CHAPTER 13

The Balance Scorecard and Business Value of Information Technology

 Balanced Scorecard – provides an integrating framework that describes
organizational performance relative to its strategic objectives across four
perspectives.
 Balanced Scorecard management process – the process by which companies
plan, implement, and monitor performance.
 Customer Perspective – the balanced scorecard perspective that describes the
organization’s customer related objectives and corresponding customer
measures; it views organization performance from the customers perspective.
 Enterprise IT – a type of information technology that restructures interactions
within an organization and with external partners, such as customer relationship
management systems.
 Learning and Growth Perspective - the balanced scorecard perspective that
Describes organizations objectives and corresponding measures related to
improvements in tangible and intangible infrastructure, such as human,
information, and organizational capital.
 Process Perspective - the balanced scorecard perspective Describes the
organizations internal, process-related, objectives and corresponding measures; it
views organizational performance from an internal perspective.
 Network IT – a type of information technology that allows people to communicate
with one another, such as e-mail and instant messaging.
 Four Types of Business Processes:
1. Operations management processes - Such as supply, production, distribution
and risk management.
2. Customer management processes - Such as those involve in the selection,
acquisition and retention of customers and growth of the firm’s market.
3. Innovation Processes - Such as identifying opportunities, research and
development and product launch
4. Regulatory and social processes - Such as financial reporting, accounting
and those that manage environmental, safety and health, employment and
community issues.
 Customer Perspective - Customer satisfaction considered a leading indicator of
firm performance. By operating its business processes, the firm creates a value
proposition that differentiates it from its competition.
 Value proposition – represents the product and service characteristics, such as
price, quality, selection, and brand image, that the firm attempts to deliver to
customers to meet or exceed its customers’ expectations and thereby result in
customer retention and new customer acquisition.
 Financial Perspective – the balanced scorecard perspective that describes the
organizations financial objectives and corresponding financial measures of
performance; it views organizational performance from the shareholders
perspective.
 Function IT – a type of information Technology that performs/supports a single
function such as spreadsheet applications.
 Information Capital – an intangible asset that reflects the readiness of the
company’s technology to support strategic internal processes. It includes
computing hardware, infrastructure, applications, and employees’ abilities to use
technology effectively.
 Key performance indicator – those measures that the organization feels best
indicates the performance of a particular activity.
 Strategy map – a one page representation of the firm’s strategic priorities and the
cause-and-effect linkages among those strategic priorities.