Transcript #123 The Ins and Outs of Outs and Ins: A lesson in the art

No. 321 - CIO SCORECARD
Ron Saull
Senior Vice-President & Chief Information Officer
Information Services Divisions of:
July 20, 1999
C
I
O
S
C
O
R
E
C
A
R
D
Good Afternoon...
and, Welcome!
C
I
O
S
C
O
R
E
C
A
R
D
Presentation Objectives
Discuss issues experienced in
scorecard implementation and
measurement.
Share experiences in establishing an
I.S. Scorecard based on the Kaplan,
Norton “Balanced Scorecard” framework.
Examine key issues in determining
I.S. value and organizational
effectiveness.
C
I
O
S
C
O
R
E
C
A
R
D
Agenda
1. Introduction
2. Scorecard
Concepts
4. Scorecard
Implementation
3. GWL/LL/IG
Scorecard
C
I
O
S
C
O
R
E
C
A
R
D
1. Introduction





What is an I.S. Scorecard?
Why Create an I.S. Scorecard?
Who Cares?
What are the Concerns?
Is it Worth it?
C
I
O
S
C
O
R
E
C
A
R
D
What is an I.S. Scorecard?

According to...
– Gartner: “A multi-dimensional, linked set of metrics used to
define, measure and modify performance”.
– Kaplan/Norton: “A set of measures that gives top managers a
fast but comprehensive view of the business” .

Two issues inherent with a scorecard:
– linkage: linking measures to drivers
– balance: balancing the interests of key stakeholders
C
I
O
S
C
O
R
E
C
A
R
D
Why Create an I.S. Scorecard?
 To demonstrate the value added by the I.S. Organization
 To guide the creation of I.S. strategic plans which link into
operational plans
 To establish a balanced set of measures to determine I.S.
effectiveness
 To communicate and motivate I.S. performance in key
areas
 To establish a framework for I.S. Management reporting
An I.S. Scorecard, supported by key stakeholders,
should become an I.S. governance “best practice”.
C
I
O
S
C
O
R
E
C
A
R
D
Who Cares?
Board of Directors
Executive Management Committee
I.S. PERFORMANCE

Audit & 
Regulatory 


Management
Organization
Methods & Tools
Internal Economy
People/Culture
Lines of
Business
&
RESULTS
Customers
I.S. Organization: Management
Practitioners
Support Professionals
C
I
O
S
C
O
R
E
C
A
R
D
What are the Concerns?
Board of Directors
Executive Management Committee
Lines of Business
Customers
I.S. PERFORMANCE





Management
Organization
Methods & Tools
Internal Economy
People/Culture
I.S. Organization:
Management/Practitioners/Support Professionals
RESULTS
Audit
Regulatory
C
I
O
S
C
O
R
E
C
A
R
D
Is it Worth It?
For some….it depends if…
The value of the I.S. scorecard outweighs the cost of
its implementation
There is commitment from all involved (top executives
and down the organization)
For ME….ABSOLUTELY
!
C
I
O
S
C
O
R
E
C
A
R
D
2. Scorecard Concepts






Business View of I.S.
Concept of Value
How Value is Measured
Concept of Benchmarking
Concept of I.S. Alignment
Acceptance of Measures
C
I
O
S
C
O
R
E
C
A
R
D
Business View of I.S.
 The value I.S. delivers to the business depends on how the
business views I.S. Either as a...
Commodity Service Provider
Strategic Partner
 IT is for efficiency
IT is for business growth
 Budgets are driven by external benchmarks
Budgets are driven by business strategy
 IT is separable from the business
IT is inseparable from the business
 IT is seen as an expense to control
IT is seen as an investment to manage
 IT managers are technical experts
IT managers are business problem solvers
Generic Measures
Specific Measures
Based on the work of N. Venkatraman





C
I
O
S
C
O
R
E
C
A
R
D
Concept of Value
Cost of I.S.
Services
INPUTS
OUTPUTS
Business Value
Measures of value must be negotiated with the
business through a continuous process.
C
I
O
S
C
O
R
E
C
A
R
D
How is Value Measured?
3 Current Views...
Financial Measures (traditional focus)
Information Economics (Parker et al)
Economic Value Added (EVA)
C
I
O
S
C
O
R
E
C
A
R
D
Concept of Benchmarking
Relevance depends on the value being sought by the
business i.e. commodity service vs. strategic contribution
-- not applicable for strategic contributions --
Benchmarking I.S.
Benchmarking Projects
No single expression of
value for comparison
Productivity and quality are the
main areas typically addressed
C
I
O
S
C
O
R
E
C
A
R
D
Concept of I.S. Alignment
Concept of alignment is only meaningful where
there is a clearly articulated business strategy
Aligning I.S.
Aligning Projects
As a strategic partner, the
strategy, vision, and
measures of success and
value should be
created jointly.
Project selection process must
incorporate an evaluation
mechanism which reflects key
business goals and their
relative importance.
C
I
O
S
C
O
R
E
C
A
R
D
Acceptance of Measures
Acceptance of measures is not only a question of
facts but of trust and perception.
I.S. must build its relationship with the business to build
its trust, credibility and influence.
Fundamental to building a relationship between I.S. and
the business.
I.S. must learn to market its capabilities and successes.
C
I
O
S
C
O
R
E
C
A
R
D
3. GWL/LL/IG I.S. Scorecard




Tri-Company Introduction
Traditional Balanced Scorecard
I.S. Scorecard Framework
Vision and Strategy (Highlights)




Corporate Contribution
Customer Orientation
Operational Excellence
Future Orientation
 Scorecard Linkage
 Business/I.S. Alignment
C
The
Business
I
O Market Strength
S
C
O
R
E
C
A
R
D
Opportunity --
Largest Canadian retail advice/service distribution system
Increased sales productivity
Enhanced opportunities for revenue growth
Economies of scale
Assures long-term sustainability of Canadian operations
GWL
LL
IG
Leading
Group Insurance
Market Share
Leading
Individual Insurance
Market Share
Leading
Mutual Fund
Market Share
C
I
O
S
C
O
R
E
C
A
R
D
Bringing Three I.S. Divisions...
+
+
C
Together,
Serving
3
Companies
I
O
S
C
O
R
E
C
A
R
D
I.S.
C
I
O
Traditional Balanced Scorecard
S
C
Customer
O
“To achieve our
vision,
how
R
should we
appear to our
E
customers?”
C
A
R
D
Financial
“To succeed financially,
how should we appear to
our shareholders?”
Internal Business Process
Vision
and
Strategy
Learning and Growth
“To achieve our vision,
how will we sustain our
ability to change and
improve?”
“To satisfy our
shareholders and
customers, what
business processes
must we excel at?”
Corporate
Customer
Contribution Orientation
External
S
C
O
R
E
C
A
R
D
I.S. Scorecard Framework
Single I.S. OrganizationVision
focused on developing worldclass capabilities to serve
and the distinct customer
needs of its three
sponsoring companies.
Strategy
Future
Orientation
Operational
Excellence
Internal
C
I
O
C
I
O
S
C
O
R
E
C
A
R
D
Corporate Contribution
Strategic
Year
2000
Strategic
Year 2000
Contribution
Compliance
Contribution
Compliance
Synergy
Synergy
Achievement
Achievement
Corporate
Business
Value
Business Value
I.S. Projects
Contribution
of ofI.S.
Projects
Management
of
Management of
Investments
Vision
I.S.I.S.Investments
and
Strategy
C
I
O
S
C
O
R
E
C
A
R
D
Customer Orientation
Service
Level
Customer
Customer
Service Level
Performance
Satisfaction
Performance
Satisfaction
Business/I.S.
Business/I.S.
Partnership
Customer
Partnership
Application
Orientation
Delivery Delivery
Application
Performance
Performance
Vision
and
Strategy
C
I
O
S
C
O
R
E
C
A
R
D
Operational Excellence
Vision
and
Strategy
Process
Responsiveness
Responsiveness
Excellence
Internal Cost of Total
Process Excellence
Operational Internal Cost of
Quality Measures
Measures
Excellence
Quality
Security
Security & Safety
Backlog&Management
Safety
Backlog Management & Aging
& Aging
C
I
O
S
C
O
R
E
C
A
R
D
Future Orientation
Vision
and
Strategy
StaffStaff
Management
Management
Effectiveness
Effectiveness
Enterprise
Enterprise
Architecture
Architecture
Future
Evolution
Evolution
Orientation
Knowledge
Knowledge
Management
Management Emerging
Emerging
Service
Capability
Technologies
Service Capability Technologies
Improvement
ImprovementResearch
Research
C
I
O
S
C
O
R
E
C
A
R
D
Business / I.S. Alignment
Specific
Mechanisms
Employed
Specific
Contributions
C
I
O
S
C
O
R
E
C
A
R
D
4. Scorecard Implementation




Basic Approach
Scorecard Contributors
Actions to Date
Next Steps
C
I
O
S
C
O
R
E
C
A
R
D
Basic Approach
 I.S. Mgmt
Reporting
 Select/
Evaluate
 Accountability
 Customize
 Develop
Key Measures
 I.S.
Alignment
 Evaluate
 Evolve
C
I
O
S
C
O
R
E
C
A
R
D
Scorecard Contributors
Executive Management
Boards of Directors
Executive Mgmt Committees
LOB Executive Management
LOB Middle Managers
I.S. Management
I.S. Practitioners/Support
Professionals
Finance Division
Audit Committees of the Boards
Market Analysts
Legal Department
Regulators
Internal Audit
External Audit
Corporate
Customer
Contribution Orientation
C.I.O. SCORECARD
Future
Orientation
Operational
Excellence
C
I
O
S
C
O
R
E
C
A
R
D
Actions to-date
1998
April
1999
May
Dec
Jan
April
July
CEO
approval
Internal awareness Reviewed internal
& tactical changes 1999 directions
Deriving common
scorecard factors
C
I
O
S
C
O
R
E
C
A
R
D
Next Steps
1999
July
 Consult with key stakeholders on scorecard factors,
performance indicators and benchmarks
 Develop customized scorecards for each company based on
stakeholder input
 Conduct gap analysis to existing measurements
 Develop plan for scorecard evolution based on gaps and current
I.S. Plans
C
I
O
S
C
O
R
E
C
A
R
D
5. Questions