Download - 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 individual goals link strategy to resource allocation organize strategic feedback
Building an IT Balanced Scorecard
Developing principles:
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IFwe increase IT employee's motivation (future orientation)(future orientation)
THENthis will result in better quality of the developed applications
(operational excellence)(operational excellence)
THENthis will meet better user expectations (user orientation(user orientation)
THENwill enhance the support of business processes
(business contribution)(business contribution)
Building an IT Balanced Scorecard
Cause-and-Effect Relationships
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Building an IT Balanced Scorecard
Outcome Measures and Performance Drivers
Outcome meas
ures Per formance drives
lines of code per person number of educational days
index of user satisfaction response time of help desk
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"A failure to convert improved operational performance into improved
financial performance should send executives back to the drawingboard to rethink the company's strategy or its implementation plans".
(Kaplan and Norton)
Building an IT Balanced Scorecard
Financial Outcomes
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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
Building an IT Balanced Scorecard
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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
Building an IT Balanced Scorecard