Performance indicators considered an essential important point of discussion within frame of general business management. The management of information technology (IT) departments is no different. Business unit should have concrete and measurable key performance indicators (KPIs) that can be used to measure IT contributions to the organization and serve as department-specific measures of performance.
To define meaningful KPI measures that align with organization goals, we need to go through questions below
- What are the business / organization measures?
- How do these translate into ICT service measures?
- How does a process support the ICT service measures?
- How will collect and analyze the measure?
Traditionally, most organizations adopt the balanced scorecard method to measure operating performance. Most organizations today are challenged to take a 360 degree view of performance by concentrating on reporting, reviewing and acting upon a limited number of Key Performance Indicators (KPIs) which impact most on organizational performance.
In this article I will explain the way that we can follow to Measure Department Key Performance Indicators by using Balanced Scorecard. WHY? Because balanced scorecard has helped many organizations to utilize intangible assets they need for future growth, and too many organizations have has viewed the matter as a complement rather than a replacement for financial assessment measures.
I would add that Balanced scorecards have long been used in strategic business management to track key performance, indicators and are designed to provide a framework to manage resources.
There are four basic viewpoints to take with the KPI balanced scorecard:
- Financial perspective – tracking financial performance.
- Customer perspective – tracking customer satisfaction, attitudes, and market share goals
- Internal process perspective – covers internal operational goals needed to meet customer objectives.
- The learning and growth or innovation perspective- intangible drivers for future success such as human capital, organizational capital, training, informational systems, etc
When I did my research I found most IT Services companies or even organizations have developed and created a set of Key Performance Indicators for multiple Information Technology Services areas to offer best Reliability, Availability and Serviceability (RAS) metrics. These areas may include Help Desk/User Services, Online services, Academic Technology, Cloud Computing Services, Technical Services, Mobile Application and Business Intelligence Data Usage
For instance, of a KPI balanced scorecard in action. A regional Telecom Company is looking to increase its profits by increasing revenue and lowering costs (financial perspective), by increasing mobile data revenue and controlling third party services provider lease costs. So the goal is to provide the best services possible to the campus community at the lowest possible costs.
To achieve part of that goal, the Telecom determines to lower prices and improve services to entice more customers (customer perspective), using metrics such as satisfaction ratings and customer rankings as performance measurements. In order to improve their services and products, the company decides to improve internet package and featuring (internal process perspective), using different services packages such as mobile data protocol, 4G LTE network that let customer to download files from the Internet up to 10 times faster than with 3G.
To help improve customers’ subscription the telecom offers a stock incentive program and more training with targets for number of employees trained to help and server large number of clients and new customers.
Based on that, more balance should be achieved in how performance is viewed between:
- Financial and non - financial measures
- Long - term and short - term Measures
I met the Senior Portfolio Manager in that company, and we went through different perspectives regarding achieving the balance and improving the performance. Then we reached a fact says that performance should be considered from four different perspectives namely
- Customer – How the organization is performing in the eyes of customers
- Internal Business Processes – How the organization is performing in the day to day processes it must carry out efficiently and effectively
- Learning & Innovation – Performance required to ensure the long term development of the organization Shareholder – Financial Performance measures
To sum up, KPIs are a vital part of organizational management, suitable and corresponding across all organization departments. Balanced Scorecard has taken a featured location in the field of integrated strategic planning and management system. Adopting the strategy approach to KPI has created a opportunity to organizations to develop performance measures that are explicitly aligned to the corporate strategy and in support thereof.
