Why Develop division of Information Technology BSC

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Very often Balanced Scorecard is implemented in auxiliary departments such as HR or IT. BSC is used to measure efficiency of information technologies applied in the business and production processes. Learn more about IT KPis in this article. Check additional information about division of information technology bsc.

Very often auxiliary departments are given too little attention as they do not produce anything. Thus, millions of dollars may be inefficiently spent for HR or IT. Indeed, no business can function without IT support. At the same time, IT departments may function in a very inefficient way which may decrease production efficiency and decrease revenue. Every department must have own strategy that is well integrated into the general strategy of a company. It is impossible to show top performance without having clear and realistic goals, especially if this is an IT or HR department. That's why performance evaluation and strategic management tools are often used on a department level, as top department performance can contribute to implementation of strategic goals.

It is impossible to imagine modern business without IT and the Internet. Business has turned international and that's why it is not reasonable to spend too much time to conclude deals, exchange information, analyze data etc. For this purposes companies in all industries use IT support. They may outsource or have own IT department which is in charge of developing automation and information analysis/exchange tools. However, just the fact that IT department exists in a company does not mean the department is performing well. Why not use an effective performance evaluation system to measure department's progress in terms of strategic goals implementation? Balanced Scorecard has proved to be one of the most effective and easy to use strategic management tools that both evaluates current and potential performance of a company and of communicates operational and strategic management. In other words, Balanced Scorecard helps top managers of IT department put adopted strategy into action.

Balanced Scorecard works according to a simple principle. The system evaluates key performance indicators (KPIs) which are specifically chosen measures that show department (or company) progress (or regress) on the way of implementing strategies. Efficiency of IT department is measured with numerous indicators the choice of which depends on adopted strategy, goals of department, current problems and weaknesses, organization structure, HR policy and a number of other factors.

What KPIs are relevant for IT industry? % of requests/orders posted via WWW is an excellent example of an effective IT KPI. It shows availability of company services to the Internet users and increases total number of company customers. Ratio between IT staff and non IT personnel can also tell much about focus of top management on IT and automation issues. % of It budget in total revenues evaluates efficiency of IT support in production process (or process of rendering services). Average IT costs per one customer is another effective key performance indicator to be used to evaluate efficiency of IT in a company.

It is important to measure changes and improvements initiated by IT department. IT leadership is a common trend, and if information technology department just serves the business without offering any suggestions and recommendations. Such an idle IT department is surely unprofitable. Balanced Scorecard helps find ways to improve IT performance and bring IT goals in compliance with company strategy.

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Balanced Scorecard Toolkit includes step-by-step manuals, documents, presentations, check lists designed to help business professionals with successful development and implementation of Balanced Scorecard. Learn more about BSC Toolkit.