AIS Chapter `16

Balanced Scorecard

•Used extensively in business and industry, government, and nonprofit organizations worldwide.

•Aligns business activities to the vision and strategy of the organization.

•Improves internal and external communications.

•Monitors organization performance against strategic goals.

Four Perspectives of Balanced Scorecard

Financial Perspective

Customer Perspective

Business Process

Learning & Growth

Learning and Growth Perspective

Describes the firm’s objectives for improvements in tangible and intangible infrastructure

Human Capital - investment in people

Information Capital – investment in information

Organization Capital – investment in creating a unique corporate identity and culture

Process Perspective

Operations management processes, such as supply, production, distribution, and risk management.

Customer management processes, such as those involved with the selection, acquisition, and retention of customers, and growth of the firm’s market.

Innovation processes, such as identifying opportunities, research and development, product design and development, and product launch.

Regulatory and social processes, such as financial reporting, accounting, and those that manage environmental, safety and health, employment, and community issues

Customer Perspective

Value proposition differentiates from the competition

Product attributes, Service attributes, Brand image

Financial Perspective

Confirms the success of the firm’s investments and its ability to deliver value to customers

Overall objective is shareholder value

Strategy Maps

A one-page representation of the firm’s strategic priorities.

Shows the cause-and-effect linkages among strategic priorities.

Allows organizations to assess and prioritize gaps between current and desired performance levels

KPIs

Key Performance Indicators

CSFs

Critical Success Factors

The Balanced Scorecard Management Process

1. Formulate

2. Translate

3. Link to operations

4. Monitor

5. Adapt

VAL IT

structured framework for IT investment and management

Intended to help managers create business value from IT investments

aligns with and complements the COBIT control framework

4 Major Questions of VAL IT

Are we doing the right things?\

Are we doing them the right way?

Are we getting them done well?

Are we getting the benefits?

Domain of Governance

Val IT distinguishes between:

1. projects, activities to deliver a defined capability

2. programs, structured groups of inter-dependent projects

3. portfolios, groups of programs, projects, services, and other IT resources

Implementing VAL IT

1. Recognize problems with prior I T investments.

2. Define characteristics of the ideal future state.

3. Assess the organizations’ readiness to undertake IT business value management.

4. Take action. Build awareness of value management principles. Redefine processes, roles, and responsibilities. Identify and create an inventory of IT investments both planned and ongoing. Review the business cases for individual investments. Evaluate and prioritize investments to form new programs and an overall portfolio.

Business Model Canvas

Business models describe how a business operates – or plans to operate

Integrates business strategy, organization, and the application of technology.

Influenced by external forces

Business Model Integration

Elements of Business Model Canvas

Customer Segments · Value Proposition

Channels · Customer Relationships

Revenue Streams · Key Resources

Key Activities · Key Partners

Cost Structure