January 30, 2012
It's time to re-think the report card used by CIOs to report on BT performance – tomorrow’s BT CIOs must look beyond the traditional IT Balanced Scorecard (BSC).
I realize this is sacred ground for many people in IT (and some of my colleagues here at Forrester), so let me explain myself before I receive a barrage of complaints. The philosophy behind Business Technology (BT) recognizes technology as integral to every facet of every organization – as such, IT is very much an integral part of the business; we can no longer talk about “business” and “IT” as if referring to two distinct things. I’m suggesting that in the age of BT, we need a new scorecard that better reflects the impact of BT on the business.
A great deal has been written and published on the Balanced Scorecard, including many great pieces of research by my colleague Craig Symons, such as his recent report "The IT Balanced Scorecard: Customer/Partner Metrics Revisited." I'm not suggesting we throw this out by any means – CIOs absolutely need to use a balanced scorecard to run an efficient and effective BT operation (see fig 1).
Fig 1 – A High-Level Balanced Scorecard Template
However, I am suggesting executives outside of BT/IT don't care much about the operational excellence aspects of IT (the ones in the lower right quadrant) or the future orientation aspects of IT. Non-IT execs expect the CIO to run an efficient operation. What they do care a great deal about is the impact BT has on business outcomes.
If you accept for a moment the premise that non-IT execs care little about IT’s internal performance and the metrics used to measure effectiveness in these areas (such as the percentage of projects delivered on-time, IT SLA performance, or emerging technology research), then what metrics should CIOs use to report BT’s contribution to the business?
Introducing A New BT Report Card
My suggestion is to focus BT’s external report card for business leaders on four similar yet different aspects of technology’s impact on the business:
- Strategic Value
- Innovation Value
- Internal Customer Value
- External Customer value
To illustrate this, and contrast it to the balanced scorecard above, I’ve used the same graphical format as the balanced scorecard graphic. I’m not suggesting this is a balanced scorecard – it is not; it’s a BT report card (see fig 2).
Fig 2 – The BT Report Card
This new report card places greater emphasis on the big things that matter to the CEO and other executives – how the organization is using technology to move the dial on critical measures of success.
It's certainly true that not all of these metrics are easy to capture, and the link between technology investments and subsequent changes in the metrics is often indirect, but that's not a reason to back away. After all, if the investments we're making in technology don’t influence these things, then why are we making them?
So what do you think? Does IT need a new scorecard? Do these measures of success make sense? Are there other metrics you think we need to include? How would this report card change behaviors in your IT department? (Comment below or join the discussion on our community).
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