IT Balanced Scorecard

A new approach to strategic management was developed in the early 1990's by Drs. Robert Kaplan (Harvard Business School) and David Norton. They named this system the 'Balanced Scorecard'.  Recognizing some of the weaknesses and vagueness of previous management approaches, IT Balanced Scorecard approach provides a clear prescription as to what companies should measure in order to 'balance' the financial perspective in an IT company.

IT Balanced Scorecard is a management system in an IT company (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action. IT Balanced Scorecard provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. When fully deployed, the balanced scorecard transforms strategic planning from an academic exercise into the nerve center of an enterprise.

IT Balanced Scorecard also retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation."

IT Balanced Scorecard, as the name implies, achieves a balance between these lag indicators and the lead indicators that need to be focused on to make things happen in any IT company or to be precise in any company. That's an important distinction. The IT Balanced Scorecard does not replace financial measurement. It doesn't replace economic value added. Rather, it complements it. Measures such as economic value added, which have received a lot of press lately, suffer from the same shortcomings as other financial measures. To make them work, organizations still need to get beneath the surface and say what it is that they do today to improve economic value added. That really is what a balanced scorecard does.

IT Balanced Scorecard benefits: IT Balanced Scorecard approach enables an organization (public or private engaging in any IT activity) to introduce a performance measurement system and also implement a new way of managing its service delivery. Unlike other methodologies it does not rely solely on financial indicators but uses a balanced selection of objective performance measurements to assist managers in developing best value services. This approach enables you to address the following issues:

• IT Balanced Scorecard makes strategy operational by translating strategy into performance measures and targets.
• IT Balanced Scorecard helps focus entire organization on what must be done to create breakthrough performance.
• IT Balanced Scorecard integrates and acts as an umbrella for a variety of often disconnected corporate programs, such as quality, re-engineering, process redesign, and customer service.
• IT Balanced Scorecard breaks down corporate level measures so local managers, operators, and employees can see what they must do well in order to improve organizational effectiveness.