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IBM needed to change its measures because its strategy, processes and desired outcomes had changed. The measures that were appropriate for a hardware-focused business were not sufficient for assessing the success of an On Demand services business. New measures were required so that performance could be compared against the new objectives, ensuring the closed-loop system remained effective and relevant.

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IBM's transformation demonstrates the value of using both qualitative and quantitative measures. Quantitative measures (Revenue & profit) identified that business performance was deteriorating, while qualitative measures (Customer feedback & client demands) explained how customer expectations were changing and why the existing approach was no longer effective. Together, these measures provided a more complete picture of organisational performance and informed both the strategic shift to an On Demand Business and the process changes needed to support that new direction.

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IBM was provoked to reinvent itself and did so holistically with adaptation to both ‘process’ and ‘desired output response’. It looked at the redefining the strategy to being an 'On Demand' business focused on services and solutions after comparison of measurement (or review of the closed loop system) showed this was no longer feasible operation. With a new strategy, it transformed its processes, technology and operating model to support this new direction.

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IBM needed to change its measures because its strategy, processes and desired output had changed. Traditional measures linked to the old model would not be enough to assess whether IBM was becoming more agile, responsive and solutions-focused. New measures were needed to track customer satisfaction, responsiveness, service integration, innovation and progress against the On Demand Business model. IBM also needed more timely lead indicators, rather than relying only on lag indicators such as revenue and profitability.

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A qualitative measure was customer feedback showing dissatisfaction with IBM’s fragmented service offerings. This was relevant because customer satisfaction and demand for integrated solutions were critical to IBM’s ongoing viability. Quantitative measures included declining revenues and profitability, which were relevant because they showed financial distress and indicated that the existing business model was not sustainable.

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It was process focussed because IBM changed how it operated to become more agile and responsive. It was also desired output response focused because IBM shifted from a hardware-centric model to a service and solutions-focused On Demand Business.

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As IBM decided to change its processes, it would need to also change its measures to suit the new processes to get an indication to see if the new processes were successful via quantitative measures such as increase in sales, and qualitative measures such as increase in customer satisfaction.

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An example of qualitative measure in the IBM case study would be an increase in customer satisfaction levels gained from feedback received via surveys. A quantitative measure would be both and increase in level of sales and a corresponding increase in the levels of profitability. Information received from use of accounting packages would measure these financial outcomes.

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In this IBM case study, they have embraced both process focus and desired output focus. An example of process focused would be the use of new technologies. An example of desired output focussed would be increasing customer satisfaction levels.

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Changing what was measured is critical to understanding whether changes were effective or ineffective.

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Qualitative – staff, consumer and consumer feedback loops; provides insights not apparent in an analysis of the quantitative measures.

Quantitative – service stream demand, revenue, expenses, and return on investment.

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Both – the desired output focus represented the organisation's strategic goal (‘On Demand Business’); the process focus was the methodology used to achieve it (adapting the service offering to provide value to consumers).

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As IBM was undertaking such a large-scale business transformation, it needed to be able to measure performance on a 360 degree basis. As well as the traditional measures for the success of the business itself (profit, efficiency, investment capability etc), it needed to understand the experience of the customers, partners, clients, and very importantly, their own staff

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Quantitative measures included financial (costs and expenses) to identify redundancy and optimise its position, and which contributed to both measuring success of new integrated processes, such as the client-centric billing processes, while enabling investment into insight and launching new business capabilities.

Qualitative measures include the worldwide tracking study, sales support business partner insights to help with evaluating customer satisfaction

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IBM's reinvention was both 'process' and desired output response' focused. It had to take a whole of organisation approach to enablers like financial systems, inventory, s-business service model to achieve the horizontal integration it needed, in order to deliver timely, responsive, adaptable and flexible services, and therefore value to customers.

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Traditional financial metrics would only track outcomes based on the previous business model which was transactional in nature. Hardware sales is easier (and more appropriately) measured in quantitative measures. IBMs desired future state, however was as a fully integrated solutions partner for their clients, and this would require a broader set of qualitative measures to assess. Importantly, the cultural change and internal processes changes requires to produce this transformation would need to measured in qualitative ways to underpin and support the client delivery goals.

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Both quantitative metrics (sales, revenue, website sales etc) and qualitative (customer feedback, staff performance feedback) were used to track success against the initiatives implemented to transform the business model and achieve the desired business outcomes.

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IBM’s journey to a more sustainable business model was characterised by both process reform and desired outcome response focus. The desired outcome goal was transformed from one that was purely transactional/financial (revenue, sales) to one that more holistically focussed on supply chain integration for customer success. In terms of process, IBM transformed a number of internal processes (eg website self service, integrated client consulting) under the On Demand banner to transform the business from technology hardware supplier to solutions agent for its clients.