Balanced Scorecard & IT Balanced Scorecard

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    Balanced Scorecard &

    IT Balanced Scorecard

    Lukman Hakim

    28 Januari 2011

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    Introduction to Balanced

    Scorecard

    ` Developed by

    ` Robert Kaplan (Harvard) and David Norton

    ` early 90s..

    ` The balanced scorecard is a strategic management

    system (not only a measurement system)

    ` Internal assessment, improvement and reporting system

    ` Key is the link to the strategic plan

    ` System to turn strategy into action

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    ` The balanced scorecard retains traditional financialmeasures. But financial measures tell the story of pastevents, an adequate story for industrial age companies for

    which investments in long-term capabilities and customerrelationships were not critical for success. These financialmeasures are inadequate, however, for guiding and evaluatingthe journey that information age companies must make tocreate future value through investment in customers,suppliers, employees, processes, technology, and innovation.

    Kaplan & Norton

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    Balanced Scorecard

    ` Enables organizations to clarify their vision and strategyand translate them into action

    ` It provides feedback about both

    ` the internal business processes and

    ` external outcomes

    ` Continuous improvement of strategic performance and

    results.

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    ` The balanced scorecard suggests that we view theorganization from four perspectives:

    ` The learning growth perspective

    ` The business process perspective

    ` The customer perspective

    ` The financial perspective

    ` Develop metrics, collect data and analyze relative to each

    of these perspectives

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    Customer Perspective

    How do the customers viewthe company?

    MissionTo deliver the best added

    value to the customer

    Objectives

    new products

    partnership with customer

    Measures

    % of new products ofturnover

    joint development efforts

    The Balanced Scorecard

    Financial Perspective

    How do the shareholders viewthe company?

    MissionAssure added value for

    shareholders both in the short

    and long term

    Objectives

    survive

    prosper

    Measures ROI and cash flow

    market share

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    IT Balance Scorecard

    Konsep umum

    ` Perkembangan implementasi IT di perusahaan berjalan cepat danbanyak memanfaatkan perkembagan IT baik hardware, software,infrastruktur jaringan, serta pengembangan digital content.

    ` Semakin banyak dan canggih IT dipergunakan di perusahaan,mendorong dan meningkatkan kegiatan dan biaya investasi sertabiaya operasional yang lain.

    `

    semakin banyak perusahaan yang menggunaanIT perlu diimbangidengan penataan organiasi IT yang sejalan dengan visi dan misi

    perusahaan dan adanya ukuran-ukuran kinerja yang ditetapkan olehperusahaan.

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    IT Balance Scorecard

    dikembangkan oleh Gold (1992) dan Willcocks (1994).

    IT Balance Scorecard = metode untuk mengukur efektifitas danefisiensi IT diperusahaan

    Empat perspektif

    1) Corporate Contribution,

    2) User Orientation,

    3) Operational Excellence,

    4) Future Orientation

    Tiap perspektif memiliki ukuran-ukuran dan target yang harusdicapai organisasi IT dan diturunkan dalam ukuran-ukuran dan targettiap fungsi yang ada di perusahaan

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    A generic IT Balanced Scorecard

    CorporateContribution

    OperationalExcellence

    FutureOrientation

    UserOrientation

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    IT Balance Scorecard

    PerspektifCorporate contribution = berisi ukuran yang menunjukkanbagaimana manajemen (pimpinan) menilai/melihat organisasi IT,

    perspektifUser Orientation = berisi ukuran yang menunjukkanbagaimana user menilai/melihat hasil-hasil organisasi IT,

    perspektifOperational Excellence = berisi ukuran efektifitas dan efisiensiproses IT,

    perspektifFuture Orientation = berisi ukuran yang menggambarkanbagaimana posisi IT dalam tantangan kedepan.

    Secara umum, empat perpektif yang ada dalam IT Balanced Scorecardmampu menggambarkan keterkaitan strategi IT dengan strategiorganisasi

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    User Orientation

    How do the users viewthe IT department?

    MissionTo be the preferred supplier

    of IS and to exploit business

    opportunities maximally

    through IT

    Objectives

    preferred supplier partnership with users

    user satisfaction

    A generic IT Balanced Scorecard

    Corporate Contribution

    How does management viewthe IT department?

    MissionTo obtain a reasonable

    business contribution

    of investments in IT

    Objectives

    control of IT expenses

    business value of newIT projects

    business value of the ITfunction

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    A generic IT Balanced Scorecard

    Operational Excellence

    How effective are theIT processes?

    MissionEfficiently deliver IT products

    and IT services

    Objectives

    efficient software development

    efficient computer operations

    efficient help desk function

    Future Orientation

    Is IT positioned to meetfuture challenges

    MissionDevelop opportunities to

    answer future challenges

    Objectives

    permanent training and

    education of IT personnel

    expertise of IT personnel research into emerging

    information technology

    age of application portfolio

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    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

    A generic IT Balanced ScorecardMeasures for Corporate Contribution

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    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

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    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

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    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

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    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

    Building an IT Balanced Scorecard

    Project phases:

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    start with a "standardized" model as presented

    apply the Kaplan and Norton principles build in cause-and-effect relationships include sufficient performance drivers linkage to financial measures

    implement the IT balanced scorecard as aStrategic Management System

    clarify and translate vision and strategy link strategy to team and