Scorecard Configuration Details

The name IT value comes from the motivation to expose the value of IT to the business. It’s main role is also to expose to the organization executives the alignment between IT and the business.

The IT value perspective portray the economic results of previous business decisions and actions. Financial metrics generally lag behind actions, and therefore might not necessarily reflect the business as it is run today. However, financial metrics often determine whether a particular strategy is successful.

Financial metrics are often reflective of the stage of a businesses life-cycle (Growth, Sustain, and Harvest). Growth financial requirements may focus on the percentage growth rates in revenues and sales growth rates in target markets, customer groups, and regions. Businesses in the sustain stage may measure return on investment, return on capital employed, and economic value added. Harvest stage analytics are designed to measure the businesses ability to maximize cash flow back to the corporation. Core financial metrics are commonly related to profitability (such as operating income, return on capital employed, and economic value added). Other financial metrics can be related to shareholder values (ROI, and Financial Risk Management) or measurements (revenue growth and mix, cost reduction/productivity improvement, and asset utilization).

Other IT value perspectives can be:

• Any significant forecast can have a real impact on the profitability of the overall enterprise.
• It is important for the executive to always know where the IT stands in relation to the expense forecast.
• Keeping expenses in line with expectations is crucial.
• The executive may be tracking specific cost reduction objectives. A set of financially-oriented objectives and metrics is a critical component of any useful Dashboard.
• How does my spending relate plan versus region.

This perspective is often the second perspective to be defined when creating a balanced scorecard. This perspective focuses on aligning core customer outcome measurements; satisfaction, loyalty, retention, acquisition, and profitability to targeted customers and market segments. These value propositions represent the drivers, the lead indicators, for the core customer outcome measurements. “What must the company deliver to its customers to achieve high degrees of satisfaction, retention, acquisition, and, eventually, market share?” Alternate measurements within a customer segment can be either the share of wallet, segment-by-segment, or customer-by-customer. Beyond the core customer metrics, customer value propositions can be organized into three categories; product/service attributes, customer relationship, and image and reputation.

The operational perspective reflects the internal business processes that support the strategy. Once the financial and customer perspectives have been designed, the customers perspective will define their internal perspective. Typically, customers might not notice these processes directly, but business must excel at these processes to succeed. Looking at these critical business processes with a lean and six sigma lens, consumers of the BSC see supplemental measures of quality, yield, throughput, and cycle time that quantify potential financial and customer objectives such as reducing costs and improving the customer’s experience. By removing waste and defects from end-to-end critical business processes, organizations can identify opportunities to mature their processes (sigma level or maturity scales) and reduce risk and cost. Another metric: Break Even Time (BET), can be a useful measurement of the product development cycle. This measurement stresses the importance of productivity while also capturing and comparing productivity. This measurement is an indicator rather than an outcome measurement.

Other perspectives can be:

• Executives must constantly inspect and refine the IT organization's internal processes to ensure efficiency, predictability, and long term scalability.
• Key internal IT processes may include project management, change management, support management, and network management.
• There may also be specific cycle time reduction or quality initiatives tracked at this perspective. 
• Objectives and metrics related to internal process improvement are an important part of a executive balanced view of IT maturation.

The future orientation perspective covers the human infrastructure of the organization and is the final perspective to be developed. It comes last because as you define the other strategies and objectives you may determine that there are gaps and opportunities to develop the organization. This perspective addresses performance indicators that concern employees, systems, and organizational procedures.

The three primary categories within learning and growth are employee capabilities, information systems capabilities, and motivation empowerment and alignment. Three core employee measurements are employee satisfaction, employee retention, and employee productivity. There may be variations on these metrics based on the related strategies.

Other perspectives can be:

• Investment in people within the IT organization is crucial for the long term success.
• Training in pursuit of technical certification or increased capability is a very good indicator of the level of commitment that management has to the development of IT employees.
• Other key indicators include salary competitiveness, employee satisfaction, and employee turnover. 
• Where is my team strong and weak?
• Am I growing staff by moving them around?
• What are the total people resources of IT and how do they divide out for Full Time Employees versus Contractors and for Onshore versus Offshore?

• The executive direct customers are the senior managers of the business units.
• It is very important that the executive be in touch with the customer perspective on IT effectiveness.
• Measuring the reliability of the systems the customers depend upon.
• Support levels, project status, and overall satisfaction ratings should also be measured.
• How is my customers’ satisfaction improving over time?
• How are the quantifiable elements of customer service stacking up—SLA, Request, and Projects?
• How well am I managing the customer’s money?