LEVERAGING THE IT BALANCED SCORECARD AS ALIGNMENT INSTRUMENT

By- Mirza Baig

IT Balanced Scorecard

At the end of this chapter we would learn: Implementation of IT Balanced

scorecard(BSC) application by a major Canadian financial group

Building of IT BSC and its Organization

Defining mission statements of the IT strategic scorecard

Introduction

Case study of Power Financial Corporation group of companies, based in Canada.

Members of group – The Great-West Life Assurance Company(GWLAC), London Life and Investors Group.

The GWLAC – Offers Life Insurance, Health Insurance, Retirement Savings and General Insurance. Its assets are more than $86.9 billion and $477 billion of life insurance in force.

London Life – It markets Life Insurance, Disability Insurance and Retirement Savings. It has more than $30 billion assets under administration and $142.6 billion of life insurance in force. The London Life is a wholly owned subsidiary of The GWLAC.

Investors Group – It is a leading provider of Mutual Funds. Offers number of insurance and mortgage options. Its life insurance coverage is about $17.1 billion . Its assets are about $40.5 billion.

The Tri-Company IT Merger

Merging of the IT divisions of the three companies took place in November, 1997.

IT expenditures exceeded $200 million. Companies merged to: Reduce costs and succeed in IT services. Achieve world class status in IT services. Maximize operating efficiency. Leverage technology investments. Optimize technical infrastructure.

Organization chart of the merged IT division

IT BSC Project and its Organization The CIO of the merged IT division defined the

goal of implementing BSC as : “Through the balanced scorecard I would know what was important to the business and I would not fall victim to the early termination syndrome. Or at least I would have a better chance of survival.” When companies started merging IT groups: The stakes were raised. IT division took measures to control over their

vital IT services, when the stakeholders were concerned about the loss of control over IT services.

Concept of balanced scorecard and its application to IT were discovered through website of IT Governance Institute (www.itgi.org).

The IT department believed that the scorecard could provide an answer to the key questions of different stakeholders.

The objectives of the scorecard were stated as:

• Align IT plans and activities with business goals

• Align employees’ efforts toward IT objectives

• Evaluating effectiveness of IT organization• Improved IT performance• Achieve balanced results

Building the IT BSC

In 2002, the status of the BSC project said that: 66% of the measures are completed 29% are in progress 5% are not yet started The IT BSC was meaningful only when: Clear business strategy was defined New Information Services Division(ISD) was

made Effective measures be taken whenever a flaw

occurs in the system

Vision and Strategy of ISD

ISD develops world-capabilities to serve customers

It is a non profit based business It supports achievement of company

goals and strategies It becomes the supplier of choice of IT It enables use of technology as a

competitive edge in financial market

Mission statements of IT strategic scorecard

To be the supplier for all IT services, either directly or indirectly through supplier relationships.

To deliver timely and effective IT services by lowering the costs.

To enable achievement of business objectives through effective delivery of value added IT services.

To continuously improve performance through innovation and organizational growth.

Customer Orientation Corporate Contribution

Operational Excellence Future Orientation

Conclusion

The development and implementation of an IT balanced scorecard within a large Canadian insurance group is described and discussed.

The implementation of BSC is a project that needs substantial human and financial resources.

The case illustrated the linkage of IT BSC with the business objectives.

Within the next two years a mature IT BSC would be linked to the business.

THANK YOU!