Intangible Tangible Benefit/Costs IT Balanced Scorecard Information Economics Cost/Benefits Analysis Return on Investment Internal Rate of Return Net Present Value Payback Period IT Evaluation

Kaplan and Norton developed the balanced scorecard in the early 90's their idea: traditional financial measures should be supplemented with measures concerning customer satisfaction, internal processes, and the ability to innovate these additional measures should assure future financial results and drive the organization towards its strategic goals while keeping all four perspectives in balance they propose a three layered structure for the four perspectives: - mission: "to become our customers' most preferred supplier" - objectives: "to provide our customers with new products" - measures: "percentage of turnover generated by new products" their BSC can be translated into the more specific needs of an IT function The Balanced Scorecard

Financial Perspective ObjectivesMeasures Internal Business Process Perspective ObjectivesMeasures Customer Perspective ObjectivesMeasures Learning and Growth Perspective ObjectivesMeasures How do we look to shareholders ? How do customers see us ? What must we excel at ? Can we continue to improve and create value ? Source: Robert S. Kaplan and David P. Norton, 1994

A generic IT Balanced Scorecard User Orientation How do the users view the IT department? Corporate Contribution How does management view the IT department? Operational Excellence How effective and efficient are the IT processes? Future Orientation Is IT positioned to meet future challenges?

User Orientation How do the users view the IT department? Mission To be the preferred supplier of IS and to exploit business opportunities maximally through IT Objectives preferred supplier partnership with users user satisfaction A generic IT Balanced Scorecard Corporate Contribution How does management view the IT department? Mission To obtain a reasonable business contribution of investments in IT Objectives control of IT expenses business value of new IT projects business value of the IT function

A generic IT Balanced Scorecard Operational Excellence How effective are the IT processes? Mission Efficiently deliver IT products and IT services Objectives efficient software development efficient computer operations efficient help desk function Future Orientation Is IT positioned to meet future challenges Mission Develop opportunities to answer future challenges Objectives permanent training and education of IT personnel expertise of IT personnel research into emerging information technology age of application portfolio

Control of IT Expenses percentage over or under IT budget allocation to different budget items IT budget as a percentage of turnover IT expenses per staff member Business Value of new IT Projects financial evaluation based on ROI, NPV, IRR, PB business evaluation based on Information Economics Business Value of the IT function percentage of the development capacity engaged in strategic projects relationship between new developments/infrastructure investments/replacement investments A generic IT Balanced Scorecard Measures for Corporate Contribution

A generic IT Balanced Scorecard Measures for User Orientation Preferred IT Supplier percentage of applications managed by IT percentage of applications delivered by IT Partnership with users index of user involvement in generating strat. applications index of user involvement in developing new applications User Satisfaction index of user friendliness of applications index of user satisfaction

A generic IT Balanced Scorecard Measures for Operational Excellence Efficient Software Development number of lines of code per person per month average days late in delivering software average unexpected budget increase percentage of projects performed within SLA percentage of maintenance activities Efficient Computer Operations percentage unavailability of mainframe and network response times per category of users percentage of jobs done within time Efficient Help Desk Function average answer time of help desk percentage of questions answered within time

A generic IT Balanced Scorecard Measures for Future Orientation Permanent Education of IT Personnel number of educational days per person educational budget as percentage of total IT budget Expertise of IT Personnel number of years of IT experience per staff member age pyramid of IT staff Research into emerging Technologies percentage of IT budget spent on research Age of the Applications Portfolio number of applications per age category