Breaking Down the Balanced Scorecard for IT
In a recent Bain trends publication (Mitt Romney’s old management consulting stomping grounds, http://www.bain.com), we noticed how much momentum the balanced scorecard is beginning to make after remaining in the theoretical stage for so many years. Also, there’s been a good bit of momentum with our customer base (particularly those for whom IT is a profit center like MSPs, but overall as well). So, we thought it might be worth spending a bit of time on the concepts in summary fashion.
A balanced scorecard is a worthy goal, especially for:
– Justifying the IT investments that have been made (and will be made) to acheive business goals
– Improving communication between IT & the Business, with increased visibility of actual performance vs. objectives
– Improving the transparency of IT activity
And, with Key Performance Indicators, Critical Success Factors and metrics, we have a framework for something very achievable. However, to date, only a handful of organizations can claim victory in using a balanced scorecard to align IT around the business mission. Let’s sum up the key elements needed at a high-level:
– Understanding of the company’s mission, goals and priorities – Are they revenue, cost reduction, risk reduction or social in nature? In what order? In what priority?
– What Frameworks have been adopted at the company (at every level) that are beneficial to the effort? Sure, Six Sigma might be helpful for detailing availability numbers, but is it common knowledge? Most in IT know ITIL to some extent, but what about your C-level executives? Will this information be meaningful to them in their common terminology?
– Know the Company – Who is going to drive this effort? Do they really want what they are saying they want? Is it achievable?
– Metric Composition – The typical balanced scorecard is composed of at least 150 metric calculations at the bottom level. It actually takes quite a bit of complexity to simplify things! BI applications like Northcraft obviously help dramatically reduce the need for IT BI development.
– Audience – This is not a mid-level manager dashboard. This is meant for Executives, both in business and IT. Does it need to be meaningful and accessible to an external customer or other 3rd party?
– Availability of the Data – Which systems will the data need to be collected from? Monitoring? IT Service Management? Project & Portfolio Management?
While Northcraft doesn’t provide a canned solution for the IT balanced scorecard, we can greatly reduce the effort associated with getting you there. We’d be happy to provide detailed balanced scorecard examples, metrics lists, consulting and our products to assist. A simple first step is to engage with us in our 5-day IT Power Score assessment.