Performance is defined as the throughput of business transactions compared to user needs, expectations or requirements. IT performance risk is the risk that a company’s IT infrastructure will be unable to perform at required levels due to inferior internal operating practices, technology and/or external relationships that threaten the demand for the organization's products or services.

Performance and scalability are two sides of the same coin. Poor performance may be indicative of a scalability problem, and scalability problems invariably lead to performance degradation. However, performance problems may also arise from causes having nothing to do with scalability, such as the inadequate deployment of system software or poorly designed applications. When looking specifically at performance risk, scalability is considered the number one factor. A company’s IT infrastructure must be able to handle the volume and types of activities, support the transaction levels it will experience after the business is up and running, manage activity spikes from the promotions, and remain accessible under unpredictable business conditions.

Periodic testing is an essential part of assessing the performance of the IT infrastructure. Benchmarks are one kind of synthetic test of performance. A benchmark procedure uses a predefined set of data and measures the results returned by the system. Benchmarks are intended to make comparisons easy. A caveat to benchmark designers, however, is that the data used may not accurately reflect what an actual end user may experience. A crucial design consideration for the benchmark program and the data employed is how to predict real-world performance. Benchmarks must be validated to prove the results are indicative of the performance experienced by the user. In order to evaluate this, the benchmark designers show that the data accurately models the workload encountered on these systems.

Business Risks Related to IT Performance

Perspective performance risk is significant because of its implications. If an organization cannot scale its systems to handle peak loads, end users may become aggravated and not visit the system again, leading to negative images within the organization or in the external marketplace. End users not only look for availability, but they also demand excellent performance. Performance is measured by quick response times and a fully functioning production/service line. If an organization cannot meet IT performance demands the end result will be that a company will lose money.

The following performance risks may arise through poor performance management:

• IT performance may fail to meet promised service levels, resulting in disappointed customers, users, or violated SLAs and contracts.
• Bottlenecks in back office systems can impact system performance, resulting in non-competitive solutions.
• Technology performance may not be easily remedied without costly upgrades or new solutions.
• Hardware and software may not be scalable and may lack the ability to “keep up” with business expansion.
• Performance problems arise due to errors in implementing load balancing or other performance remedies.

Failure to manage performance risk can have the following impact:

• Performance may not be easily remedied given poor design or upgrade choices.
• The effectiveness of the system may remain unknown without defining adequate business and IT service-level objectives.
• Total service may fail to meet client needs due to the performance of systems/processes that were not adequately considered early on.
• Lapses in functionality could result in data integrity problems.

You can find more information about IT performance risk on KnowledgeLeader by accessing the document IT Performance Risk Key Performance Indicators.  Here are other KnowledgeLeader resources that might be of interest to you as well:

• Manage Systems Development Lifecycle (SDLC) RCM
• Define IT Strategy and Organization RCM
• IT Risk Assessment Audit Report