1. Measuring and Improving Corporate IT Performance through the Balanced Scorecard (Part 2)

2. Contents IT BALANCED SCORECARD AND BUSINESS BALANCED SCORECARD
IT BALANCED SCORECARD PRACTICE

3. IT Balanced Scorecard and Business Balanced Scorecard
IT has to focus more on creating business value
IT has to shift from the efficiency and cost cutting concern to
a better support of today's and future business needs
an IT balanced scorecard has to address IT operational and
business strategic concerns
operational: monitoring within the IT department (IT manager)
strategic: IT's contribution to the business (CIO)
Included IT-Based Capabilities in a Balanced Business
Scorecard (Nolan Norton Institute)
Strategic IT Balanced Scorecard (GartnerGroup)

4. IT Balanced Scorecard and Business Balanced Scorecard
CEO
CIO
Department 1
Department 2
Systems Development Manager
Business Balanced Scorecard
Data Center Manager
IT Balanced Scorecard

5. IT Balanced Scorecard and Business Balanced Scorecard (Nolan Norton)
Relationship between IT and business scorecards
BALANCED BUSINESS SCORECARD
Business planning Senior management Business value of IT
STRATEGIC IT BALANCED SCORECARD
IT planning IT management (CIO) Effectiveness of IT
OPERATIONAL IT BALANCED SCORECARD
IT supply planning IT supply management Effectiveness and
(IT manager) efficiency of
IT supply

6. IT Balanced Scorecard and Business Balanced Scorecard (Nolan Norton)
A bank included IT-based capabilities in it's balanced business scorecard
Net income
growth
Financial
perspective
Operating costs down
Sales growth
Make products more accessible
through new and old
distribution channels
Customer
perspective
Improve "low cost" perception
of potential & current clients
Internal
perspective
Reduce costs
by designing
IT enabled
processes
Start up call centers and
automated electronic
distribution channels
for internet
Learning and
growth
perspective
Increase employee
productivity through
ubiquitous capabilities
Improve awareness about
IT opportunities in the
context of business
activities
Learn employees to
use productivity tools

7. IT Balanced Scorecard and Business Balanced Scorecard (Nolan Norton)
A retailer included IT-based capabilities in it's balanced business scorecard
Increase sales by
internal growth
Financial
perspective
Increase sales with current
clients through higher client
satisfaction, minimize
out-of-stock
Win new clients
through excellence in
service and products
Customer
perspective
Internal
perspective
Lower costs of staff and
materials by using more
efficient planning models
New marking effort
by introduction of
client loyalty card
linked to direct
marketing systems
Automated planning of
supplies by integrating
POS with external suppliers
to distribution centers
Learning and
growth
perspective
Train employees in
use of IT sales
forecasting tools
Train employees in
service and selling
skills

8. IT Balanced Scorecard and Business Balanced Scorecard (Gartner Group)
Cascade of Business and IT balanced scorecards
Financial EPS
Customer Retention
2. Wallet share
Internal Service delivery
2. New services
Innovation 1. Customer profiles
2. Web interface
BUSINESS SCORECARD
Customer Web interface
2. Customer profiles
Technology 1. Web tools
2. Data warehouse
Process Rapid prototyping
2. Data mgmt
People Recruitment
2. Training
IT SCORECARD

9. Key Goal Indicators Definitions
Describe the outcome of the process (i.e., measurable after the fact); are measures of “what,” and may describe the impact of not reaching the process goal
Are indicators of the success of the process and its business contribution
Focus on the customer and financial dimensions of the balanced scorecard

10. Key Goal Indicators Examples Increased level of service delivery
Number of customers and cost per customer served
Availability of systems and services
Absence of integrity and confidentiality risks
Cost-efficiency of processes and operations
Confirmation of reliability and effectiveness
Adherence to development cost and schedule
Cost-efficiency of the process
Staff productivity and morale
Number of timely changes to processes and systems
Improved productivity (e.g., delivery of value per employee)

11. Key Performance Indicators
Definitions
Are measures of “how well” the process is performing
Predict the probability of success or failure
Focus on the process and learning dimensions of the balanced scorecard
Are expressed in precise, measurable terms
Should help in improving the IT process

12. Key Performance Indicators
Financial
Examples
Number of IT customers
Cost per IT customer
Cost-efficiency of IT processes up
Delivery of IT value per employee
Customer
Process
Level of service delivery
Satisfaction of existing customers
Number of new customers reached
Number of new service delivery channels
Availability of systems and services
Developments on schedule and budget
Throughput and response times
Amount of errors and rework
Information
Learning
Staff productivity and morale
Number of staff trained in new techno/services
Value delivery per employee
Increased availability knowledge systems

13. Critical Success Factors
Definitions
Are the most important things to do to increase the probability of success of the process
Are observable—usually measurable—characteristics of the organisation and process
Focus on obtaining, maintaining and leveraging capability, skills and behaviour

14. Critical Success Factors
Used to interpret business objectives in terms of actions required to achieve them
Defined as “areas in which satisfactory results will ensure successful competitive performance”
Typically 5-8 CSFs per objective
Key Performance Indicators (KPIs) used to measure attainment of CSFs

15. Determining Critical Success Factors
Identify objectives
Identify CSFs against each objective
Consolidate recurring CSFs across objectives
IT CSF Questions
- How can IT help attain the CSFs?
- How do existing systems inhibit attainment of CSFs?

16. Problems/Concerns with CSFs
Focus primarily on management control
Tends to be internally focused & analytical instead of creative
Reflect executive management style
Often ‘critical’ is not adequately differentiated from ‘important’

17. Consolidated BSC & CSF
Critical Success Factors can be linked to Balanced Scorecard
Determine CSF from BSC Objective & Measures by identifying actions that would allow objectives to be met
Model may extend one step further to IT/IS needs to carry out Actions/CSFs

18. Maturity Models Definitions
Refer to business requirements (KGIs) and the enabling aspects (KPIs) at the different levels
Are a scale that lend themselves to pragmatic comparison, where the difference can be made measurable in an easy manner
Are recognisable as a profile of the enterprise in relation to IT governance and control
Assist in determining as-is and to-be positions relative to IT governance and control maturity and analyse the gap
Are not industry-specific nor generally applicable. The nature of the business determines what is an appropriate level.