Page 171 - DMGT302_FUNDAMENTALS_OF_PROJECT_MANAGEMENT

Fundamentals of Project Management

Notes should be supplemented with measures concerning customer satisfaction, internal processes
and the ability to innovate. Results achieved within the additional perspectives should assure
future financial results (Kaplan and Norton). Kaplan and Norton propose a three layered structure
for the four perspectives: mission (to become the customers’ most preferred supplier), objectives
(to provide the customers with new products) and measures (percentage of turnover generated
by new products). To put the BSC to work, companies should translate each of the perspectives
into corresponding metrics and measures that assess the current situation. These assessments
have to be repeated periodically and have to be confronted with the goals that have to be set
beforehand. At first, the BSC was used as a performance measurement system and a planning
and control device. Later on, some companies moved beyond this early vision of the scorecard.
They discovered that the measures on a balanced scorecard can be used as the cornerstone of a
management system that communicates strategy, aligns individuals and teams to the strategy,
establishes long-term strategic targets, aligns initiatives, allocates long and short term resources
and finally, provides feedback and learning about the strategy (Kaplan and Norton). Different
market situations, product strategies, business units and competitive environments require
different scorecards to fit their mission, strategy, technology and culture. The general BSC-
framework can be translated to the more specific needs of the monitoring and evaluation of the
IT function and recently the IT BSC has emerged in practice (Graeser et al.; Van Grembergen and
Saull). In Van Grembergen and Van Bruggen and Van Grembergen and Timmerman a generic IT
scorecard is proposed consisting of four perspectives: business contribution, user orientation,
operational excellence and future orientation. This IT scorecard differs from the company-wide
BSC because it is a departmental scorecard for an internal service supplier (IT): the customers are
the computer users, the business contribution is to be considered from management’s point of
view, the internal processes under consideration are the IT processes (systems development and
operations) and the ability to innovate is measuring the use of new technologies and the human
IT resources.

Self Assessment

Fill in the blanks:
1. ....................... projects are often managed too technically and little attention is paid to the
business case.
2. In the 1990s, ....................... and Norton developed the balanced scorecard.
3. Kaplan and Norton propose a three layered structure for the ....................... perspectives:
mission, objectives and measures.
4. This IT scorecard differs from the company-wide BSC because it is a departmental
....................... for an internal service supplier.

10.3 Generic E-business Balanced Scorecard

The costs that go with the development, implementation and the maintenance of an E-business
project can be very high. Therefore, E-business projects, like any other projects, need to be evaluated
and monitored to find out if the project delivers what it was supposed to deliver. This means that
performance measurement is one of the most important activities that occur once an E-business
project is started. However, many of the E-business benefits such as better customer service,
increased responsiveness and faster deliveries are intangibles that are difficult to translate into
monetary benefits. Raisinghani reports that three-fourths of information systems investments,
ranging from data centers to web sites, offer no calculable business value. The traditional financial
performance measures such as ROI, NPV, IRR and the payback method are therefore problematic
in measuring E-business investments because they need monetary values for benefits and costs.

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