4.4 Balancing the Services

Services that are focused on supporting the "squeakiest wheel" in the organization may not be optimizing the resources in the IT organization or leveraging the most valuable business contributors. Traditionally, if the top executive has a finance background the entire organization, including IT, will have a tendency to expend more energy on financially oriented activities such as cost control. In the same vein, if the top executive comes from a marketing background the organizational focus will most likely be revenue generation. Insuring that the organization views its responsibilities in a balanced manner requires a discipline that should be applied throughout the enterprise, including the IT function.

Services that the IT function provides the enterprise must support the balanced needs of the entire organization. One method of ensuring that this happens is through the use of the balanced scorecard approach.

The balanced scorecard approach is an approach that first burst on the scene with a Harvard Business Review article, "The Balanced Scorecard ”Measures that Drive Performance," January “February 1992, written by David Norton and Robert S. Kaplan. Since that article, the methodology has become widely accepted as an extremely valuable tool to ensure that strategies address all areas of the enterprise, and has become a core management process to ensure that resources are allocated appropriately to the support of the strategies.

The balanced scorecard methodology, in addition to providing discipline to ensure all facets of the enterprise are viewed in a balanced manner, provides an architecture that includes measurement of goal accomplishments that grow out of the methodology.

The balanced scorecard methodology forces all aspects of the enterprise to be viewed from four different perspectives:

Financial Perspective
Customer Perspective
Internal-Business Process Perspective
Learning and Growth Perspective

The financial perspective looks at strategies, goals, and services from a stockholder and CFO's standpoint.

The customer perspective looks at strategies, goals, and services from a customer satisfaction, marketing, and pricing standpoint.

The internal-business process perspective looks at strategies, goals, and services from a production, quality, and service standpoint.

The learning and growth perspective looks at strategies, goals, and services from the standpoint of how well an organization accommodates change, learns from its mistakes, and develops its resources.

Figure 4-4 provides an overview of the balanced scorecard framework. The companies that utilize this methodology have an excellent tool to ensure that all the enterprises ' objectives and initiatives are adequately supported by services. Another valuable use of the methodology is in the area of measurement. Not only do services need to be balanced across the enterprise to ensure that adequate coverage is provided, but the level of service and the resources required also need to be balanced. Measures in the different balanced scorecard perspectives can be linked to service level agreements at the operations level. Examples of business measures in the methodology are:

Figure 4-4. The balanced scorecard framework. (Adapted and reprinted by permission of Harvard Business Review. Excerpt from "Using The Balanced Scorecard as a Strategic Management System" by Robert S. Kaplan and David P. Norton, (January “February 1996). Copyright 1996 by the President and Fellows of Harvard College, all rights reserved.)

Financial Perspective

Return on Investment
Economic Value Added
Revenue/Employee
Unit/Costs

Customer Perspective

Customer Satisfaction
Market Share
Customer Retention

Internal-Business Process Perspective

Quality
Response Time
New Product Sales Percentage

Learning and Growth Perspective

Employee Satisfaction
Reskilling Capabilities
Team Alignment and Performance

The investment to create a balanced scorecard framework and surround it with management processes is not trivial. However, there is software that provides support for this investment.