The balanced scorecard approach has become quite the toast of the business circle s in the recent years. Many people have discussed it on various forums and said a lot about it. This paper is an attempt to discuss the Balanced Scorecard Approach in relation to Strategic management with a special focus on organizational application to align its Business strategy and vision with its Information technology strategy. While the preceding sentence might look like a bevy of management jargon, this paper is structured to break down each part of that sentence, analyse and discuss each word.
Simply put a Balanced Scorecard Approach is an effort made by an organization to consider all its performance factors to review it. These factors were traditionally based on economic counters, but by applying a balanced scorecard, the organization will score itself on various other counters like customers and their perception, internal business processes for each task and learning and growth of a business organization in its own field (Kaplan, 2010). To easily define Strategic management, it could be stated as an organizational effort to understand and manage issues like customer needs and competitive market forces. According to Dr. Vladimir Kvint (2009) it is “a system of finding, formulating, and developing a doctrine that will ensure long-term success if followed faithfully.” Moving further on through the aforementioned sentence, business strategy and vision would include the goals and methods to attain those goals as envisioned by the organization.
Lastly, the Information Technology strategy of a business is the plan or approach adopted by an organization to manage all the facets of information technology requirements of the organization. This can include cost management, human resource management, hardware & software management and even vendor management. Now that all the aspects have been defined in simple words, the goal of this paper can be re-structured in simple words as follows “An attempt to discuss the use of a balanced approach in understanding and dealing with the problems faced by a business organization as it tries to align its business vision with the technology requirements of today.”
A balanced approach has been deemed very important in every sphere of business. Balanced scorecard is a balanced approach that knows how to grade it and see if it is progressing in the right direction. Business Strategy management is in many ways the art and science of managing the management of a business organization. Many businesses face problems with their technological requirements. Some do not even know or understand their technological issues. Some businesses find that their technological requirements are forcing them to become a kind of business that they did not want to become. An example would be the online porting of many magazines in the recent times. Many magazines and other such publication companies have been migrating online and facing multiple situations like revenue drops and readership decline alongside heavy competition from technologically advanced businesses in the field that had an e-presence before these newly ported publishers.
This forces the business to take drastic steps including hiring new staffs that are required to do jobs that the key people in the organization do not understand. Now the business organization faces a mammoth problem. How to manage this new staff so that they understand and work towards achieving what the organization has been looking to achieve in the past? This is a very limited example that cannot to apply to all situations. Furthermore, there are many other considerations for any business caught in an information technology strategy quandary. Decisions might have to be made after analysing the two-way implications. The vision and business strategy has to be updated to meet the technological challenges of today. A business has to see to it that it does not get left behind and this is why every business needs to align its strategy and vision to its information technology strategy. Having looked into the question of information technology strategy and its implication to the business vision and strategy of an organization, the focus now shifts on to the actual fulfillment of this objective.
The strategy map links intangible assets and critical processes to the value proposition and customer and financial outcomes can be seen in the given plan.
Every organization needs some kind of strategy management. Whether it is a business organization or a public service organization, the structure and operations of the organization has to be tuned to achieve its final goals. The organization that does not manage its own strategy will find itself in a situation where the operations of the organization go in different directions without any co-ordination and achieve something the structure might not have originally intended. Whether the key members of an organization like it or not, the structure of an organization has to be handled in such a way that every person involved understands and works towards achieving the common goal. This is where strategy management comes in. Strategic management is an organizational activity that would set priorities, focus energy and resources, strengthen operations, ensure that employees and other stakeholders work towards common goals, establish an agreement around intended outcomes/results, and assess and adjust the organization's direction in response to a changing environment. An organization will have to strategically plan its approaches to achieve a goal like aligning its vision with the information technology strategy.
To state this in other words, an organization will have to develop a concrete plan to make it work towards achieving its goals in a changing and technological environment. Strategy management is the process of developing this plan by defining its methods, goals and distribution of responsibilities. It also includes seeing through the execution of this plan and reviewing the overall plan and its execution through and after its implementation. Business strategy management is a delicate exercise with many factors to consider whether the strategy being managed is for aligning of IT strategy to the business vision and strategy or not. This process is something that had been done with only financial considerations and nothing else in the past. Business strategies were economically oriented for a good reason but they lacked a holistic approach or in other words, the balanced approach.
The balanced approach is as mentioned before a way to consider all the important factors while managing the strategy of an organization. Today there are a lot of software’s and consultants available for the same purpose. The software’s and consultants help with everything including identification of important factors to defining problems and goals for the organization with the methods to solve issues and achieve goals in an efficient manner. Solutions that come through a balanced approach need to clear the issues and be effective for a considerable time when efficiently implemented. The balanced scorecard needs measures or scores according to which the organization will apply it. Sampling the case of aligning the IT strategy of an organization to its vision and strategy, the scores could be
- Decrease in the entire human-hours invested in the meta-operation of the technological infrastructure.
- Customer perception of the technological support and the online face of the organization.
- Usefulness of the implemented schemes as regards to operation of the technological infrastructure.
- Increase in the technological knowledge of the employees and thereby their effectiveness in the operations of the organization.
- Requirement of all the hardware or services that are provided for the technical operations and their effectiveness.
- Average time taken to produce tangible output from the technical process and the quality of the output.
- Employee stress-comfort analysis in relation to the technical framework.
- Reputation of the organization among tech-savvy customers.
An organization can identify more scoring objectives for it to work on, the balanced approach involves identifying minor, and major factors that help sustain a profitable business without turning the entire process in to an internal economic audit. While internal audits are very beneficial and required for a business organization, the balanced approach ensures that the objectives of the audit are reaching in the right departments and creating the right environments for producing the desired results. In the example case considered earlier, the publishing organization would have to look at how much it is willing in the technology that is required to transfer its operations online.
This would not just be the finances but also in terms of, how many employees are required for this process. How long would the process take? How would it appear or how to make it appear to the existing customer base? Are new employees needed, if so for what? How to integrate them in to the existing structure of the organization? How much online penetration is required to be profitable? How much is desired? How to achieve this? What all changes would this mean to the existing structure? And so on.
Identifying such questions in relation to all fields of the organization and realizing new considerations that may come up during the process is ‘The Balanced Scorecard Approach’. Transferring these questions in to discernable goals makes the ‘The Balanced Scorecard’. The process of achieving these goals through effective communication and implementation is what defines strategy management. The entire discussion was based on an organization’s effort to align its business vision & strategy with its Information Technology strategy.
To summarize, a balanced scorecard approach when applied in the right manner would enable a business to initiate a strategy management procedure where the right variables are analysed in the correct manner to achieve a goal like aligning the business vision and strategy with its information technology strategy or any such objective that an organization would choose for itself.
- Vladimir KvKint (2009), It's time to think about life after the crisis, Moscow School of Economics, http://mse-msu.ru/category/nauchnye-publikacii/, retrieved on 27 January 2014.
- Jessica Keyes (2005), Implementing the IT Balanced Scorecard, Auerback Publications, http://hlp4asp.files.wordpress.com/2011/10/it-scorecard.pdf, retrieved on 27 January 2014.
- Robert S. Kaplan (2010), Conceptual Foundations of the Balanced Scorecard, Working Paper, Harvard Business School, http://www.hbs.edu/faculty/Publication%20Files/10-074.pdf, retrieved on 26 January 2014.
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