The IT Balanced Scorecard

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The IT Balanced Scorecard
Ron SaullGreat-West Life n London Life
n Investors Group n Canada Life Senior
Vice-President and CIO n Information
Services Division
October 29, 2003 n WebCast
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Agenda
Session Content

• I.T. Balanced Scorecard as a Governance Tool
• Introduction to PFC Environment
• Creation of the I.S. Division Strategy
• Description of the I.T. Balanced Scorecard
• Questions

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1.
I.T. BSC as a Governance Tool
What is I.T. Governance?
IT governance is the responsibility of the board
of directors and executive management. It is an
integral part of enterprise governance and
consists of the leadership and organisational
structures and processes that ensure that the
organisations IT sustains and extends the
organisations strategies and objectives.
ITGI, Board Briefing on IT Governance
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1.
I.T. BSC as a Governance Tool
What does it cover?

• Strategic alignment, focusses on ensuring the
  linkage of business and IT plan on
• defining, maintaining and validating the IT value
  proposition on aligning IT operations
• with the enterprise operations and establishing
  collaborative solutions to
• Add value and competitive positioning to the
  enterprises products and services
• Contain costs while improving administrative
  efficiency and managerial effectiveness

IT Governance Domains
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1.
I.T. BSC as a Governance Tool
What does it cover?
Value delivery is about executing the value
proposition throughout the delivery cycle,
ensuring that IT delivers the promised benefits
against the strategy, concentrating on
optimising expenses and proving the value of IT,
and on controlling projects and operational
processes with practices that increase the
probability of success (quality, risk, time,
budget, cost, etc)
IT Governance Domains
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1.
I.T. BSC as a Governance Tool
What does it cover?
Risk management requires risk awareness of senior
corporate officers, a clear under- standing of
the enterprises appetite for risk and
transparency about the significant risks to the
enterprise it embeds risk management
responsibilities in the operation of the
enterprise and specifcally addresses the
safeguarding of IT assets, disaster recovery
and continuity of operations
IT Governance Domains
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1.
I.T. BSC as a Governance Tool
What does it cover?
Resource management covers the optimal
investment, use and allocation of IT resources
and capabilities (people, applications,
technology, facilities, data) in servicing the
needs of the enterprise, maximising the
efficiency of these assets and optimising their
costs, and specifically focusses on optimising
knowledge and the IT infrastructure and on where
and how to outsource
IT Governance Domains
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1.
I.T. BSC as a Governance Tool
What does it cover?
Performance measurement, tracking project
delivery and monitoring IT services, using
balanced scorecards that translate strategy into
action to achieve goals measur-able beyond
conventional accounting, measuring those
relationships and knowledge-based assets
necessary to compete in the information age
customer focus, process efficiency and the
ability to learn and grow.
IT Governance Domains
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Introduction to PFC Environment
2.
PFC Organizational Structure
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Introduction to PFC Environment
2.
Information Services Scale
Power Financial Corporation
Notes GW/LL/MFC 2003 FTEs Net Operating
Expenses CL 2003 FTE Plan Canada only All
Does not include contractors
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2.
Introduction to PFC Environment
A Shared Services Information Services Division
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2.
Introduction to PFC Environment
The Business Balanced Scorecard
Vision Strategy
Source The Strategy-Focused Organization, Robert
S. Kaplan and David P. Norton, 2001
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2.
Introduction to PFC Environment
Balanced Scorecard Cascade
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2.
Introduction to PFC Environment
Best Practice Models
Process Model Selection Matrix
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2.
Introduction to PFC Environment
CobiT An I.S. Control Framework

• Starts from the premise that I.S. needs to
  deliver the information that the enterprise needs
  to achieve its objectives
• Promotes process focus and process ownership
• Divides I.S. into 34 processes belonging to four
  domains
• Looks at fiduciary, quality and security needs of
  enterprises and provides for seven information
  criteria that can be used to generically define
  what the business requires from I.S.

Domains 1. Planning Organization 2. Acquiring
Implementing 3. Delivery Support 4. Monitoring
Information Criteria 1. Effectiveness 2.
Efficiency 3. Availability 4. Integrity 5.
Confidentiality 6. Reliability 7. Compliance
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3.
Creation of the I.S. Division Strategy
Recognizing the New Realities

• Emerging Issues
• Increasing importance of corporate and I.S.
  governance
• Changing expectations of I.S. stakeholders
• Need to demonstrate value creation
• Increased focus on risk management
• Increased pressure on reducing I.S. budgets

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3.
Creation of the I.S. Division Strategy
Defining Stakeholders Interests
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3.
Creation of the I.S. Division Strategy
Defining Stakeholders Interests
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3.
Creation of the I.S. Division Strategy
I.S. Strategy Summary
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3.
Creation of the I.S. Division Strategy
I.S. Strategy Summary
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3.
Creation of the I.S. Division Strategy
I.S. Strategy Summary
Support Technology Users
Understand Business Unit Strategies
Understand Business Unit Strategies
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3.
Creation of the I.S. Division Strategy
I.S. Strategy Summary
Propose Validate Enabling Solutions
Understand Emerging Technologies
Develop the Enterprise Architecture
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3.
Creation of the I.S. Division Strategy
I.S. Strategy Summary
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3.
Creation of the I.S. Division Strategy
I.S. Strategy Summary
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3.
Creation of the I.S. Division Strategy
I.S. Strategy Summary
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4.
Description of the I.T. Balanced Scorecard
Setting I.S. Scorecard Objectives
Our I.S. balanced scorecard should enable us to

• Align I.S. plans and activities with business
  goals and needs
• Align employees efforts toward I.S. objectives
• Establish measures for evaluating the
  effectiveness of the I.S. organization
• Stimulate and sustain improved I.S. performance
• Achieve balanced results across stakeholder
  groups

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4.
Description of the I.T. Balanced Scorecard
Adapting the BSC Perspectives
ISBSC
Explanation
Traditional BSC
Financial
Corporate Contribution
Internal support vs. profit centre
Customer Orientation
Customer Orientation
Internal clients vs. external customers
Business Process
I.S. Process
I.S. vs. business process
Learning and Growth
Rate of technology change
Future Orientation
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4.
Description of the I.T. Balanced Scorecard
Corporate Contribution
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4.
Description of the I.T. Balanced Scorecard
Customer Orientation
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4.
Description of the I.T. Balanced Scorecard
I.S. Process
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4.
Description of the I.T. Balanced Scorecard
Future Orientation
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4.
Description of the I.T. Balanced Scorecard
I.S. BSC Structure
Strategic IT Scorecard
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4.
Description of the I.T. Balanced Scorecard
Aligning and Measuring Operational Services
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4.
Description of the I.T. Balanced Scorecard
I.S. Service Desk Unit Scorecard
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5.
Questions

• Questions?

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• Ron Saull
• Great-West Life/London Life/Investors Group
• 60 Osborne Street North, Winnipeg, Manitoba
• R3C 3A5 Canada
• 204-946-2930
• ron.saull_at_gwl.ca

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5.
Questions
I.S. BSC Experience Measurement Challenges
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5.
Questions
Issues in I.T. Governance Metrics The
measurement problem Creating value from
Intangible Assets Is Different
Intangible assets do not have a direct impact on
financial results - it is usually a second-order
or third-order impact.
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5.
Questions
Issues in I.T. Governance Metrics The
measurement problem Creating value from
Intangible Assets Is Different
Intangible assets require several interdependent
ingredients for value creation.
Strategic investments must be bundled
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5.
Questions
I.S. BSC at PFC I.S. Value Delivery
Our Decision
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5.
Questions
I.S. BSC Experience Measurement Challenges
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5.
Questions
I.S. BSC Experience Measurement Challenges