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Translating Strategy Into an IT Scorecard
The major portion of the Balanced Scorecard strategy is in its initial design; that is, in translating the strategy into an IT Scorecard, the Evaluation of Technology. During this phase a strategy map and an actual Balanced Scorecard are created. This process should begin by designing a Balanced Scorecard that articulates the business strategy.
Remember that every organization needs to build a strategy that is unique and based on its evaluation of the external and internal situation (Olve et al, 2003). To clarify the definition of this strategy it is easier to consider drawing the scorecard initially in the form of a strategy map. A generic strategy map essentially defines the components of each perspective, showing specific strategies within each one, as shown in below:
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We can apply the generic strategy map above to an IT organization, as shown below:
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As an example of how to create a Balanced Scorecard for an IT issue, I create a fictitious firm called Ravell. The IT organization of Ravell has a strategic decision to make for the organization, specifically, the economies of scale for rental expense and an opportunity to retire old computers and replace them with a much needed state-of-the-art network. Furthermore there is a grave need to replace old legacy applications that are incapable of operating on the new equipment and are also not providing the competitive advantage that the company seeks to attain. In using the above strategy map, a Balanced Scorecard can be developed containing the specific outcomes to achieve the overall mission. The Balanced Scorecard is shown below:
Mission: To accelerate investment in technology during the company's relocation for reasons of economies of scale and competitive advantage.
Strategy Map Perspective
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Measurable Outcomes
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Strategic
Objectives
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Organizational Transformation
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| Financial |
Improve Returns on Project Investments
Reduce Technology Overhead Costs
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Combine IT expenses with relocation and capitalize entire expense.
Integrate new telephone system with computer network expenses.
Leverage engineering and communications expenses with technology.
Retire old equipment from financial statements.
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Combination of expenses requires formation of new communities of practice, which includes finance, engineering, and IT.
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| Users |
More Satisfied Users
Increase User IT Support
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Increase access to central applications.
Integrate IT within other departments to improve dynamic customer support requirements
Provide new products to replace old email system and make standard applications available to all users
Establish Help-Desk personnel
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Process of supporting users requires IT staff to embrace reflective practices.
User relationship formed through new communities of practice and cultural assimilation with user community.
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| Process |
Provide Accurate and Timely Information
Improved Systems
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Improve Decision Support for improved reporting and strategic marketing
Upgrade new internal systems including Customer Resource Management (CRM), and General Ledger applications
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Strategic Integration occurs through increased discourse and language among communities of practice engaged in making relocation successful. New knowledge created and needs knowledge management.
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| Learning & Growth
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New Technology Products
New Ways of Staff Interaction
Establish New Organization Structure
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Investigate new voice-messaging technology to improve integration of email and telephone Systems
Physically relocate IT staff across departments.
Modify IT reporting structure with "dotted-line" to business units.
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IT becomes more critically reflective, understands value of their participation with learning organization. IT staff seeks to know-less and understands view of the "other."
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The Ravell Balanced Scorecard has an additional column that defines the expected organizational transformation. This model addresses the issue of whether a change is truly a transformation. This method also provides a systematic process to forecast, understand, and present what technology initiatives will ultimately align with business goals.
There are two other important factors embedded in this modified Balanced Scorecard technique. First, Scorecards can be designed at varying different levels of detail. Thus, more Balanced Scorecards can be developed that address other projects. Second, the Scorecard can be modified to reflect unexpected changes during a technology's implementation. These changes could be related to a shifting mission statement or to external changes in the market that require a change in business strategy. Most important, though, are the expected outcomes and transformations that occur during the course of a project. Essentially, it is difficult to predict how organizations will actually react to changes during an IT project and transform. The Balanced Scorecard provides a checklist and tracking system that is structured and sustainable—but not perfect. The salient issue here is that it allows an organization to understand when such unexpected changes have occurred. When this does happen, organizations need to have an infrastructure and a structured system to examine what a change in their mission, strategy, or expectations mean to all of the components of the project. This can be described as a "rippling effect," where one change can instigate others, affecting many other parts of the whole. Thus, the Balanced Scorecard, particularly using a strategy map, allows practitioners to reconcile how changes will affect the entire plan.
Another important component of the Balanced Scorecard, and the reason why I choose to use it as the measurement model for outcomes, is its applicability to organizational learning. In particular, the Learning and Growth Perspective shows how the Balanced Scorecard ensures that learning and strategy are linked in organizational development efforts.
Next: Implementing the Balanced Scorecard
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