Aligning the internal IT function to the overall business goals of the organization using the balanced scorecard approach

Abstract

The Balance Scorecard was developed in the early 1990's by Robert Kaplan and David Norton to help organizations manage effectively by tracking both financial and operational metrics. The balanced scorecard approach provides a clear prescription as to what companies should measure in order to 'balance' the financial perspective. Companies all over the world to improve their competitiveness have used this approach successfully. As businesses around the world look at investments in new IT products or IT based processes to increase competitiveness, the· internal IT function of organizations needs to ensure that it aligns itself to the overall business goals of the parent organization. Some of the typical benefits that business can achieve by achieving alignment between their overall goals and that of their internal IT function are -Reduce the time to market for IT based products and services Reduce cost of developing and maintaining IT based systems Attract and retain customers with improved IT based products and services Increase internal efficiencies by effective use of IT. This paper adopts the Balanced Scorecard to identify different areas of improvement for the internal IT Function of an organization, which can result in effective alignment between its business goal and that of the parent organization. It will also use the "Goal-Question Metric" framework to identify metrics that can be used to measure and make such improvements within the internal IT organization. This paper is intended to benefit the Information Technology office (CIO / CTO office) senior managers and process engineering groups of all internal IT organizations. This work will also benefit various IT vendors in the software services space, who are outsourcing partners to such internal IT organizations.