compare and contrast the Balanced Scorecard

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After watching the videos below and reading about the Balanced Scorecard in Chapter 12, compare and contrast the Balanced Scorecard to one of the IT frameworks below (COBIT, ITIL, TOGAF, CMMI-Dev). Describe the context in which the Balanced Scorecard and the IT framework would be used. The paper should 3-4 pages in APA format, not counting the title and reference pages. Make sure you include in-text citations. Your paper should cite at least 3 peer-reviewed articles (already attached) on IT governance frameworks.

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Information Systems Management, 27:10–24, 2010 Copyright © Taylor & Francis Group, LLC ISSN: 1058-0530 print / 1934-8703 online DOI: 10.1080/10580530903455106 The Effect of IT Governance Maturity on IT Governance Performance UISM Mårten Simonsson, Pontus Johnson, and Mathias Ekstedt The Effect of IT Governance Maturity on IT Governance Performance Department of Industrial Information and Control Systems, KTH, Royal Institute of Technology, Stockholm, Sweden if appropriate documentation exists. The internal IT organization efficiency is called IT governance maturity. One might argue, however, that internal efficiency metrics of the IT organization are of moderate interest only; what really matters is the external effectiveness of services that the IT organization delivers to the business. We refer to this latter effectiveness as IT governance performance. From a management perspective, the situation is further complicated by the fact that IT governance performance is not directly controllable. IT management can define and manage the internal structure of the IT organization but they can only hope that this in the end also leads to good IT governance performance as perceived by the business. Fortunately for IT management, it is reasonable to believe that an organization that displays a high IT governance maturity also benefits from good IT governance performance. Even though Croteau & Bergeron (2001) concluded that little research had previously shown the existence of a direct link between IT governance and organizational performance, some progress has been made. A number of studies have focused on finding different linkages, e.g., Weill and Ross’ (2004) survey on how financially top-performing companies manage IT decision rights, Dahlberg and Lahdelma’s (2007) study on IT governance maturity and the degree of IT outsourcing, and De Haes and Van Grembergen’s (2008) research on IT governance and IT business alignment. The correlation of IT governance maturity and IT governance performance, however, has never been analyzed in detail. There are several best practice based frameworks that detail effective arrangements for the internal structure of an IT organization. Although it is reasonable that there is a correlation between the quality of the internal structure of an IT organization – labeled IT governance maturity, and the external impact of the same IT organization on the business – labeled IT governance performance, this has not been validated. The results, based on 35 case studies, confirm the hypotheses of a positive correlation between IT governance maturity and IT governance performance. Among IT processes described in 34 references, the internal structure of the IT organization, clearly defined organizational structures and relationships, mature quality management, and cost allocation show the strongest positive correlation to IT governance performance. The maturity of project management and service level management, as well as performance and capacity management, show almost no correlation to IT governance performance. The findings can be used to improve current frameworks for IT governance. Keywords alignment of IS organization; business value of IT; governance of the IS organization; IS organization transformation; strategic IS planning IT governance is defined as the structures, processes and relational mechanisms for the IT decision making in an organization (Van Grembergen, De Haes, & Guldentops, 2004). The concept IT organization is used in this paper to represent everybody that is involved in IT-related decision making, so be it an IT department employee or a business manager acting as a stakeholder for IT. The highest decision making authority in an IT organization is called IT management. There is IT governance in every organization that deals with IT. However, the quality of the IT organization may differ between enterprises; depending on issues such as if rights and responsibilities are distributed over the appropriate people, if formalized processes for important tasks are implemented, and RESEARCH HYPOTHESIS The research presented in this article thus aims at testing the following research hypothesis: H1: There exists a positive correlation between IT governance maturity and IT governance performance. Address correspondence to Mårten Simonsson, Department of Industrial Information and Control Systems, KTH, Royal Institute of Technology, Osquldas väg 12, 7 tr, 100 44 Stockholm, Sweden. E-mail: This hypothesis is divided into several sub-hypotheses in the methodology section of this paper, where a number of potentially falsifying tests are also presented. 10 THE EFFECT OF IT GOVERNANCE MATURITY ON IT GOVERNANCE PERFORMANCE The structure of the paper is as follows: First, the theoretical foundation for IT governance maturity and IT governance performance is presented. We then turn to describing the methodology of the research performed, and explain the different hypotheses and tests. Finally, the outcome of the tests, based on 35 case studies, is presented. The findings are discussed and validated in discussions with experts in the field. IT GOVERNANCE There are many ways to design organizations for insightful yet efficient decision making and the field has been thoroughly investigated for several decades (Cyert & March, 1963; Galbraith, 2002; Handel, 2003; March, 1994; March & Simon, 1958; Mintzberg, 1979; Weber, 1978). Transferred to the subset of the organizational theory that considers IT decision making, the general principles are still valid. IT governance deals with the structures, processes and relational mechanisms involved in IT decision making, and highlights IT’s business supportive, or business driving function (Luftman, 1996; Van Grembergen et al, 2004; Weill & Ross, 2004). IT governance is a new concept. It emerged in the nineties when Henderson, Venkatraman, and Loh used the term to describe the complex array of interfirm relationships involved in achieving strategic alignment between business and IT (Loh & Venkatraman, 1993; Loh & Henderson, 1993). IT governance today concerns how the IT organization is managed and structured, and it provides mechanisms that enable the development of integrated business and IT plans; it allocates the responsibilities within the IT organization; and it prioritizes IT initiatives (Debraceny, 2006; Holm Larsen, Kühn Pedersen, & Viborg Andersen, 2006; Ridley, Young, & Carroll, 2004; Sallé & Rosenthal, 2005; Van Grembergen et al 2004; Weill & Ross, 2004). It is important to ensure that the IT governance is not only designed to achieve internal efficiency in the IT organization, such as deploying good IT processes and making sure that the means and goals are documented. The final goal of good IT governance is rather to provide business enabling support. Several frameworks assist IT governance decision making. Weill and Ross have developed a simple IT governance framework that can be used to analyze the suitability of different decision models (Weill & Ross, 2004). The IT Infrastructure Library (ITIL) supports implementation of processes related to delivery and support of IT and details establishment and maintenance of service level agreements and operation level agreements (Office of Government Commerce, 2007). ITIL receives massive support from practitioners all over the world, but the framework itself has traditionally provided little support for strategic IT concerns. This has been improved in recent ITIL v3 publications, but ITIL still does not cover the entire scope of IT governance, i.e. it still does not support all the decisions made by IT management. The most widely used IT governance framework is the Control Objectives for Information and related Technology, COBIT (ITGI, 2007a), which is discussed in further detail 11 below. A recent addition to the growing number of IT governance frameworks is Val IT (ITGI, 2007b). Val IT takes IT governance onto a higher level of abstraction by providing general directions on how to manage IT from a business point of view. The high level of abstraction is however also a limitation, as Val IT purely focuses on the interface between IT and the business and lacks the support to represent e.g. the processes of an IT organization. Val IT takes on where COBIT ends, and the two frameworks complement each other well. As described in the introduction, an important distinction can be made between IT governance maturity and IT governance performance. The former spans the internal quality of the IT organization, which at least in principle is under the control of IT management or a CIO. A maturely governed IT organization is thus defined as an organization that is efficient and aligned with state-of-the-practice frameworks such as the ones mentioned above. The concept of maturity is used also in other disciplines, including software development. The Software Engineering Capability Maturity Model, SE-CMM, was created by the Software Engineering Institute of the Carnegie Mellon University in the late eighties (Humphrey, 1989). It comprises a tool for objectively assessing the ability of government contractors’ processes to perform software projects. The term IT governance performance, on the other hand, can rather be seen as the external objective of IT governance. It describes the effectiveness and impact of an enterprise’s IT organization as perceived from a business point of view. Good IT governance performance is the desired goal, but it is outside the direct domain of control of the IT management responsible for achieving it. As mentioned in the introduction, the main purpose of this paper is to determine how IT governance maturity and IT governance performance are correlated. A statistical approach is chosen where the IT governance maturity is seen as an aggregate of a set of independent variables and the IT governance performance is a variable potentially dependent on the maturity. In order to determine the strength of correlations between maturity and performance, a number of case studies have been carried out. Before these are discussed, the following two subsections describe IT governance maturity and IT governance performance in further detail. IT GOVERNANCE MATURITY The Control Objectives for Information and related Technology, COBIT is the most well-known framework for IT governance maturity assessments (Debraceny, 2006; Guldentops, 2004; Holm Larsen et al, 2006; Ridley et al, 2004; Van Grembergen & De Haes, 2008; Warland & Ridley, 2005). It was first issued by the IT Governance Institute, ITGI, in 1998 and has been constantly evolving ever since. COBIT features a maturity model for IT governance, which follows the same principles as the Software Engineering Institute’s Capability Maturity Model (Humphrey, 1989). The framework provides a definition of IT governance as consisting of four 12 M. SIMONSSON ET AL. domains and 34 processes. Each process contains a number of IT governance maturity indicators, such as activities, documents, metrics, and support for role and responsibility assignment. The domains and processes in COBIT are described briefly in the following subsections. the business process. In addition, changes in and maintenance of existing systems are covered by this domain to make sure the solutions continue to meet business objectives. Table 2 covers the seven processes that concern acquisition and implementation. Plan and Organize (PO) This domain covers ten IT processes of strategy and tactics, c.f. Table 1, and concerns the identification of the way IT can best contribute to the achievement of the business objectives. The realization of the strategic vision needs to be planned, communicated and managed for different perspectives. A proper organization as well as technological infrastructure should be put in place. Deliver and Support (DS) This domain is concerned with the actual delivery of required services, which includes service delivery, management of security and continuity, service support for users, and management of data and operational facilities. The covered processes are listed in Table 3. Acquire and Implement (AI) To realize the IT strategy, IT solutions need to be identified, developed or acquired, as well as implemented and integrated into Monitor and Evaluate (ME) All IT processes need to be regularly assessed over time for their quality and compliance with control requirements. This domain addresses performance management, monitoring of internal control, regulatory compliance, and governance. The processes in this domain are presented in Table 4. TABLE 1 Plan and organize IT processes (ITGI, 2007a) Process name PO1 Define a strategic IT plan PO2 Define the information architecture Determine technological direction Define the IT processes, organization and relationships Manage the IT investment PO3 PO4 PO5 PO6 Communicate management aims and direction PO7 Manage IT human resources PO8 Manage quality PO9 Assess and manage IT risks PO10 Manage projects Description Incorporation of IT and business management in the translation of business requirements into service offerings. Development of strategies to deliver these services in a transparent and effective manner. The establishment of an enterprise data model that incorporates a data classification scheme to ensure the integrity and consistency of all data. Defining and implementing a technology infrastructure plan, architecture and standards that recognize and leverage technology opportunities. Establishing transparent, flexible and responsive IT organizational structures and defining and implementing IT processes with owners, roles and responsibilities integrated into business and decision processes. Effective and efficient IT investment and portfolio decisions, and by setting and tracking IT budgets in line with IT strategy and investment decisions. Providing accurate, understandable and approved policies, procedures, guidelines and other documentation to stakeholders, embedded in an IT control framework. Hiring and training personnel, motivating through clear career paths, assigning roles that correspond with skills, establishing a defined review process, creating position descriptions and ensuring awareness of dependency on individuals. The definition of a QMS, ongoing performance monitoring against predefined objectives and implementation of a program for continuous improvement of IT services. Development of a risk management framework that is integrated in business and operational risk management frameworks, risk assessment, risk mitigation and communication of residual risk. A defined program and project management approach that is applied to IT projects and enables stakeholder participation in and monitoring of project risks and progress. THE EFFECT OF IT GOVERNANCE MATURITY ON IT GOVERNANCE PERFORMANCE 13 TABLE 2 Acquire and implement IT processes (ITGI, 2007a) Process name AI1 AI2 AI3 Description AI4 Identify automated solutions Acquire and maintain application software Acquire and maintain technology infrastructure Enable operation and use AI5 Procure IT resources AI6 Manage changes AI7 Install and accredit solutions and changes Identifying technically feasible and cost-effective solutions. Ensuring that there is a timely and cost-effective development process. Providing appropriate platforms for the business applications in line with the defined IT architecture and technology standards. Providing effective user and operational manuals and training materials to transfer the knowledge necessary for successful system operation and use. Acquiring and maintaining IT skills that respond to the delivery strategy, an integrated and standardized IT infrastructure, and reducing IT procurement risk. Controlling impact assessment, authorization and implementation of all changes to the IT infrastructure, applications and technical solutions; minimizing errors due to incomplete request specifications; and halting implementation of unauthorized changes. Testing that applications and infrastructure solutions are fit for the intended purpose and free from errors, and planning releases to production TABLE 3 Deliver and support IT processes (ITGI, 2007a) Process name DS1 DS2 Define and manage service levels Manage third-party services DS3 Manage performance and capacity DS4 Ensure continuous service Ensure systems security DS5 DS6 DS7 DS8 DS9 DS10 DS11 DS12 DS13 Identify and allocate costs Educate and train users Manage service desk and incidents Manage the configuration Manage problems Manage data Manage the physical environment Manage operations Description Identifying service requirements, agreeing on service levels and monitoring the achievement of service levels. Establishing relationships and bilateral responsibilities with qualified third-party service providers and monitoring the service delivery to verify and ensure adherence to agreements. Meeting response time requirements of SLAs, minimizing downtime, and making continuous IT performance and capacity improvements through monitoring and measurement. Building resilience into automated solutions and developing, maintaining and testing IT continuity plans. Defining IT security policies, plans and procedures, and monitoring, detecting, reporting and resolving security vulnerabilities and incidents. Complete and accurate capture of IT costs, a fair system of allocation agreed upon by business users, and a system for timely reporting of IT use and costs allocated. A clear understanding of IT user training needs, execution of an effective training strategy and measurement of the results. A professional service desk function with quick response, clear escalation procedures, and resolution and trend analysis. Establishing and maintaining an accurate and complete repository of asset configuration attributes and baselines, and comparing them against actual asset configuration. Recording, tracking and resolving operational problems; investigating the root cause of all significant problems; and defining solutions for identified operations problems. Maintaining the completeness, accuracy, availability and protection of data. Providing and maintaining a suitable physical environment to protect IT assets from access, damage or theft. Meeting operational service levels for scheduled data processing, protecting sensitive output, and monitoring and maintaining infrastructure. 14 M. SIMONSSON ET AL. TABLE 4 Monitor and evaluate IT processes (ITGI, 2007a) Process name ME1 ME2 Monitor and evaluate IT performance ME3 Monitor and evaluate internal control Ensure regulatory compliance ME4 Provide IT governance Description Monitoring and reporting process metrics and identifying and implementing performance improvement actions. Monitoring the internal control processes for IT-related activities and identifying improvement actions. Identifying all applicable laws, regulations and contracts and the corresponding level of IT compliance and optimizing IT processes to reduce the risk of non-compliance. Preparing board reports on IT strategy, performance and risks, and responding to governance requirements in line with board directions. IT GOVERNANCE PERFORMANCE IT governance performance is the quality of the services that the IT organization delivers, as seen from a business point of view. A similar, yet broader, discipline is strategic alignment, where Jerry Luftman attempted to provide guidance for achieving strategic alignment between business and IT in a mid 90s framework. As of today, Luftman’s framework has been applied in 500 case studies (Luftman, 1996; Luftman, Papp & Brier 1999). Dahlberg and Lahdelma (2007) synthesized IT governance literature and created another broad definition of business value delivery from IT. In the early 2000s, MIT researchers Weill and Ross con ...
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School: Carnegie Mellon University


Balanced Scorecard



Introduction to balanced scorecard
Comparison between the scorecard and COBIT
Context in which the Balanced Scorecard and the IT framework would be used.

Balanced Scorecard
A scorecard is a system that is used for strategical and management purposes by an organization
to focus on the major strategic goals. It provides the feedback to a given organization A scorecard uses
four perspectives to measure your company’s health;

Financial perspective
Customer perspective
Internal perspective
Learning and growth perspective.

Balanced scorecard (BSC) was created in the year 1992 by Kaplan and Norton and since
then, it has gone development over the last 20 years. In our modern society, we have many
frameworks known and the popular ones are, COBIT, ITIL, TOGAF, CMMI-Dev, COSO, VAL IT (W, 2002).
COBIT 5 was released following a development from the initial COBIT 4.1’s maturity model to
the process capability model of COBIT 5’s. both of these models, tend to perform the same function only
that the structure of the framework is modified for new process capability model.
However, despite the many number of frameworks known, we are going to major our study and
research on COBIT. We shall relate it with balanced scorecard looking it details the simi...

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