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   Background, Purpose, And Position   Practice Themes   The Balanced Scorecard Offering   Thoughts On Strategy   Str...
3/104
Positioning      4/104
Positioning   BSC has many confusing and sometimes conflicting definitionsIT Performance Management applies these concepts...
6/104
Success starts with the management of intangible assets                                                          7/104
Drivers† “The Balanced Scorecard: To Adopt or not to adopt?” Kevin Hendricks, Larry Menorand Christine Wiedman, Ivey Busin...
Drivers             Balanced Scorecard would more likely benefit firms that             followed a Prospector or Analyzer ...
Drivers   10/104
Drivers            “There is no such thing as a free lunch,” — Milton Friedmann† “New Math for the New Economy,” Baruch Le...
DriversIdentify the needs of the IT department that focus on …                                                            ...
13/104
ApproachBalanced Scorecard Is 1 Of 4 Needed Capabilities For Success                  Business and Technology Governance  ...
ApproachMission and Vision are starting points for developing a BalancedScorecard from the “top down.” Without a Mission a...
ApproachIdentifying the strategic initiatives that support the organization strategies is keybeneficial outcome of deployi...
ApproachThe four phases of the Balanced Scorecard deployment are broad andgeneral purpose, focused on increasing maturity....
Approach      Readiness               Mobilization                   Alignment                   Sustainment              ...
Approach† Alignment: Using Balanced Scorecard to Create Company Synergies,Norton and Kaplan, Harvard Business School Publi...
Approach                                            Clarify mission &                              Mission       Vision st...
Approach      Focusing on Goals, the Success Criteria separates the measures of success      from the task progress indica...
Approach                                                                 GOAL(s)                                Question 1...
Approach                        IT Development                            Balanced                           Scorecard Bus...
Approach   24/104
Themes† Michael E. Nagel, Vice President, Balanced Scorecard Collaborative                                                ...
Themes  26/104
ThemesIf executives are having a normal meeting and talking about strategy, butinstead focusing on tactics – then they’re ...
Themes  28/104
Themes  29/104
Themes† Advice from Bruce W. Harber, CEO North Shore Health Board, Vancouver, B.C.                                        ...
Positioning      31/104
PositioningFrom, Functions of an Executive, Chester Barnard, 1938.Barnard laid the foundations of management theory. Berna...
Positioning      33/104
Positioning      34/104
PositioningThese are core issues with almost every organization                                                           ...
Positioning The original 4–quadrant BSC fails to make the cause and effect connection between action and outcome – strateg...
PositioningA scorecard practice should move the client toward the 3rd generation.They’ll have to get there eventually in o...
Positioning      38/104
Positioning      39/104
Positioning      40/104
PositioningStrategies fail for a simple reason – their inability to be executed                                           ...
Positioning     The four primary barriers that lay the seeds of strategy failure …              Only 10% of organizations ...
Positioning     Instituting change is at the heart of a successful Scorecard     In many studies of patients who have unde...
PositioningAll five components of strategy are needed for true success Vision      Skills     Incentives   Resources Actio...
Positioning      The BSC must be placed in the context of process improvementDeriving Enterprise-Based Measures Using the ...
PositioningA simple set of goals provides a good staring point for a BSC              Strategies            Key Performanc...
Positioning                                                                      Stakeholder Perspective                  ...
Positioning  Selection Key Performance Indicators identified Connection align KPIs with Critical Success Factors  Collecti...
Positioning        Vision              Top Down   Positively Impact        Making the effect-and-cause connection between ...
Positioning       Vision           Bottom Up  Positively Impact     Making the cause-and-effect connection between Key    ...
PositioningMany organizations have operational metrics in place. Identifying the Keyperformance measures is the starting p...
Positioning                                           Stakeholder Perspective                      Service Attributes     ...
53/104
StrategyStrategy is not the same as operational excellence …                                                          54/104
Strategy                         Obtaining                         commitment for a                       Staking out the ...
Strategy† “The Balanced Scorecard: To Adopt or not to adopt?” Kevin Hendricks, Larry Menorand Christine Wiedman, Ivey Busi...
StrategyMission and Vision provide the anchors for developing strategy. Withouta mission and vision the underlying perform...
Strategy                   To be effective, the scorecard should have attributes like these† Implementing Balanced Scoreca...
Strategy      It is easy to fall into the trap of being metrics focused rather than strategy         focused. Make sure th...
Strategy                                 It is VALUE we’re after with the IT Balanced Scorecard                          ...
StrategyIn order to deliver value we must first be ready to deliver value                                                 ...
Strategy    ¾’s of the BSC value comes from intangible assets.Only the financial quadrant can be traced to tangible assets...
StrategyAn example of intangible asset manage built around a scorecard   Strategy converts intangible assets into tangible...
64/104
65/104
Planning                            Planning is a continuous improvement processInformation Outlook Online, March 2005    ...
Planning                       Role Responsibilities                                      Assumes ownership for the Balan...
Planning                                                                                                               1  ...
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Beneficial Outcomes            The benefits appear “soft” at first, they are “booked” as wellAllan R. Bailey, Chee W. Chow...
Beneficial Outcomes             71/104
72/104
73/104
Measurement      74/104
Measurement             Information Needs   Techncial &       User Feedback                                 Management    ...
Measurement    People           Procedures                Data             Software           Hardware Owner of the      ...
MeasurementGuide to a Balanced ScorecardPerformance Management Methodology,National Partnership for ReinventingGovernment,...
Measurement      78/104
Measurement                 It’s easy to create “ugly” measures, so test the outcomes of each measure before use“What to d...
Measurement     Too many CXOs judge implementations by measuring the technical     capacity of a project, instead of consi...
Measurement                  Each metric needs to be tested against these attributes      1.      2.      3.      4.      ...
Measurement          Perverse metrics, linked to perverse incentives, always yields to perverse results    1.    2.    3. ...
Measurement                          Metrics are useful, indicators are better suited for strategyDeriving Enterprise-Base...
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Stakeholder Perspective                      Service Attributes                                     Relationships         ...
“Do the right things, do them well, do them with less, to…”Business Results                        ……reduce overall       ...
89/104
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Enterprise mission    % mission improvement (cost, time, quantity) attributed togoals                    IT solutions and...
Customer             % cooperative customer and IT applications designpartnership and      % joint development service l...
 % procurement exception to architecture                     standardsArchitecture                    N variations from ...
Workforce       N staff trained by skill areacompetency      % staff training uses new technologies andand              ...
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http://www.balancedscorecard.org/http://www.bscol.orghttp://www.continuinged.uncc.edu/certificate/proc_mgmt/proc-mgmt.htmh...
http://www.casewise.com/index.php                                    99/104
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These books are Mandatory reading for anyone claiming to practice the discipline ofBalanced Scorecard                     ...
These papers and articles are reading for background, ideas, and guidance        www.ejise.com                            ...
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Notes on balanced scorecard

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Defining business value in units meaningful to the business and connecting these to the measures of performance for the project that produce this business value.

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Notes on balanced scorecard

  1. 1. 1/104
  2. 2.  Background, Purpose, And Position Practice Themes The Balanced Scorecard Offering Thoughts On Strategy Strategy Planning Beneficial Outcomes Measurement Sample Balanced Scorecards BSC Training Resources References 2/104
  3. 3. 3/104
  4. 4. Positioning 4/104
  5. 5. Positioning BSC has many confusing and sometimes conflicting definitionsIT Performance Management applies these concepts to the strategic, tactical and operational aspects of IT 5/104
  6. 6. 6/104
  7. 7. Success starts with the management of intangible assets 7/104
  8. 8. Drivers† “The Balanced Scorecard: To Adopt or not to adopt?” Kevin Hendricks, Larry Menorand Christine Wiedman, Ivey Business Journal, Nov/Dec 2004 8/104
  9. 9. Drivers Balanced Scorecard would more likely benefit firms that followed a Prospector or Analyzer strategy, and likely not benefit firms that followed a Defender or Reactor strategy.† “The Balanced Scorecard: To Adopt or not to adopt?” Kevin Hendricks, Larry Menorand Christine Wiedman, Ivey Business Journal, Nov/Dec 2004 9/104
  10. 10. Drivers 10/104
  11. 11. Drivers “There is no such thing as a free lunch,” — Milton Friedmann† “New Math for the New Economy,” Baruch Lev, Fast Company, 31, January, 2000 11/104
  12. 12. DriversIdentify the needs of the IT department that focus on … 12/104
  13. 13. 13/104
  14. 14. ApproachBalanced Scorecard Is 1 Of 4 Needed Capabilities For Success Business and Technology Governance Competitive Advantage Real Options Enterprise Sustained Capabilities Balanced Based Program & Based Scorecard Portfolio Project Planning Management Management Enterprise Class Tools and Work Processes  Readiness Assessment  Mobilization  Alignment  Sustainment 14/104
  15. 15. ApproachMission and Vision are starting points for developing a BalancedScorecard from the “top down.” Without a Mission and Vision, theunderlying performance measures have no foundation on which to rest. Balanced Scorecard Mission Why We Exist Values Guiding Principles Vision Picture of the Future Strategy Differentiating activities 15/104
  16. 16. ApproachIdentifying the strategic initiatives that support the organization strategies is keybeneficial outcome of deploying a Balanced Scorecard in IT General Mission What do we do? Strategic Themes Why is it important? Desired Outcomes What results do we want? How will we know when we’ve Metrics achieved these results? What specific actions do we Strategic believe will lead to these results? Initiatives Connecting specific actions with the strategy of the firm is the role of a Balanced Scorecard 16/104
  17. 17. ApproachThe four phases of the Balanced Scorecard deployment are broad andgeneral purpose, focused on increasing maturity. The details of thedeployment must be developed in order to achieve success Readiness Mobilization Alignment Sustainment Assess readiness  Mobilize change  Translate the  Motivate the staff for BSC initiative through executive strategy  Govern the Identify gaps & leadership  Align the organization closure plans organization Conduct  Achieve  Define and clarify  Focus the staff Readiness commitment from the strategy  Align Assessments the top connections accountability and • Cultural  Build the  Establish long rewards • Operational executive team term targets  Develop human • Data  Build the case for  Communicate the capital • Governance change strategy  Re–define Identify and close  Identify initial  Connect measures governance gaps KPIs, CSFs, Goals with strategies  Get results Prepare for and Initiatives deployment  Identify target strategies Discovery Missionary Change Agent Strategy Focused 17/104
  18. 18. Approach Readiness Mobilization Alignment Sustainment  Translate the strategy Assess readiness for BSC initiative  Mobilize change through executive  Align the organization  Motivate the staff  Govern the The four phases of the Identify gaps & leadership organization BSC deployment are a closure plans sequence that builds Conduct Readiness  Achieve commitment  Define and clarify the  Focus the staff Assessments from the top strategy connections  Align accountability the increasing maturity • Cultural • Operational  Build the executive team  Establish long term targets  and rewards Develop human of the scorecard. • Data  Build the case for  Communicate the capital • Governance change strategy  Re–define Identify and close  Identify initial KPIs,  Connect measures governance gaps CSFs, Goals and with strategies  Get results Prepare for Initiatives deployment  Identify target strategies Discovery Missionary Change Agent Strategy Focused With the scorecard in place, the Capabilities needed to fulfill the strategy, the options trade–offs for existing and future projects, and the enterprise tools to manage this portfolio. Business and Technology Governance Competitive Advantage Real Options Enterprise Sustained Capabilities Balanced Based Program & Based Scorecard Portfolio Project Planning Management Management Enterprise Class Tools and Work Processes 18/104
  19. 19. Approach† Alignment: Using Balanced Scorecard to Create Company Synergies,Norton and Kaplan, Harvard Business School Publishing Company, 2006 19/104
  20. 20. Approach Clarify mission & Mission Vision statement Vision Develop Strategic Goals Strategic Goals Balanced Scorecard Derive Strategy Map Sub–Goals Sub–Goals Stakeholder Perspective Service Attributes Relationships Image Recognition Stakeholder Application Quality Time to Delivery System Capabilities of Value Relations Internal Processes Perspective Map Sub-Goals to Operations Management Stakeholder Management Innovation Processes Regulatory Processes each quadrant of the Learnings & Growth Perspective Human Capital Information Capital Balanced Score Card Culture Organizational Capital Leadership Alignment Teamwork Budget Perspective Project Budget Resource Performance Management Management GQ(I)M KPI’s, Targets, Goal Question For each BSC Quadrant CSF’s for each Indicator Objective Measure Apply GQ(I)M to: Indicators – Identify measurement areas Trouble Reports – Develop measurement goals – Pose relevant questions ModuleDerived from – Postulate indicators Performance Data“Developing Enterprise–WideMeasures for Tracking – Identify data elements ElementsPerformance,” SoftwareEngineering Institute 20/104
  21. 21. Approach Focusing on Goals, the Success Criteria separates the measures of success from the task progress indicators. This separation distinguishes physical progress from business value – both are needed, but they are not the same. Success Goal Criteria Strategy to Success Indicators accomplish the goal % 1 2 3 4 1 2 3 4 Reporting Periods Analysis Indicators 100 80 60 Tasks to Accomplish 40 20 goal Tasks Progress Indicators Task 1 Task 2 100 Actual Test Cases Complete 80 Task 3 60 • 40 Planned Functions • 20 Task n Reporting PeriodsDerived from “Developing Enterprise–Wide Measures for Tracking Performance,” Software Engineering Institute” 21/104
  22. 22. Approach GOAL(s) Question 1 Question 2 ••• Question n SLOC Staff-hours Trouble Reports Milestone DatesDerived from “Developing Enterprise–Wide Measures for TrackingPerformance,” Software Engineering Institute`` 22/104
  23. 23. Approach IT Development Balanced Scorecard Business ITBalanced BalancedScorecard Scorecard IT Operations Balanced Scorecard 23/104
  24. 24. Approach 24/104
  25. 25. Themes† Michael E. Nagel, Vice President, Balanced Scorecard Collaborative 25/104
  26. 26. Themes 26/104
  27. 27. ThemesIf executives are having a normal meeting and talking about strategy, butinstead focusing on tactics – then they’re not fulfilling their roles asleaders of their respective organizations 27/104
  28. 28. Themes 28/104
  29. 29. Themes 29/104
  30. 30. Themes† Advice from Bruce W. Harber, CEO North Shore Health Board, Vancouver, B.C. 30/104
  31. 31. Positioning 31/104
  32. 32. PositioningFrom, Functions of an Executive, Chester Barnard, 1938.Barnard laid the foundations of management theory. Bernard is widelycredited with having originated the “Systems” approach to the study oforganizations. He recognized that in order for the organization to survive inthe external environment and to succeed in the long run, it was necessaryto sustain cooperation from employees by satisfying the condition ofefficiency. 32/104
  33. 33. Positioning 33/104
  34. 34. Positioning 34/104
  35. 35. PositioningThese are core issues with almost every organization 35/104
  36. 36. Positioning The original 4–quadrant BSC fails to make the cause and effect connection between action and outcome – strategy maps replace this approach and show how to “connect the dots”1.2.3. 36/104
  37. 37. PositioningA scorecard practice should move the client toward the 3rd generation.They’ll have to get there eventually in order to impact their organization– might as well start out headed in that direction on day one. First Generation Second Generation Third Generation BSC as a BSC as a BSC as a framework for performance management organizational change evaluation system system • Performance measures • Organizational learning • Organizational change • Breakdown of strategy • Identifying and solving • Strategy maps • Four perspectives operational problems • Strategy patterns • Strategic objectives, • Feedback for planning • Integration of budget performance indicators, key • Organizational and personnel plans performance parameters knowledge • Changing the • Performance linked to organizational behavior compensation 37/104
  38. 38. Positioning 38/104
  39. 39. Positioning 39/104
  40. 40. Positioning 40/104
  41. 41. PositioningStrategies fail for a simple reason – their inability to be executed 41/104
  42. 42. Positioning The four primary barriers that lay the seeds of strategy failure … Only 10% of organizations successfully execute their strategies  Vision Barrier  Only 5% of the workforce  85% of executive teams spend understands the strategy less than one hour per month  Informed action is virtually discussing strategy impossible without sound  Without a clear and concise knowledge of the organizations blueprint for success – the strategy strategy – manage will focus  People Barrier on financial and operational details  Only 25% of managers have  Resource Barrier incentives linked to strategy  Incentives linked to short-  60% of organizations don’t term financial targets, leads to link budget to strategy less than rational decision  Based on strategy, what making at the expense of long initiatives distinguish us from term sustainable success our competition?† Norton and Kaplan and, in Balanced Scorecard Diagnostics: Maintaining Maximum Performance,Paul R. Niven, John Wiley & Sons and Strategy Safari, Mintzbert, Ahlstrand and Lampel, The FreePress, 1998. 42/104
  43. 43. Positioning Instituting change is at the heart of a successful Scorecard In many studies of patients who have undergone coronary bypass surgery, only one in nine people, on average, adopts healthier day-to-day habits […] [even if] they clearly see the value of changing their behavior.“The Neuroscience of Leadership,” David Rock and Jeffery Schwartz, strategy+business, Summer 2006 43/104
  44. 44. PositioningAll five components of strategy are needed for true success Vision Skills Incentives Resources Action Plan Success Vision Skills Incentives Resources Action Plan Confusion Vision Skills Incentives Resources Action Plan Anxiety Incentives Resources Action Plan Gradual Vision Skills Change Vision Skills Incentives Resources Action Plan Frustration Vision Skills Incentives Resources Action Plan False Starts 44/104
  45. 45. Positioning The BSC must be placed in the context of process improvementDeriving Enterprise-Based Measures Using the Balanced Scorecard and Goal-Driven measurement Techniques, WolfhartGoethert and Matt Fisher, Software Engineering and Measurement Analysis Initiative, CMU/SEI-2003-TN-024, October 2003 45/104
  46. 46. PositioningA simple set of goals provides a good staring point for a BSC Strategies Key Performance Indicators  Customer satisfaction User Be the supplier of  User survey score Orientation choice for services  Percentage of projects delivered on time  Total business impact Focus resources on  Service budget as a percentage of revenue Business attaining business Value strategies through  Cost impact for each release effective delivery  Percentage of budget allocated to new development  Budget versus actualOperational Deliver timely andat  Staff utilizationExcellence effective services or under budget  Staff turnover  Historical availability Develop internal Future capabilities toto learn  Number of documented best practices Orientation and innovate exploit future  Existence of Process Architecture opportunities 46/104
  47. 47. Positioning Stakeholder Perspective Service Attributes Relationships Image Recognition Stakeholder Application Quality Time to Delivery System Capabilities of Value Relations Internal Processes Perspective Operations Stakeholder Innovation Regulatory Management Management Processes Processes Learnings & Growth Perspective Human Capital Information Capital Organizational Capital Culture Leadership Alignment Teamwork Budget Perspective Project Budget Resource Performance Management ManagementConnecting Critical Success Factors with Key Performance Indicators providestraceability from execution at the project level to fulfillment of strategicobjectives. 47/104
  48. 48. Positioning Selection Key Performance Indicators identified Connection align KPIs with Critical Success Factors Collection Manage KPI process Dashboards, Strategy Maps, PerformancePresentation Indicators Action Drive performance improvement 48/104
  49. 49. Positioning Vision Top Down Positively Impact Making the effect-and-cause connection between Financial Performance Strategy and Key Performance Indicators is the role of an Balanced Scorecard automation systemStrategic Objective Performance Goal Critical Success Key Performance Factor (CSF) Indicator (KPI) Be The Preferred Supplier Of Business Provide on-time, on- Budget Variance BPI ≥ 0.95 Applications budget, on- Schedule Variance CPI ≥ 0.97 Traceable to specification for our Increased Customer enterprise applications Function Points Revenue % Requirements Delivered ≥ 90% Variance Target Cost of Delivery Declining Cost per Provide scalable Impact Customer platform for SLA Compliance ≥ acquisition and Performance Impact 0.98 growth of our customer base Global Operational 24/7/365 Non-Stop Baseline Operations Why What How Measures Flow Down from Strategy to KPIs 49/104
  50. 50. Positioning Vision Bottom Up Positively Impact Making the cause-and-effect connection between Key Financial Performance Performance Indicators and Strategy is the role of an Balanced Scorecard automation systemStrategic Objective Performance Goal Critical Success Key Performance Factor (CSF) Indicator (KPI) Be The PreferredSupplier Of Business Provide on-time, on- Budget Variance BPI ≥ 0.95 Applications budget, on- Schedule Variance CPI ≥ 0.97 Traceable to specification for our Increased Customer enterprise applications Function Points Revenue % Requirements Delivered ≥ 90% Variance Target Cost of Delivery Declining Cost per Provide scalable Impact Customer platform for SLA Compliance ≥ acquisition and Performance Impact 0.98 growth of our customer base Global Operational 24/7/365 Non-Stop Baseline Operations Why What How Measures Flow Up from KPIs to Strategy 50/104
  51. 51. PositioningMany organizations have operational metrics in place. Identifying the Keyperformance measures is the starting place for developing a strategybased Scorecard Vision Moving from ad hoc collections of performance metrics to Key Performance Metrics (KPI) to a Strategy Focused Organization (SFO), is a natural progression for many organizations. Positively Impact Financial Making the connections between “ad hoc” metrics to KPI’s then to CSF’s creates a Line of Sight Performance between tactical performance measurement of strategy.Strategic Objective Performance Goal Critical Success Factor Key Performance (CSF) Indicator (KPI) Be The PreferredSupplier Of Business Provide on-time, on- Budget Variance BPI ≥ 0.95 Applications budget, on- Schedule Variance CPI ≥ 0.97 Traceable to specification for our Increased Customer enterprise applications Function Points % Requirements Revenue Delivered ≥ 90% Variance An ad hoc collection of Target existing operational Cost of Delivery Declining Cost per performance metrics. Provide scalable Impact Customer Each metric was platform for created for a good Performance Impact SLA Compliance ≥ 0.98 acquisition and growth reason, but not of our customer base Global Operational 24/7/365 Non-Stop necessarily for a the Baseline Operations measurement of a strategic objective Why What How Measures Flow Up from Ad Hoc to KPIs to CSF to Goals to Strategy 51/104
  52. 52. Positioning Stakeholder Perspective Service Attributes Relationships Image The Metrics Map describes the Bi-directional Recognition Stakeholder relationships between the KeyApplication Quality Time to Delivery System Capabilities of Value Relations Internal Processes Perspective traceability Performance Indicators, Critical Regulatory between Success Factors, and tactics and Operations Stakeholder Innovation Management Management Processes Processes Performance Goals in support Learnings & Growth Perspective strategy of a Strategic Objective Human Capital Information Capital Organizational Capital Culture Leadership Alignment Teamwork Budget Perspective Vision Bottom Up Project Budget Resource Making the cause-and-effect connection between Key Positively Impact Performance Management Management Financial Performance Performance Indicators and Strategy is the role of an Balanced Scorecard automation system Strategic Objective Performance Goal Critical Success Factor Key Performance (CSF) Indicator (KPI) Be The Preferred Budget Variance BPI ≥ 0.95 Provide on-time, on- Supplier Of Business budget, on-specification Applications Traceable Schedule Variance CPI ≥ 0.97 for our enterprise to Increased Customer applications Revenue % Requirements Function Points Variance Delivered ≥ 90% Target The Strategy Map described the cause and effect connection Declining Cost per Cost of Delivery Impact Customer Provide scalable between each Strategic platform for acquisition Performance Impact SLA Compliance ≥ 0.98 and growth of our customer base Objective Global Operational Baseline 24/7/365 Non-Stop Operations Why What How Measures Flow Up from KPIs to Strategy 52/104
  53. 53. 53/104
  54. 54. StrategyStrategy is not the same as operational excellence … 54/104
  55. 55. Strategy Obtaining commitment for a Staking out the grand purpose Territory Core Risks to be Belief Systems Values Avoided Boundary Systems Business Strategy Critical Interactive Diagnostic Control Strategic Control Systems Uncertainties Performance Systems Variables Positioning for Getting the job tomorrow done† “Levers of Control: How Managers Internal ControlsUse Innovative Control Systems toDrive Strategic Renewal ,” R. Simons,Harvard Business School, 1995 55/104
  56. 56. Strategy† “The Balanced Scorecard: To Adopt or not to adopt?” Kevin Hendricks, Larry Menorand Christine Wiedman, Ivey Business Journal, Nov/Dec 2004 56/104
  57. 57. StrategyMission and Vision provide the anchors for developing strategy. Withouta mission and vision the underlying performance metrics don’t have afoundation on which to stand. “Why are we measuring this activity?” Askthe Mission and Vision for the answer ‒ ‒ ‒ ‒ ‒ 57/104
  58. 58. Strategy To be effective, the scorecard should have attributes like these† Implementing Balanced Scorecard, Jessica Keys, and compensation is important, but it is also important to The connection between scorecard performance Auerbach, 2005 understand that this connection comes ONLY in a mature organization where the scorecard and the resulting performance has been operational for some time. Without this maturity the expected benefits will not appear 58/104
  59. 59. Strategy It is easy to fall into the trap of being metrics focused rather than strategy focused. Make sure these “sins” are not present in the BSC. If they are, take explicit actions to remove them Common Pit Falls Impact on the Performance Initiative An IT centric view of IT Lack of senior management involvement in metrics Selection performance selection and refinement Measures that don’t No explicit link between metrics and IT strategy matter to the business Lack of common ground Lack of common metrics definitions complicates Collection aggregation An over reliance on tools Lack of focus on data collection processes leads to inaccurate and outdated data No drill–down capability Unavailable context for scorecard–level metrics Reporting hinders interpretation Too many metrics Lack of aggregation and screening of low–level metrics results in cumbersome reports No individual impact Individual lack incentives to impact scorecard UseImplementing Balanced Scorecard, Jessica Keys, Auerbach, 2005 performance 59/104
  60. 60. Strategy It is VALUE we’re after with the IT Balanced Scorecard          “The Market–Based Adaptive Enterprise: Listening, Learning and Leading Through Systems Thinking, VincentP. Barabba, in Proceedings Russell L. Ackoff and The Advent of Systems Thinking, March 1999 60/104
  61. 61. StrategyIn order to deliver value we must first be ready to deliver value 61/104
  62. 62. Strategy ¾’s of the BSC value comes from intangible assets.Only the financial quadrant can be traced to tangible assets 62/104
  63. 63. StrategyAn example of intangible asset manage built around a scorecard Strategy converts intangible assets into tangible outcomes 63/104
  64. 64. 64/104
  65. 65. 65/104
  66. 66. Planning Planning is a continuous improvement processInformation Outlook Online, March 2005 66/104
  67. 67. Planning Role Responsibilities  Assumes ownership for the Balanced Scorecard project  Provides background information to the team on the strategy and methodology Executive  Maintain communication with senior management Sponsor  Commit resources to the team  Provide support and enthusiasm for the Balanced Scorecard throughout the organization  Coordinates meetings; plans, tracks and reports team results to all audiences Balanced  Provides thought leadership on the Balanced Scorecard methodology Scorecard  Ensures that all relevant background material is available to the team Champion  Provides feedback to the executive sponsor and senior management  Facilitates the development of an effective team through coaching and support  Provide expert knowledge of business unit or functional operations  Inform and influence their respective senior executives Team Members  Act as Balanced Scorecard ambassadors within their business units  Act in the best interest  Increase awareness of organizational change issues Organizational  Investigates change-related issues affecting the Balanced Scorecard project Change Expert  Works with the team to produce solutions mitigating change-related risksBalanced Scorecard Diagnostics: Maintaining Maximum Performance, Paul R.Niven, John Wiley & Sons 67/104
  68. 68. Planning 1 1 1 1 1 1 1 1 1 1 2 Planning Phase 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 Develop objectives for the BSC 2 Determine the appropriate business unit 3 Gain executive sponsorship 4 Build the BSC team 5 Formulate the project plan 6 Develop the communication plan Development Phase 1 Gather and distribute background material 2 Develop or confirm, mission, values, vision, & strategy 3 Conduct executive interviews 4 Develop objectives and measures 4a Executive workshop 4b Gather employee feedback 5 Develop cause and effect linkages 5a Executive workshop 6 Establish targets for measures 6a Executive workshop 7 Develop ongoing Balance Scorecard planBalanced Scorecard Diagnostics: Maintaining Maximum Performance, Paul R.Niven, John Wiley & Sons 68/104
  69. 69. 69/104
  70. 70. Beneficial Outcomes The benefits appear “soft” at first, they are “booked” as wellAllan R. Bailey, Chee W. Chow, and Kamal M. Haddad,"Continuous Improvement in Business Education: Insights from theFor-Profit Sector and Business School Deans," Journal ofEducation for Business, January-February 1999, pp. 165-181 70/104
  71. 71. Beneficial Outcomes 71/104
  72. 72. 72/104
  73. 73. 73/104
  74. 74. Measurement 74/104
  75. 75. Measurement Information Needs Techncial & User Feedback Management Processes Core Measure Processes Establish Plan Perform EvaluateCommitment Analysis Results Improvement Actions 75/104
  76. 76. Measurement People Procedures Data Software Hardware Owner of the  Procedures  Performance  Software for  Personal PMS and rules for relevant data, the extraction, computers People the definition of the “as is” transformation  Servers accountable for the values and loading of performance the data  Communication the units of  “To be” values infrastructure measure indicators of the  Database  Rules for data performance management  Storage People who set up and management indicators software. Data maintain the  Rules for data  Performance warehousing PMS communication results software Data suppliers  Rules for the (calculated  Data analysis use of the data) software Internal and external users performance  Meta data  Presentation of the PMS results description of and the communication Internal and performance software external indicators stakeholders 76/104
  77. 77. MeasurementGuide to a Balanced ScorecardPerformance Management Methodology,National Partnership for ReinventingGovernment, U. S. Department ofCommerce, 1999 77/104
  78. 78. Measurement 78/104
  79. 79. Measurement It’s easy to create “ugly” measures, so test the outcomes of each measure before use“What to do with your ugly measures!,” Stacey Barr, www.staceybarr.com 79/104
  80. 80. Measurement Too many CXOs judge implementations by measuring the technical capacity of a project, instead of considering how it has improved their companies business“The Metrics Trap,” CIO Magazine, Feb 15, 2004 80/104
  81. 81. Measurement Each metric needs to be tested against these attributes 1. 2. 3. 4. 5.“Two Mistakes Most Professional Services Organizations Make,” Thomas Lah,Technology Professional Services Association (TPSA) 81/104
  82. 82. Measurement Perverse metrics, linked to perverse incentives, always yields to perverse results 1. 2. 3. 4. 5.Implementing Balanced Scorecard, Jessica Keys, Auerbach, 2005 82/104
  83. 83. Measurement Metrics are useful, indicators are better suited for strategyDeriving Enterprise-Based Measures Using the Balanced Scorecard and Goal-Driven measurementTechniques, Wolfhart Goethert and Matt Fisher, Software Engineering and Measurement Analysis Initiative,CMU/SEI-2003-TN-024, October 2003 83/104
  84. 84. 84/104
  85. 85. 85/104
  86. 86. 86/104
  87. 87. Stakeholder Perspective Service Attributes Relationships Image Recognition StakeholderApplication Quality Time to Delivery System Capabilities of Value Relations Internal Processes Perspective Operations Stakeholder Innovation Regulatory Management Management Processes Processes Learnings & Growth Perspective Human Capital Information Capital Organizational Capital Culture Leadership Alignment Teamwork Budget Perspective Project Budget Resource Performance Management Management 87/104
  88. 88. “Do the right things, do them well, do them with less, to…”Business Results ……reduce overall ……reduce overall …enable profitable …enable profitable …enable firm to accelerate …enable firm to accelerate operating costs -- R2 operating costs R2 operations -- R1 operations R1 market deployment -- R3 market deployment R3 Competency ContributionExpectations Competency Credibility Contribution Project “Keep my “Keep my “Manage to “Manage to “Understand my “Implement timely and cost- “Understand my “Implement timely and cost- systems running” systems running” corporate goals” corporate goals” operation” -- E3 effective solutions” -- E4 operation” E3 effective solutions” E4 -- E1 E1 -- E2 E2 Operational Excellence Operational Excellence Project // IT Alignment Project IT Alignment Solutions Leadership Solutions Leadership Reduce the cost of Reduce the cost of Provide appropriate technology to Provide appropriate technology to Provide innovative Provide innovative providing services -- P1 providing services P1 enable success -- P2 enable success P2 solutions -- P3 solutions P3Internal Processes Deliver solutions Deliver solutions Manage Manage Leverage Leverage Improve Improve requirements -- P7 on schedule -- P6 on schedule P6 requirements P7 knowledge and knowledge and processes for processes for best practices -- P10 best practices P10 efficiency efficiency and quality -- and quality Centralize IT Centralize IT Enhance customer Enhance customer P4 P4 resources -- P5 resources P5 relationships -- P9 relationships P9 Strategically deploy services -- P8 Strategically deploy services P8People and Develop and Develop and Recognize team Recognize team Provide employees with Provide employees with Tools Build a high performance Build a high performance retain critical retain critical and individual and individual the tools and knowledge the tools and knowledge culture -- S2 culture S2 skills -- S1 skills S1 performance -- S3 performance S3 they need -- S4 they need S4 88/104
  89. 89. 89/104
  90. 90. 90/104
  91. 91. 91/104
  92. 92. Enterprise mission  % mission improvement (cost, time, quantity) attributed togoals IT solutions and services  % planned IT benefits achieved  % IT strategies fully matched to enterprise strategiesPortfolio Analysis  % IT portfolio reviewed and disposedand Management  % compliance to approved IT solution deployment  % reusability of core modulesFinancial and  % total IT costs by major asset categories (hardware,investment software, personnel, facilities, management)performance  IT budget as % of operational budget and compare to industry average net present value, internal rate of return, return of investment, return on assets percentages (aggregate or by project)IT resources  % databases that can be sharedusage  % hardware/software with interoperability capabilities 92/104
  93. 93. Customer  % cooperative customer and IT applications designpartnership and  % joint development service level agreementsinvolvement  % customers attending IT investment meetings  % customers reporting full use of applications  % customers satisfied with IT application design  % customers satisfied with IT maintenance andCustomer supportsatisfaction  % of problems resolved within target time  % products launched on time taken to fulfill service requests  degree to which IT solution support process improvement plans  degree to which IT aids process analysisBusinessprocess support  degree to which IT solutions can adapt to new requirements  incremental cost to transfer application to new hardware platform 93/104
  94. 94.  % procurement exception to architecture standardsArchitecture  N variations from standards detected bystandards review and audit per yearcompliance  % increase in systems using standard architecture  % projects on time, on budget  % projects using standard methodology forProject systems analysis and designperformance  N backlog on enhancement and maintenance requests  % system availabilityInfrastructure  % applications availabilityavailability  on-line system response time 94/104
  95. 95. Workforce  N staff trained by skill areacompetency  % staff training uses new technologies andand techniquesdevelopment  % staff professionally certified  % IT budget devoted to training and staff developmentEmployee  % employees satisfied with the existingsatisfaction technical and operating environment to deliver quality products or services  % employees satisfied with training  % employee turnover by function 95/104
  96. 96. 96/104
  97. 97. 97/104
  98. 98. http://www.balancedscorecard.org/http://www.bscol.orghttp://www.continuinged.uncc.edu/certificate/proc_mgmt/proc-mgmt.htmhttp://www.scip.org/http://www.academyci.com/scip.html 98/104
  99. 99. http://www.casewise.com/index.php 99/104
  100. 100. 100/104
  101. 101. 101/104
  102. 102. These books are Mandatory reading for anyone claiming to practice the discipline ofBalanced Scorecard 102/104
  103. 103. These papers and articles are reading for background, ideas, and guidance www.ejise.com 103/104
  104. 104. 104/104
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