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

Measuring and Improving Corporate IT Performance through the Balanced Scorecard (Part 2 ). A generic IT Balanced Scorecard Measures for Corporate Contribution. Control of IT Expenses percentage over or under IT budget allocation to different budget items

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

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

  2. A generic IT Balanced ScorecardMeasures for Corporate Contribution • 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

  3. 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

  4. 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

  5. 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

  6. Building an IT Balanced Scorecard Project phases: 1. presentation of the concept to senior and IT management 2. establishing a project team 3. data-gathering phase where information is collected on: - corporate and IT strategy - IT metrics already in use for performance measurement 4. developing the organization-specific IT balanced scorecard

  7. Building an IT Balanced Scorecard Developing principles: • start with a "standardized" model as presented • apply the Kaplan and Norton principles l build in cause-and-effect relationships l include sufficient performance drivers l linkage to financial measures • implement the IT balanced scorecard as a Strategic Management System l clarify and translate vision and strategy l link strategy to team and individual goals l link strategy to resource allocation l organize strategic feedback

  8. Building an IT Balanced Scorecard Cause-and-Effect Relationships IF we increase IT employee's motivation (future orientation) THEN this will result in better quality of the developed applications (operational excellence) THEN this will meet better user expectations (user orientation) THEN will enhance the support of business processes (business contribution)

  9. Building an IT Balanced Scorecard Outcome Measures and Performance Drivers Outcome measuresPerformance drives lines of code per person number of educational days index of user satisfaction response time of help desk

  10. Building an IT Balanced Scorecard Financial Outcomes "A failure to convert improved operational performance into improved financial performance should send executives back to the drawing board to rethink the company's strategy or its implementation plans". (Kaplan and Norton)

  11. Building an IT Balanced Scorecard • Clarify and Translate Vision and Strategy • align IT and corporate strategy • clarify cause-and-effect relationships • build in sufficient performance drivers in order to visualise how the IT strategy will be achieved • build in sufficient outcome measures in order to monitor whether the strategy is successful • link to financial objectives in order to visualise how IT strategy is improving the company's financial performance

  12. Building an IT Balanced Scorecard • Link Strategy to Resource Allocation • stretch long term targets • define long term targets that are realistic • take strategic initiatives to achieve the stretch targets • define short term milestones for the IT BSC • link priority settings for IT investment projects to the IT BSC Link Strategy to Team and Individual Goals • communicate the IT BSC to the employeees • link individual objectives of IT employees to the IT BSC • link incentive system to the IT BSC measures Organise Strategic Feedback • act upon the measurement results

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