Perhaps the most important indicator is business goal alignment.

This is
used to align the incentives of employees and management with corporate
and customer objectives.
These indicators, then, form the basis for FedEx s balanced scorecard.
The FedEx corporate philosophy called People, Service, Profit guides
all decisions.
Balanced Scorecard
The technique that many companies have selected is indeed the balanced
scorecard, as shown in Figure 3.5. Heralded by the Harvard Business
Review as one of the most significant management ideas of the past 75
years, balanced scorecard has been implemented in companies to both
measure as well as manage the IT effort.
Robert S. Kaplan and David P. Norton developed the balanced-scorecard
approach in the early 1990s to compensate for their perceived shortcomings
of using only financial metrics to judge corporate performance.
They recognized that in this New Economy, it was also necessary to value
intangible assets. Because of this, they urged companies to measure such
esoteric factors as quality and customer satisfaction. By the mid-1990s,
How do we look to shareholders?
Objectives Measures Targets Initiatives
Financial
How do customers see us?
Objectives Measures Targets Initiatives
Customer
What must we excel at?
Objectives Measures Targets Initiatives
Internal Business Processes
How can we sustain our ability to change and improve
Objectives Measures Targets Initiatives
Learning & Growth
Vision & Strategy
FIGURE 3.5
The balanced scorecard and its four perspectives.
Oracle Enterprise Performance Management 97
balanced scorecard became the hallmark of a well-run company. Kaplan
and Norton often compare their approach for managing a company to that
of pilots viewing assorted instrument panels in an airplane cockpit both
have a need to monitor multiple aspects of their working environment.
In the scorecard scenario, a company organizes its business goals into
discrete, all-encompassing perspectives: Financial, Customer, Internal
Process, and Learning/Growth. The company then determines cause
effect relationships, e.g., satisfied customers buy more goods, which
increases revenue. Next, the company lists measures for each goal, pinpoints
targets, and identifies projects and other initiatives to help reach
those targets.
Departments create scorecards tied to the company s targets, and
employees and projects have scorecards tied to their department s targets.
This cascading nature provides a line of sight between each individual,
what they re working on, the unit they support, and how that impacts
the strategy of the whole enterprise. A vast majority of organizations are
now using a balanced-scorecard approach. General Electric, Home Depot,
Wal-Mart, and Mobil are among the many well-publicized companies
using this approach.
Kaplan and Norton (2001) both emphasize that the approach is more
than just a way to identify and monitor metrics. It s also a way to manage
change and increase a company s effectiveness, productivity, and competitive
advantage. Essentially, as Kaplan and Norton put it, a company that
uses the scorecard to identify and then realize strategic goals is a strategyfocused organization. Cigna is a good example of this. According to
Norton, when Cigna started its balanced-scorecard process, the company

had negative shareholder value. The parent company was trying to sell it
but had no takers. Five years and a few balanced scorecards later, Cigna
was sold for $3 billion.
For IT managers, the balanced scorecard is an invaluable tool that will
finally permit IT to link to the business side of the organization using a
cause-and-effect approach. Some have likened balanced scorecard to a new
language, which enables IT and business line managers to think together
about what IT can do to support business performance. A beneficial side
effect of the use of the balanced scorecard is that, when all measures are
reported, one can calculate the strength of relations between the various
value drivers. For example, if the relation between high development costs
and high profits levels is weak for a long time, it can be inferred that the