Balanced Scorecard in Software - Alain Abran - Nokia Research - Slides

Nokia Research Center
Helsinki, Finland, Nov. 27, 2000
Balanced Scorecard in
Software
Alain Abran
Universit du Qubec Montral
Research Lab. in Software Engineering Management,
abran.alain@uqam.ca
1
Alain Abran, Nov 27. 2000 www.lrgl.uqam.ca
Agenda
Introduction
Management information needs
Balanced Scorecard framework
Goal-Question-Metric technique
Conclusions
2
Introduction
Strategic Management basic principles:
alignment of processes and strategic business goals
identification and application of measures for an overall
strategic performance management
Basic Management need: align internal processes and

activities to business objectives, in order to maintain business
competitiveness (e.g. Porters Value Chain)
Software Process Improvement is not a goal in itself, but a

mean to achieve business goals more effectively
3
Agenda
Introduction

Conclusions
4
Management Information
Needs
Mission
Strategy
Implementation
Less than 10% of strategies effectively
formulated are effectively executed (Fortune
Magazine)
In the majority of failures (70%), the real

problem isnt bad strategiesIts bad
execution (Fortune Magazine)
5
Management Needs
Misalignments can cause several negative consequences:

Corporate strategy unknown or not properly used
Data collection from projects does not support organisational
goals
Financial indicators tend to drive corporate decision-making
No clear purpose for the measurement activity, that is isolated
from other projects
6
Agenda
Introduction

Conclusions
7
Measurement Motivates
Creation of value, consistent with the mission,

is the overaching purpose of organization
Strategy: defines the unique organization
approach to creating value
Measurement system: designed to influence
behavior - should describe the strategy
A good Balanced Scorecard describes the
organization strategy
8
Introduction
Balanced Scorecard (BSc):
A multidimensional framework for translating (organisational)
strategy into action at all levels of an enterprise, by linking
objectives, initiatives and measures to an organisations strategy
Authors: Kaplan & Norton (HBS) - early 90s

(from a French method called Tableau du Bord (turn of 20th century)
Main measurement object: whole organisation / a Strategic
Business Unit (SBU)
Harvard Business Review 90s: BSc is one of the most relevant
management practices of last 75 years
9
BSc Perspectives
Financial: do we get the best deal for our

shareholders?
Customer: how do customers see us?
Internal: What must be excell us?
Organizational Learning: do we continue
to create and improve value?
10
BSc and Strategy
Good BSc: tells the story of the strategy
Every measure is part of a chain of
cause and effect linkages
All measures eventually link to
organizational outcomes (mission)
A balance exists between outcome
measures (financial, customer) and
performance drivers (value proposition,
internal processes, learning & growth)
11
BSc Perspectives
Financial: to appear financially how should we appear to our
shareholders?
Customer: to achieve our vision, how should we appear to our

customers?
Internal Business Process: to satisfy our shareholders and customers,

what business process must we excel at?
Learning & Growth: to achieve our vision how will we sustain our ability
to change and grow?
12
13
Alain Abran, Nov 27. 2000 www.lrgl.uqam.ca Source: Guide to a BSc USA Dept.Commerce 1999
14
Source: Guide to a BSc USA Dept.Commerce 1999
Evolution of BSc
Measurement Techniques:
Balanced Scorecard
Management System:
Strategic Management Entreprise
Organization & Change Framework:

Strategy Focused Organization 15
http://oamweb.osec.doc.gov/bsc/guide.htm
16
17
Source: Guide to a BSc USA Dept.Commerce 1999
BSc in the ICT field
Two versions of the BSc taylored for the ICT field developed
in the last few years:
Balanced IT Scorecard (BITS)

BITS by the European Software
Institute (ESI)
AIS BSc by the Advanced Information Services Inc. (AIS)
Commonalities: both support 5 perspectives:

+ People/Employee perspective
18
ESI BITS: Perspectives
Financial: how do our software processes and SPI add value?
Customer: how do we know that our customer (int/ext) are delighted?
People: are people issues (competence, satisfaction and retention)

properly managed to implement a sustainable improvement program?
Process: are software development processes performing at levels

sufficient enough to meet customer expectations?
Infrastructure & Innovation: are technology and organisational

infrastructure issues being addressed to implement a sustainable
improvement program?
19
ESI BITS
The framework
includes a set of goals,
drivers, lead and lag
indicators properly
designed to cover a
wide range of
situations and
organisation realities
in the ICT field.
The figure shows the
internal structure for
each BITS perspective. Source: ESI 1999
20
BSc application?
Multilevel Balanced Scorecard:
Several Balanced Scorecards, one per each organisational

level, approaching them from bottom-up or top-down, as
desired.
21
BSc application?
22
23
24
25
26
27
Agenda
Introduction
BSC and senior management information needs
Conclusions
28
GQM approach
GQM is a technique to derive measures for project control

starting from high-level goals, passing through the
decomposition in several questions to answer.
Author: Victor Basili in the early 80s (NASA Goddard Space

Fligth Center)
Main measurement object: software projects
GQM:well-known and quoted measurement approach in
software for establishing a measurement program
29
GQM approach
30
GQM + BSc
31
Agenda
Introduction
BSC and senior management information needs
Conclusions
32
Concluding Remarks
Software organizations have not yet
aligned their business management
with the business organisation
BSc will help with the alignment
Significant challenges still remains
to mature measurement in software
33
www.lrgl.uqam.ca
34

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Nokia Research Center

Helsinki, Finland, Nov. 27, 2000

Basic Management need: align internal processes and

Software Process Improvement is not a goal in itself, but a

Management information needs

In the majority of failures (70%), the real

Misalignments can cause several negative consequences:

Balanced Scorecard framework

Creation of value, consistent with the mission,

Authors: Kaplan & Norton (HBS) - early 90s

Financial: do we get the best deal for our

Customer: to achieve our vision, how should we appear to our

Internal Business Process: to satisfy our shareholders and customers,

Organization & Change Framework:

Balanced IT Scorecard (BITS)

AIS BSc by the Advanced Information Services Inc. (AIS)

Commonalities: both support 5 perspectives:

Customer: how do we know that our customer (int/ext) are delighted?

People: are people issues (competence, satisfaction and retention)

Process: are software development processes performing at levels

Infrastructure & Innovation: are technology and organisational

Multilevel Balanced Scorecard:

Several Balanced Scorecards, one per each organisational

GQM is a technique to derive measures for project control

Author: Victor Basili in the early 80s (NASA Goddard Space

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