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 / Spring 2004 / Issue 34(originally published by Booz & Company)


A CIO's View of the Balanced Scorecard

Experienced project managers know that between the initial excitement and enthusiasm for a new project and the first deliverables, there are two critical periods. The first is the honeymoon, usually at least 12 weeks, but rarely more than 26 weeks, when the project is running on the goodwill created during its kickoff. Project champions are still extolling the potential value, and critics, who lost the battle in opposing the project, find it safer to keep a low profile.

But when the sunny honeymoon ends, the dark clouds of the second period roll in fast and thick; enthusiasts become nervous and naysayers feel safe to come out and criticize. If the dark days last too long, say more than two or three months, a project that seemed to have much support may be marginalized or even canceled. Scorecard projects are especially vulnerable when there are major corporate distractions, such as an economic downturn, a profit shortfall, or unexpected management changes.

Scorecard Wisdom
When I became Booz Allen’s CIO, I was determined to introduce a scorecard for the IT department without making the mistakes of many of my former clients. First, we tackled data integrity issues, including dueling data and definitional problems. As luck would have it, considerable IT reporting was being done at the junior and middle manager level, but little was being done at the senior management level. So we had a relatively clean slate.

Where no data existed, we introduced it after studying and identifying appropriate key performance measures. There are two ways to look at the selection of IT reporting data: Key performance indicators (KPIs) give us the information we want to know; performance measures (PMs) are the actual information we can, or are likely to, get. KPIs are the performance knowledge we want to have about an asset, process, or group, such as sales growth, customer satisfaction, and e-mail availability. PMs are the reporting measures we can get our hands on — such as sales order totals, the number of survey respondents who liked the service, or the percentage of the time e-mail is available when users access it.

Corporate contentment happens when the KPIs and PMs are nearly identical. Major difficulties occur when their definitions diverge. To avoid this, we spent more time on data definition than on any other single facet of the scorecard. It is a process that never ends. As new systems, processes, or groups are brought under the scorecard, all definitions have to be reviewed and recertified.

Another critical step is defining the target audiences, which, for us, include corporate and business unit management, senior and junior IT managers, and journeymen IT staff. We wanted one report for all of them. But to create one report, you need to address two very different perspectives: IT shops think of themselves as selling technology, but users buy service. This distinction is at the heart of much of what goes wrong in managing IT, especially with respect to its relationship with business clients.

More IT departments are starting to appreciate how important it is to address these two perspectives when reporting IT’s value to the business. Value is not a question of one perspective being more important than the other. Reporting on both is necessary. What needs to be different in the process is how each is reported. At Booz Allen, our IT scorecard is multilayered; the top layers have relatively few items and are focused on service offerings — the services a user wants and is willing to pay for. Examples are collaboration and communication, telephones, order processing, and financial accounting. Business users find the highest levels of the scorecard most useful.

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