The IT Balanced Scorecard

An approach for IT strategy execution and measurement

Technology evolution leading to evolution of IT organization

Strategic

Strategic business enabling function Distributed process automation function Traditional EDP backend function

Tactical 1980s 1990s 2000s

Key themes for excellence in IT management

1. Align IT initiatives with business strategy and measure the business value generated by IT programs

2. Strengthen project management to de-risk IT implementation and improve schedule, productivity and quality

3. Integrate key IT operational and sustenance processes to improve service levels across the organization

4. Assess key business processes proactively and identify areas to leverage IT for business excellence

Integrated Approach To Management Excellence

IT Balanced Scorecard Aligning IT strategy for execution

BSC

Software Process Improvement Strengthening engineering processes

CMM IT Management Excellence

Operations Process Improvement Integrating operational processes

Six Sigma

Business Process Assessment Anticipating areas for improvement

BNQA

People Practices

Execution of strategies continues to be a challenge

Only 5% of the team understands strategy

Only 25% managers have incentives linked to strategy

Less than 10% Of strategies effectively formulated are effectively executed

85% of executive teams spend < 1 hr / month discussing strategy

60% organizations dont link resource allocation to strategy

Source: Fortune Magazine Survey

 and it helps to have an approach to

Communicate IT Objectives

Align Metrics And Targets

IT Objectives Metrics And Targets IT Initiatives

Review Metrics / Progress

Focus Budgets & Initiatives

A hands-on approach

Step 1
Assimilate Business Objectives

Step 3
Identify IT Strategic Objectives

Step 4
Select IT Metrics / Targets

Step 5
Align Day-to-day Operations

Step 2
Analyze Emerging Role Of IT Team

Step-1

Analyze and assimilate business strategy

Value Selection
Target Customers Customer Benefits Customer Costs Competitive Value

Value Management
Forecast Plan Design Deliver Manage

Value Enhancement
Brand / Image Customer Contact Customer Relationship

How To Review Strategy Collect Information Structured Interviews Business Strategy Map

Step 1
Business

Step 2
Role Of IT

Step 3
IT Objectives

Step 4
IT Metrics

Step 5
Institutionalize

Step-2

Consolidate emerging roles of the IT organization

Strategy Leadership Creating the IT vision, fusing business and IT strategy, balancing demand for services and supply of resources

Architecture Development
Business Enhancement

Developing blueprint for IT technical design, providing foundation for intra- / inter-company workings, setting standards / policies
Supporting business change initiatives by analyzing/designing business processes, managing projects / relationships with users

Technology Exploitation
Vendor Management
How To

Designing, developing and evaluating applications largely for supporting business-change initiatives
Designing, developing and evaluating applications largely for supporting business-change initiatives
Gartner Research 2002

Role Analysis

Structured Interviews

Facilitated Workshop

Emerging IT Roles

Step 1
Business

Step 2
Role Of IT

Step 3
IT Objectives

Step 4
IT Metrics

Step 5
Institutionalize

Step-3

Identify key IT strategic objectives

Business Objective 1 Business Objective 2 Business Objective 3 Business Objective 4 Business Objective n

Strategy Leadership Architecture Development Business Enhancement Technology Exploitation Vendor Management
How To Straw Man Design IT Process Analysis Facilitated Workshop IT Strategy Map

Step 1
Business

Step 2
Role Of IT

Step 3
IT Objectives

Step 4
IT Metrics

Step 5
Institutionalize

Review capabilities to achieve the key objectives

Strategic IT Plan Technology Plan Investment Plan

Plan
Architecture Plan Internal Relationship Partnership Plan

Identify Solution

Build Infrastructure

Audit Systems

Build
Develop Solution Internal Procedures Change Management

Implementation Plan

Manage Partners

System Security

Implement
Implement Solution Advise / Train Users System Audits

Define Service Levels

Manage Configuration

Manage Facilities

Sustain
Manage Performance Manage Data Manage Complaints

Step 1
Business

Step 2
Role Of IT

Step 3
IT Objectives

Step 4
IT Metrics

Step 5
Institutionalize

Step-4

Select IT strategic measures and targets

IT Strategic Objectives

Outcome Measures Common Measures Across The Industry Lagging Measures To Gauge Outcomes Of Strategy

Change Drivers Strategy Dependent Unique Measures Leading Measures To Understand processes And Activities

How To Draft Scorecard Facilitated Workshop Feasibility Analysis IT Scorecard

Step 1
Business

Step 2
Role Of IT

Step 3
IT Objectives

Step 4
IT Metrics

Step 5
Institutionalize

 to form the IT Balanced Scorecard

Sr. Performance Measure Unit Of Responsibility Measure Current Level 2001-2002 Target 2002-2003 2002-2003 Actual Performance Qtr 1 Qtr 2 Qtr 3 Qtr 4 Visual Indicator

A Contribute To Productivity 1 IT Cost as % Of Revenue 2 # of key processes integrated through systems 3 Weighted adherence to productivity objectives B Contribute To Growth 1 % Leads generated through IT initiatives 2 Adequacy of data to support client relationship 3 % Projects with achieving cycle time reduction C Strengthen IT Capability 1 % footprint on obsolete technology 2 Delivered defect density 3 New / existing system adoption rate 4 % Compliance to implementation plan 5 % Applications adhering to performance standards 6 Weighted SLA adherence D Develop Competence 1 % Employees with training plan serviced 2 # of domain experts developed 3 # of employees PMI certified 4 % Employees with defined career paths 5 % Projects with knowledge assets created % # # % % Greg Timothy Greg Timothy Frank % D/fp Ratio % % % Frank Venessa Frank Venessa Baron Pfister % Ratio % Baron Judith Ramon % # % Pfister Ramon Pfister

Step 1
Business

Step 2
Role Of IT

Step 3
IT Objectives

Step 4
IT Metrics

Step 5
Institutionalize

Step-5

Put the scorecard to day-to-day use

Traditional Review Meeting Strategy Review Meeting

Strategic Issues (10%)

Provide input to strategic issues currently under discussion

Dialogue about performance Explain anomalies Suggest Solutions Identify Issues Identify strategic issues Review performance data Implications (30%) Performance (10%) Strategic Issues (60%)

Implications (40%)

Performance (50%)

How To Setup Reviews Rationalize Initiatives Activate IT Metrics Ongoing Reviews

Step 1
Business

Step 2
Role Of IT

Step 3
IT Objectives

Step 4
IT Metrics

Step 5
Institutionalize

 rationalize the portfolio of initiatives

Func. Group HR Project Desc Business Benefit Project Type

IC1

IC2

IC3

IC4

IB1

IB2

IB3

IB4

Automation of confirmation Remove manual internvention in New Project process confirmation proces, hence reduce Conventional errors and time lags. ESOP Management System - Phase 2 Employee temporary relocation system Automation of monthly grants, events, reports automation of relocation - details and employee cliams New Project Conventional New Project Conventional New Project Conventional

HR

HR

HR

Integrated Training System Assist people in identifying / nominating training needs. Enhanced admin functionality Automation of separation process

HR

Control on seperation / clearance New Project & info collection at source Conventional New Project Conventional New Project Conventional New Project Conventional New Project Conventional

HR

Technology Aided Learning Online Remote Learning for all employees Attendance system Phase out the Paradox based system which is not geared up to handle the ever increasing emp strength. Linkage between the Single system for allocation of domestic, overseas salaries & perdiem

F&A

F&A

Employee cost allocations

F&A

Loans system

Work-flow enabled system for requesting / processing of loans

Step 1
Business

Step 2
Role Of IT

Step 3
IT Objectives

Step 4
IT Metrics

Step 5
Institutionalize

and setup an integrated reporting system

Set Alerts on key metrics to monitor even when not logged in to Dashboard Standard and Query on Personalized Metrics data Reports for custom views

Dashboard views that address all concerns Metrics display along with legend and navigation BU or its component level summary views that are selected for specific attention and displayed in the Watch list

Indication appears when Alerts set by you are triggered Drill down from current view to its component
Indicates presence of Alert on this Metric

Step 1
Business

Step 2
Role Of IT

Step 3
IT Objectives

Step 4
IT Metrics

Step 5
Institutionalize

Key benefits of using this approach

Facilitates shared understanding of business and IT strategy

Aligns goals and objectives of those involved in IT management

Introduces a metrics based culture within the IT organization

Facilitates better understanding of deviations and the reasons

Helps identify initiatives to improve capability and competence

Common Perception Vs Our Experience

Common Perception This approach is of no use if the corporate does not first articulate its strategy We should not take this up if there is no corporate-wide BSC initiative Such efforts become obsolete when strategies change so why bother Our Experience CIOs make key assumptions, use them as working basis and iterate their strategies CIOs use this approach to guide and manage the performance of the IT team CIOs know strategies change, they use this approach to better manage the change

1st step in Balanced Scorecard is to choose metrics and develop an application / setup a tool

1st step is alignment of strategy and metrics, automation is taken up subsequently for deployment

Balanced Scorecard Approach

Assess Accelerate Assure

Readiness to initiate a Balanced Scorecard Effectiveness of current Balanced Scorecards

Development of new Balanced Scorecard Re-alignment based on major shift in strategy

Reviews / audits to support implementation Planning / managing IT enabling of Scorecards

Experience In Implementing And Using Balanced Scorecard

Thank You
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