a prototype system that uses artificial intelligence to discover how the performance of a company’s business processes, be it sales or customer service, is related to that of the applications that support them.

The goal of the system is to align an organization’s applications, computing resources and networks with its strategic objectives – for example, to reduce costs while simultaneously increasing customer satisfaction levels.

Global firms make ever-changing and challenging demands for constant innovation in application performance management combined with intelligent network services It won’t be too long before even the most complex IT systems become as accountable as a firm’s employees.