September 26, 2016
We’ve entered the age of the customer, where powerful customers are disrupting every industry. In response, companies will have to change how they develop, market, sell, and deliver products and services directly to their customers and through their partners. CIOs and their teams are crucial to these strategic responses and will have to track transformation and performance with new metrics to go beyond their traditional IT approach to include the business technology (BT) strategy — technology, systems, and processes to win, serve, and retain customers.
Existing approaches to Balanced Scorecards deliver limited value in this new environment. This is why Forrester has created an updated Tech Management Balanced Scorecard (based on the original framework proposed by Robert S. Kaplan and David P. Norton) in which we recommend an approach that addresses four components: business outcomes, agility, health, and service (see Figure).
Health and service represent those measures on which CIOs are typically measured. However, in the Age of the Customer, CIOs must begin to address new metrics that better align with the business. Outcome metrics ensure a clear linkage between technology spending and business results. Measuring and communicating these metrics can ensure joint accountability and ownership of business- or customer-focused systems. CIOs can act as the glue that provides data on variables to understand their impact on outcomes. With disruption and volatility in virtually every market, the ability to change business models, processes, or engagement strategies becomes a critical success factor for any organization. The agility metrics are therefore important determinants of the long-term success of an organization. Agility metrics help ensure technology management is flexible and nimble enough to move with the pace of business change, is skilled enough with the capacity to adapt to future business needs, and has the technology to support future business models.