Real Reasons why IT Projects Fail

You would have probably read about the Queensland Department of Health payroll project, which ended in a debacle with costs estimated at $1.2 billion. In the US, the Expeditionary Combat Support System project was cancelled after the US Air Force spent $1 billion on its development.

The sad fact is that these failures are not isolated instances, but rather, only the most visible examples.  The failure of IT projects is very common. Per industry norms, less than 50% of IT projects finish on time and on budget.
Discussions with experienced CIOs, consultants and project managers show there are many reasons for the failures of IT projects. If you step back from the individual causes, some common themes emerge. Some are obvious, but others are not well recognised.

Fuzzy Goals

Many large projects fail, because they don’t have a clear idea of what they are trying to do. There is no clear problem definition or clarity about the project requirements. The full scope of the project is not understood. One Executive has an objective, but as the project moves forward new people, such as other executives, risk managers, and architects are introduced who add their ideas of what would be best for project implementation. The net result is unclear goals, expanding project scope, and poor project design, which lead to unending debates and sliding timelines.

Over-optimism

Over OptimismSalesmen and internal project champions both want their proposal to succeed. However, in their wish to make the ‘sell’, they often underestimate the costs and over emphasise the benefits. While preparing  business cases, there is a tendency to maximise benefits and cut costs to meet the right return on investment (ROI) At times, the under-estimation is not intentional, but a result of the CIO having a poor understanding of the current situation and requirements. The CIO does not consider, or budget for, the effort to move from installing a system to actually achieving the benefits (new products, customers, new capability).
Over optimism then results in unrealistic schedules. There often is an unjustified faith in technology (product, vendor, or internal capability). Solution complexity is not evaluated. As a result, project risks are not well understood or controlled.

Complexity

ComplexityMajor IT projects have a high degree of complexity due to new technology, the myriad of interfaces with other systems, data conversion. and due to project team having to compete for resources with other projects. Many times the legacy processes have to be replicated or supported in the new system, which adds to the complexity.
What project managers (PMs) and executives do not understand is that the project risks and effort involved in the project increase exponentially as complexity increases. Systems and processes become brittle as people try to cater for this complexity in a tight timeframe and with workarounds. The complexity eventually overwhelms the PMs, and the projects go out of control.

Weak Ownership

Large projects often have multiple executives, each with slightly different agendas as stakeholders. The executives have different expectations of the project’s benefits and options, which are at times incompatible. None of the executives fully support the project, and many projects lack an effective sponsor who is accountable for the project goals, and benefits, and can arbitrate conflicting demands. Weak sponsorship also indicates weak accountability across the project. When dates slip, tasks are not completed or roadblocks emerge, and no one is held accountable to do their job, which results in the project becoming unmanageable. Weak ownership usually results in weak project control resulting in an increased chance of the project failing.

Governance

People accept that lack of governance is a reason for the failure of a project. However, most large projects have the exact opposite problem; there is too much bureaucracy. For example, in one IT project, 80% of budgeted costs were non-productive costs or red tape. In another organisation, a 3 day change request needed justification papers, and the approval of the executive steering committee, which costed more than 10 days of effort. In large organisations, stakeholders such as risk managers, compliance staff, process experts, and architects all have their own governance demands, which greatly increases the demands on the project staff.

Over-engineered Project Management

It appears that Project Management has succumbed to the modern fetish for valuing form over substance. Simply put, there is a greater focus on how we carry out the project, than on the activities, which produce the product. Below is a quote from a CIO on this over engineering:

In the past, we spent time working out how to solve a problem. We explored different avenues of approach, different ways of meeting a target. We focused on the customer’s needs and expectations. We focussed on what was to be delivered.

Nowadays, it seems that the focus is more on planning how you are to do it, coupled with a determination to adopt methodologies and standards. The result is that we spend more time planning the method and approach to the project and not working on the technical requirements of the solution and how we can deliver it. The body of documentation has greatly increased. Now we have plan, plus risk analyses, process flows, summary timelines, and all sorts of forms showing who did what, with and to whom, and when.

That gives rise to a more formally documented meetings, implying a new breed of project administrators who manage the documentation and schedule the meetings, adding to the project overhead, both in time and cost.  A second result is that the poor people at the coal face have, in addition to actually doing the work, a welter of forms to complete.

Wrong Project Manager

The major success reason for projects – large or small – is the Project Manager (PM).  Having certification as a PM is one thing, but having the ability and know-how is another. The PM has to know how to balance the needs of the project with the needs of good governance. The PM has to use the right method, apply it at the right time and in the amounts that are really needed. A PM must have knowledge of the subject of the project. This knowledge not only helps the PM drive the right solution, but also helps them to effectively communicate this solution to the business and the sponsor The notion that a qualified PM can manage any sort and size of project is twaddle.

Failure to Recognise a Troubled Project

Projects never go from being well-managed, on-budget, and on-schedule to outright failure overnight. There is always a transition period during which time the project is “troubled”. If you can cut through the noise to see the real issues, you have a window of opportunity in which the project can potentially be rescued. It is likely that this is the last chance to save the project. Since people involved in a project generally want it to succeed, they unintentionally start ignoring or dismissing the warning signs.

Using external reviewers to detect these early signs and help the sponsor take decisive action can often help rescue a troubled project.

Conclusion

Think Big, but Act Small

As shown in this article, large IT projects fail for a variety of reasons. There is insufficient space in this article to go into the details of mitigating these failures, but one last fact is worth mentioning here.

Standish group research indicates that smaller projects (agile or waterfall) have a higher success rate (76%) than larger projects (10%). Research suggests that delivering product in small doses produces positive results. So you can think big, but you need to act small by making every big project a group of small projects.

You may also be interested in Barriers to Transformation.

Written by: Hemant Kogekar

Can CIOs avoid politics?

Typical CIO Attitudes to Politics

Many CIOs are scared of organisational politics and think it is a dirty business. Often CIOs come from a technology background and technical expertise is their forte. Politics, and wheeling and dealing are not their comfort zone. They focus their energy on finding the best technology solutions for the business’s problems. The CIO’s daily battles are about up-time  service delivery, and project delivery. They shy away from business level politics wherever they can. Many CIOs see politics as a ‘necessary evil’ or some sort of ‘game’ to play. Those who tend to look at politics in this way tend not to be very good at dealing with company politics. Continue reading “Can CIOs avoid politics?”

Is your IT Department Under Control?

Do you know if your IT department is under control? How does one determine if the IT capability is well managed? Is IT well managed if the IT service is in line with service levels? Is IT in control if projects are delivered more or less on time? Or one can say IT is under control when information is secure? What should a CEO or a CIO do to ensure that the technology function is well governed? Continue reading “Is your IT Department Under Control?”

Show me the money!

Introduction

The 2009 Standish research shows that only 32% of IT projects are successful. Which means that the new capability is successfully “installed”. But the sad reality is that in a large number of cases this new capability is not used the way it was intended. Thus only a fraction of the desired benefits (or value) are realised. So when the CEO says, “show me the money” or the value the CIO is often caught short.

There are many reasons for this failure.  There may be a lack of understanding about the true intent for the change. Competing agendas and conflicting priorities may dilute the focus. Then there is resistance from the people affected to adapt new behaviours and processes. A key reason is that organisations tend to put all the rigour and energy in the project “installation” and almost none for the benefits realisation post-installation.

Instead of the “installation” focus, the modern CIO needs to adopt a “realisation” or value mindset. With a realisation focus, CIOs ensure that project success is judged by the value created. This article suggests steps CIOs can take to instil a benefits management focus and show the “money”.

Executive Summary

Organisations are good at figuring out what must be done to address their business challenges and capture the opportunities. IT organisations are getting better at delivering technology capabilities to address these challenges. A lot of energy and capital is invested in developing these technology solutions. The plans appear sound. Why is it then that the outcomes fall significantly short of the original ambitions? In today’s markets, CIOs and other leaders cannot afford to spend large amounts of money and risk their reputation just deploying projects, when the success now depends on their ability to manage the change and actually getting the returns on investment (ROI).

Benefit realization mindset

Figure 1 – Realisation mindset

Getting a sustainable ROI requires carefully managing benefits realisation as well as managing the human aspects of the change. The benefits management process provides the framework for blended investment programs that integrate technological change, organisational change and business process design within a common context.

The purpose of the benefits management plan is to identify and organise all activities such that the promised benefits are achieved. It consists of benefits identification, benefits planning, monitoring, realisation and review. A realisation mindset guides the entire project/ program execution. Surveys show that organisations without well-defined benefits planning processes are significantly worse at getting project ROI.

All major changes require shifts in the way people (staff, suppliers, competitors and customers) think, manage and act. These changes will not just happen by themselves. They must be planned and carefully managed. The bigger the change, the larger is the impact and the disruption and resistance to the change.  If people don’t “buy-in”, the change is likely to fail.  In technology enabled changes there is a tendency to focus on the technology side of the project and under-estimate the human change dimension.

Keeping track of the “money”– Benefits Management Process

A benefits management plan is a critical tool for focussing the mind on the value.. It has five stages.

  • Benefit Identification is about clarity around the intent of the change. Benefits identification determines project scope.  The sponsors must be clear about what beneficial outcomes (or value) they want to obtain. Where the benefits will occur? When? Who will receive these? Who is responsible for the delivery of benefits? How the project outcomes link to the value?

Figure 2  – Benefits Management Process

  • Benefits planning stage covers all steps needed to leverage the project outcomes to realise the desired value. (E.g. The project may deliver new technology capability, people need to be trained, new processes and structures may need to be implemented, product/ service features need to be changed, new marketing programs may need to be devised.) In planning evaluate the organisation’s capability to execute and capacity to absorb the change. Also consider the various risks and capability to govern and support the change.
  • Benefits Monitoring covers many stages of the technology development / implementation process. It ensures that the benefits are not diminished during the project life cycle.
  • Benefits realisation should be performed from the time changes begin to be implemented right through to routine operations stage. It would indicate if more actions are necessary to realise the benefit or whether further benefits are achievable.
  • Benefits review captures on lessons learned.

Ten success factors for realising the value

  1. Active Sponsor – Effective management requires a single leader who is visibly committed to success and accountable for realising the benefits. Major changes need senior level executive leadership. Active leadership means selling ideas repeatedly and being there to overcome obstacles.  The sponsor should be accountable.
  2. Clear Intent – There must be clarity about the reasons for the change. What “pain” this initiative will address? How well do key people share the intent?  Is it aligned to the strategy? What would success look like? Is the “price to be paid (dollars, political, organisational)” justified? A lack of clear and shared intent at the beginning would invariably result in a weak or failed initiative.
  3. Business Case – There are many examples of weak business cases that have just sufficient funding for the technology solution. All the post implementation activities and resources are assumed to come from the “business as usual” budget. Without adequate funding and resources for change management in the business case, benefits realisation would be suboptimal.
  4. Full life-cycle governance  – In business changes are to be expected.  The business case will change when the circumstances change. At agreed project stages or upon discovering major variations, both the costs and benefits should be reassessed. If project costs are higher, ask if is it still viable? Should more benefits be found? Should the scope be reduced? Remember that the business benefits are the reason for the project and not technology installation.
  5. People – People are the greatest variable in a change. Systems are at times easier to change than people. Benefits realisation will depend on transforming the way people think and operate. Don’t underestimate the difficulties employees will have in learning to work with new systems that require new skills and new ways of thinking. Take the views of affected people into account early. Try and understand reasons for their resistance and develop action plans to address these. Align consequences and rewards with benefit realisation.
  6. Capacity for change – Do you really know your organisation’s capacity for change? Do you have executives who have a track record of leading the change? Are there are too many changes going on in the organisation? Be truthful with yourselves about what the capacity for change is and what is realistic and then plan accordingly.
  7. Relevant measurement – Measurements must clearly demonstrate how investments contribute to the beneficial outcomes. They must support decisions regarding progressive allocation of funding and resources via agreed “stage-gates”. Secondly, measurements help adjust the benefits path to changing environments. Techniques such as “results-chain” would help choose the right measurements.
  8. Clear accountability – Assign clear ownership to each of the measurable outcomes including project milestones and outcome measures.
  9. Independent governance – Importance of independent governance cannot be overstated. Investment governance board should ideally also monitor benefits realisation. This creates transparency around investment and the returns on investment, provides due diligence on the change initiative and holds sponsors accountable for the benefits. It also helps create peer pressure and reinforces good governance. Experience suggests leaving the entire governance to the sponsor alone is a mistake. Sponsors are known to downplay mistakes and to overstate success.
  10. Value Management Office (VMO) – A VMO serves two purposes; first it provides expert advice and tools to the sponsors for assessing value (validating business cases). Secondly, it helps monitor program progress, and provides rigorous value assessments to the investment governance board. A VMO, like a Project management office, would promote consistency in the approach as well as promoting transparency via reporting.

Benefits management is process is applicable to all initiatives and not just for technology. But changing the organisations mindset from installation to realisation is neither a quick nor an easy process. It requires an ongoing commitment from the top. This mindset enables a big picture view of capital investments and enhances ROI.

For more information on how to create a realisation mindset in your organisation please contact the author.

Towards better IT governance

Introduction

As both business and public sector organisations are becoming increasingly dependent on IT, there is growing recognition that governance of IT is an essential part of the corporate governance. Governance is about who makes the decisions? How they are made and who is accountable for what? While the need for IT governance is accepted, implementing effective IT governance continues to be a challenge.

Many C-level executives still consider IT to be too complex, technical and difficult to govern. IT governance still is perceived as a CIO issue. Alignment between IT and business strategy as well as between IT and business governance remains weak.

This article demystifies the IT governance and provides practical ideas for improvement.

Four “ares” of governance

Governance is about ensuring that the organizations resources are used the right way to create value while managing IT risks. The Val-IT framework from IT Governance institute helps address these challenges. The four “Ares’ are the core of Val-IT framework. This is a sound framework which helps organisations ensure IT efforts are aligned and IT continues to deliver value.

Four "R"s of IT Governance

  1. Are we doing the right things? To quote Peter Drucker: “There is nothing so useless as doing efficiently that which should not be done at all”. This is the question about should we be doing something at all. It ensures strategic alignment between business and IT. Is what we are trying to do fit with the organisations vision and strategy? Is it consistent with the business principles?
  2. Are we doing them the right way? This is the question about architecture and standards. Is what we are doing conform to the architecture and processes?
  3. Are we getting it done well? This is the question about the execution. Do we have the disciplined delivery and change management processes? Do we have the right skilled re sources and are we managing them well? How does our performance measure up to others? Are we effectively managing risks?
  4. Are we getting the benefits? This is a question about realising value from investments in IT /projects.  Are we clear about the benefits? Do we have metrics? Is the accountability for the benefits clearly defined?

These four questions cover the core of Governance, which are Strategic alignment, IT value delivery, IT Risk management, Performance management, and IT Resource Management. When managers at all levels address these questions, IT governance will become part of the culture.

IT Governance Models

There is no one size fits all model for IT governance.  Three common models are based on three decision-making styles within organizations. These are: Centralised, Federated or Decentralised.

 

IT Governance models

Figure 2 – IT Decision making models

  • In the centralised model efficiency and cost control is emphasised over business unit responsiveness. There is greater focus on standards, synergies and economies of scale.
  • In a BU centric (decentralised) model there is greater business ownership and responsiveness but integration and synergies suffer, resulting in likely higher costs.
  • The federated model tries to combine the best features of these two. In the federated model common applications and infrastructure resources are pooled while business units control BU specific applications.

Here are some commonly used IT Governance forums. The above models influence the scope and membership of the IT governance forums.
Business Leadership Council / Executive committee – This is the top-level committee that makes enterprise-wide decisions including approving IT strategic plan and controlling major investments (including projects). Sometimes Ex-co may delegate the IT decisions to IT Council or IT Steering committee. This usually consists of key business executives, CFO and CIO.  They would consider IT policy and investment decisions more deeply than the Ex-co.
IT Leadership council – This group consists of most senior IT leaders across the enterprise.  They focus on decisions such as IT policy, IT Architectures and IT infrastructure.  This is a critical forum in Federated and decentralised models.
IT Architecture Council consisting of key IT and some business leaders who would oversee development of architecture standards, recommend them for endorsement by the Leadership council. This group may also monitor compliance with the architecture standards.
Business-IT relationship managers – These managers bridge the gap between IT and business units and act as two-way communication channel to address and resolve any gaps.

Characteristics of good IT governance

  • IT investments and decisions are assessed in a manner similar to business investments and IT is managed as a strategic asset. This means there is top management participation in key IT decisions. There is board oversight of IT investments and executives are held accountable for realising benefits.
  • IT is essential part of corporate planning and strategic planning. IT understands the business dynamics and contributes to the development of business strategy, which is interlinked to IT strategy. IT and business work together to identify opportunities.
  • Top IT risks are considered within the enterprise risk management framework. Risks such as data protection, IT security and business continuity receive periodic board oversight.
  • IT performance is regularly measured and compared with peers and best practice.
  • How decisions are made and why, is well understood and outcomes are clearly and formally communicated to the stakeholders. Formal exception processes are established and promote transparency as well as allowing organisational learning.

Steps to better governance

Improving governance in organizations is a strategic change process. There is no silver bullet. Governance is not just a new process but it also needs a new mindset and behaviours at senior levels of both IT and business. The established power centres within organizations do not always welcome greater transparency and accountability. Experience suggests that strong support from CEO and CIO and gradual increase in governance maturity usually works better than constant tinkering.

Here are ten steps for improving IT Governance:

  1. Visible and active top management commitment is absolutely critical for the success of any governance initiative. Governance is a disciplined approach. There must be consequences for all the executives for non-compliance.
  2. Treat governance as a change program requiring resources and commitment. It must have visible benefits for it to be considered successful. Also, consider organization’s culture, resources available and capacity for change. Establish credible goals, measure and communicate the benefits.
    If the IT is struggling to deliver reliable service, or have a poor track record of customer service or project delivery; focus the governance efforts for addressing these burning issues rather than going for the lofty goals of strategy alignment and such.
  3. Use recognised frameworks for the governance initiative. There are a number of frameworks like COBIT, ITIL and others. If service management were an issue using ITIL framework would be ideal.  Use knowledgeable experts to help establish a realistic program.
  4. Transparency of decision making and reporting gives governance its potency. Transparency whether it be business cases, standards compliance or project health reports create trust and creates peer pressure to address issues identified or to question unusual decisions.
  5. Create a formal process for handling exceptions. Then report on percent of exceptions and key reasons for these. May be the standard it inappropriate or the enforcement is poor. Openly discuss and address.
  6. Encourage peer group consensus at each governance tier and avoid escalations to higher levels. This will build trust and sense of compromise within the framework of good governance.
  7. Where possible align with the corporate governance mechanisms. Most companies would have risk management, investment management, and crisis or business continuity management mechanisms. Align IT with this where possible. This would accelerate the implementation as well as give it instant credibility. Seek input from internal or external Audit staff in design of the governance framework.
  8. Educate senior management on benefits of IT governance as well as on new technologies and challenges so that they can participate in an informed manner in key technology related decisions. Lack of technological knowledge should not be an excuse for executives not to participate in key technology investment decisions.
  9. Build accountability for benefits realisation in the business case itself. This will encourage active interest in delivery governance.
  10. Avoid clogging the IT steering committee or EX-co with technical or architectural details. Address the technical details at a technical forum and report only on compliance or non-compliance/ risk to the top team. The top team can then focus on ‘is this the right thing to be doing (or investing in)’ rather than ‘how’.

If you want to discuss steps to improve IT governance in your organisations contact me.

Becoming a performance driven organisation with balanced scorecards

Introduction

A lot of effort goes into developing sound strategies for performance improvement and getting them endorsed by the board and the executives. Initially there is a flurry of new activities and initiatives. But a few months down the track, day-to-day operations seem to take over and strategy is relegated to the bottom of the pile.  The bulk of the organisation continues to do what it did before. As a result, the performance of the organisation remains unchanged.

What is typically missing is the process for turning the broad thrust of a strategy into specific measurable performance goals, and assigning accountability right through the organisation. A balanced scorecard turns a strategic plan from a passive document into marching orders for the troops on a daily basis.

Executive Summary

Strategy describes where the organisation now is and where it aspires to be. It also describes the broad initiatives that the organisation plans to take. It may describe key focus areas, process changes or capability-building initiatives or projects that are necessary for the achievement of goals. Strategy execution needs the ability to take a very broad-brush strategy and find, prioritise and carry out the key things that need to be done to put that strategy in practice. A successful execution means that the goals are set, accountability  assigned and the results reviewed.

A balanced scorecard (BSC) is a one-page document that outlines an organisation’s key performance goals and indicators (KPIs), usually covering financials, customers, execution and people.  These KPIs are driven from the company’s strategic intent. A BSC is critical for a performance-driven organisation as it creates a common view of performance across a range of objectives. For the business, KPIs are the “guiding force” that link strategic goals with day-to-day execution. This allows managers to have a better understanding of how to improve the business. Across and down the organisation, business units and teams then define supporting targets and KPIs, which results in a hierarchy of KPIs cascading down from the corporate strategy.

Why balanced scorecards?

  • We all know that ‘what gets measured gets done’. Organisations are faced with multi-dimensioned challenges (e.g. how to improve service and cut costs?). Balanced scorecards cater for many dimensions by allowing for simultaneous focus on multiple performance areas.
  • Organisations expect the strategy execution to happen in parallel with the ongoing service delivery. Merely tracking strategy execution progress can result in too much attention on strategy and not enough on service delivery. Different managers also have different accountability for delivery and strategy execution. BSC enable addressing these competing demands in a rational way.
  • BSCs also give the ability to assign joint accountability to multiple teams in the areas where joint effort is required to achieve results. Silo behaviours result where managers are held accountable for only the direct performance of their internal processes. External service or customer satisfaction outcomes result from end-to-end process execution. BSC makes this clear and enables teams to be jointly held accountable for the overall outcome.
  • In many organisations, scorecards are used only for the senior managers or executives. In fact, scorecards that cascade down many levels of the hierarchy are more effective. Here, the executives’ KPIs are directly linked to the KPIs of their managers and team leaders. There is clearer accountability for results. Cascading KPIs offer better drill down ability, allowing quick diagnosis and action on performance issues.
  • For teams lower down the hierarchy, this linkage shows, how they are contributing to the overall performance and achievement of the strategy. This can result in staff believing that  “my job matters”.

The goal of metrics is to enable managers to get a complete picture of the performance from multiple perspectives, and hence make wiser long-term decisions. As a management system, balanced scorecards enable regular feedback around both internal processes and external outcomes. Good BSCs capture feedback from the customer (or external) perspective and help analyse it with metrics from the internal processes. This encourages continuous monitoring and improvement by the teams as well as improvement in strategic performance across multiple areas.

Figure 1 – Balanced Scorecard Process

Setting the balanced scorecards is a six-step process. The first step is getting the commitment from the executive sponsor. Strategy mapping then identifies the key performance areas/indicators to focus on. The third step, selection of performance metrics, is at the heart of balanced scorecards. Having the right metrics with well-understood definitions is critical for a successful implementation. Fourthly, it is worth investing time to refine the quality of data used in the measurements and assign responsibilities for data collection to impartial staff. The fifth step, regular review, includes checking the quality and effectiveness of the metrics. The last step is to refine the performance indicators as the performance or strategy changes.

Ten Key Lessons for Balanced Scorecard Implementation

  1. Scorecards are most effective when they are linked to pay and performance management. Without this link there is little incentive for staff to take KPIs seriously. Top-level sponsorship is needed in order for this to happen.
  2. Good scorecards are brief; say one page, with around ten measures of what really matters. A business view of performance is more valuable than an internal view.  Ideally, the scores should show expected and superior performance levels. Scores weighting should be used to derive the performance ratings.
  3. Strategy Mapping will show key areas where performance must be lifted. Typically, the areas covered are financials, customers, execution and people.
    1. Financials cover profits, budgets, return on investment as well as key measures of risk.
    2. Customers cover areas that are important from a customer perspective. These could include customer satisfaction, growth/ attrition in customer numbers, number of complaints, etc.
    3. Execution (internal business process or delivery) covers how well the internal processes of the organisation are running in delivering the strategic mission for our customers. It includes key indicators of service delivery, such as service levels, reliability, on-time-performance etc.
    4. People (learning and growth) covers organisational development and ability. IT is a knowledge-worker organisation. Metrics on ‘learning’, ‘sharing’ and ‘retaining’ knowledge can be used. Metrics can cover talent management, training, turnover, and employee engagement. Some organisations also include “social responsibility”, e.g., volunteering, presentation at industry forums etc in this section.
  4. Unclear definitions undermine effectiveness. It is worth spending time in creating common definitions of the key measures. Assign data collection responsibility and review data for consistency and quality.
  5. Avoid seeking perfection with the measures or the scorecard. Measures that are 80% right can still yield valuable performance data. It is important to set up and practice the process of collecting the data, reporting, review and actions than to seek perfection. Focus on getting an acceptable level of quality.  An iterative approach works best allowing all participants to learn and refine. It is also important to remember that trends are usually more valuable than absolute values. Similarly, over reliance on tools or data collection automation at the beginning will detract from getting value from the scorecards.
  6. Meaningful performance results from understanding the desired outcomes and the internal processes that are used to generate these outcomes. Outcomes are measured from the perspective of customers while process metrics are from perspective of process owners. Usually, process metrics are used for teams while outcome measures are used for department/ service managers. Do not confuse output (what we produce) with outcome (what we produce).
  7. Drill down ability is valuable in analysing performance and improving data quality. Without adequate drill down ability, there will be greater subjectivity in interpreting results, which may result in inappropriate corrective actions being taken.
  8. Assign shared accountability to common measures such as customer satisfaction, where many teams have to work together to deliver satisfactory service to the customers. Joint responsibility will avoid silo behaviours being rewarded.
  9. Organisations that openly share the balanced scorecard results and communicate performance (and the challenges) with their teams and peers create greater commitment from their teams. It also helps to show how everyone is contributing to performance and how collective actions can improve the results.
  10. When planning to cascade scorecards through multiple levels of management in the organisation, it is best to tackle one level at a time and use an iterative approach.

For a detailed discussion and/or information on how you can use balanced scorecards to become a performance-driven organisation, please contact the author.