This document discusses how to align IT performance measurement with business goals through the use of balanced scorecards. It provides examples of how both an IT balanced scorecard and a business balanced scorecard can incorporate IT-related objectives, measures, and initiatives. The key aspects covered are: - An IT balanced scorecard should address both operational IT concerns and how IT strategically supports business needs. - Scorecards can be linked, with an IT scorecard focusing on IT effectiveness and efficiency supporting measures in a business scorecard related to business value from IT. - Examples are given of how specific companies have incorporated IT-enabled goals and measures into their balanced scorecards.

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

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

3.  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)
IT Balanced Scorecard and Business
Balanced Scorecard

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

5. 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
IT Balanced Scorecard and Business
Balanced Scorecard (Nolan Norton)

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

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

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

9.  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
Key Goal Indicators
Control
Statements
Control
Practices
is enabled by
and considers
IT Processes
The control of
Business
Requirements
which satisfy
Definitions

10.  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)
Key Goal Indicators
Examples

11.  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
Key Performance Indicators
Control
Statements
Control
Practices
is enabled by
and considers
IT Processes
The control of
Business
Requirements
which satisfy
Definitions

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

13.  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
Critical Success Factors
Control
Statements
Control
Practices
is enabled by
and considers
IT Processes
The control of
Business
Requirements
which satisfy
Definitions

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.  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.
Maturity Models
Definitions