Performance Management is the mechanism to drive continual improvement in your IT organization. To know whether actions you take as a manager have the impact you believe they will, you need to have some measurement of your current state and periodic measurements to assess changes (good or bad) over time.

At its simplest, you need to establish an expected value and an actual value. In Project Management, the most common measurements of project execution performance are forecasted time line to actual time line; forecasted cost to actual cost; and forecasted FTE for actual FTE. In Capacity Planning, you may measure predicted rate of growth to actual growth rate for storage, servers, network bandwidth and so on. For software licensing compliance, you track the number of licenses you have purchased vs. actual instances installed.

This generalized model of a predicted value to an actual value can make for simple metrics development that can provide insight into trends in your IT organization.