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The IT Balanced Scorecard An approach for IT strategy execution and measurement

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.

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The IT Balanced Scorecard An approach for IT strategy execution and measurement

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  1. The IT Balanced ScorecardAn approach for IT strategy execution and measurement

  2. 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

  3. Key themes for excellence in IT management • Align IT initiatives with business strategy and measure the business value generated by IT programs • Strengthen project management to de-risk IT implementation and improve schedule, productivity and quality • Integrate key IT operational and sustenance processes to improve service levels across the organization • Assess key business processes proactively and identify areas to leverage IT for business excellence

  4. People Practices IT Balanced Scorecard Aligning IT strategy for execution BSC Software Process Improvement Strengthening engineering processes IT Management Excellence CMM Operations Process Improvement Integrating operational processes Six Sigma Business Process Assessment Anticipating areas for improvement BNQA Integrated Approach To Management Excellence IT Balanced Scorecard Aligning IT strategy for execution

  5. Less than 10% Of strategies effectively formulated are effectively executed Source: Fortune Magazine Survey Execution of strategies continues to be a challenge… Only 5% of the team understands strategy Only 25% managers have incentives linked to strategy 85% of executive teams spend < 1 hr / month discussing strategy 60% organizations don’t link resource allocation to strategy

  6. Communicate IT Objectives Align Metrics And Targets Review Metrics / Progress IT Objectives Metrics And Targets IT Initiatives Focus Budgets & Initiatives … and it helps to have an approach to…

  7. 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

  8. 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… Structured Interviews Business Strategy Map Review Strategy Collect Information Step-1Analyze and assimilate business strategy… Step 1 Business Step 2 Role Of IT Step 3 IT Objectives Step 4 IT Metrics Step 5 Institutionalize

  9. Strategy Leadership Creating the IT vision, fusing business and IT strategy, balancing demand for services and supply of resources Architecture Development Developing blueprint for IT technical design, providing foundation for intra- / inter-company workings, setting standards / policies Business Enhancement Supporting business change initiatives by analyzing/designing business processes, managing projects / relationships with users Technology Exploitation Designing, developing and evaluating applications largely for supporting business-change initiatives Vendor Management Designing, developing and evaluating applications largely for supporting business-change initiatives Gartner Research 2002 How To… Facilitated Workshop Emerging IT Roles Role Analysis Structured Interviews Step-2Consolidate emerging roles of the IT organization… Step 1 Business Step 2 Role Of IT Step 3 IT Objectives Step 4 IT Metrics Step 5 Institutionalize

  10. 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… Facilitated Workshop IT Strategy Map Straw Man Design IT Process Analysis Step-3Identify key IT strategic objectives… Step 1 Business Step 2 Role Of IT Step 3 IT Objectives Step 4 IT Metrics Step 5 Institutionalize

  11. Plan Strategic IT Plan Technology Plan Investment Plan Architecture Plan Internal Relationship Partnership Plan Build Identify Solution Build Infrastructure Audit Systems Develop Solution Internal Procedures Change Management Implement Implementation Plan Manage Partners System Security Implement Solution Advise / Train Users System Audits Sustain Define Service Levels Manage Configuration Manage Facilities Manage Performance Manage Data Manage Complaints Review capabilities to achieve the key objectives… Step 1 Business Step 2 Role Of IT Step 3 IT Objectives Step 4 IT Metrics Step 5 Institutionalize

  12. IT Strategic Objectives Outcome Measures Common Measures Across The Industry Change Drivers Strategy Dependent Unique Measures Lagging Measures To Gauge Outcomes Of Strategy Leading Measures To Understand processes And Activities How To… Feasibility Analysis IT Scorecard Draft Scorecard Facilitated Workshop Step-4Select IT strategic measures and targets… Step 1 Business Step 2 Role Of IT Step 3 IT Objectives Step 4 IT Metrics Step 5 Institutionalize

  13. … to form the IT Balanced Scorecard Illustration Step 1 Business Step 2 Role Of IT Step 3 IT Objectives Step 4 IT Metrics Step 5 Institutionalize

  14. Traditional Review Meeting Strategy Review Meeting Strategic Issues (10%) Strategic Issues (60%) Provide input to strategic issues currently under discussion Implications (40%) Dialogue about performance Explain anomalies Suggest Solutions Identify Issues Identify strategic issues Performance (50%) Implications (30%) Review performance data How To… Activate IT Metrics Ongoing Reviews Setup Reviews Rationalize Initiatives Performance (10%) Step-5Put the scorecard to day-to-day use… Step 1 Business Step 2 Role Of IT Step 3 IT Objectives Step 4 IT Metrics Step 5 Institutionalize

  15. … rationalize the portfolio of initiatives Illustration Illustration Step 1 Business Step 2 Role Of IT Step 3 IT Objectives Step 4 IT Metrics Step 5 Institutionalize

  16. Set Alerts on key metrics to monitor even when not logged in to Dashboard Standard and Personalized Reports Query on Metrics data for custom views Indication appears when Alerts set by you are triggered Dashboard views that address all concerns Drill down from current view to its component Metrics display along with legend and navigation Indicates presence of Alert on this Metric BU or its component level summary views that are selected for specific attention and displayed in the Watch list …and setup an integrated reporting system Illustration Step 1 Business Step 2 Role Of IT Step 3 IT Objectives Step 4 IT Metrics Step 5 Institutionalize

  17. 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

  18. 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 1st step in Balanced Scorecard is to choose metrics and develop an application / setup a tool 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 is alignment of strategy and metrics, automation is taken up subsequently for deployment Common Perception Vs Our Experience

  19. 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 Balanced Scorecard Approach Experience In Implementing And Using Balanced Scorecard

  20. Thank You www.infosys.com

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