Implementing an IT Service Balanced Scorecard: Getting it Right the Second Time Round

Introduction 

Good Balanced Scorecards (BSC) are designed to give organizations strategic focus and align divisions and business units with corporate performance objectives. They also provide staff with the relevant performance information to guide decision making and performance improvement.. This case study shows how the Information Management Services (IMS) unit of HM Revenue & Customs overcame many cultural challenges and a first failed attempt to implement a BSC, before the BSC became the successful centerpiece of the performance management, measurement and reporting process and enjoys wide buy-in at each level of the organization. 

About HMRC IMS 

HM Revenue & Customs (HMRC) was formed in April 2005 through the merger of the Inland Revenue and HM Customs and Excise departments. On behalf of the UK Government HMRC collects and administers direct and indirect taxes, child benefit, child trust fund, tax credits and other provides other services. Amongst its wider duties are border and frontier protection and the enforcement of the UK's national minimum wage laws. In November 2008, HMRC launched a departmental purpose, vision and way. Its purpose is that:  We make sure that the money is available to fund the UK's public services  We also help families and individuals with targeted financial support HMRC's vision states that: "We will close the tax gap, our customers will feel that the tax system is simple for them and even-handed, and we will be seen as a highly professional and efficient organization." The "our way," includes nine HMRC commitments that include, as examples: "we understand our customers and their needs," "we believe that most of our customers are honest and we treat everyone with respect," "we recognize that we have privileged access to information and we will protect it," and "we drive continuous improvement in everything we do." HMRC is structured around four operational groups, Personal Tax, Benefits and Credits, Business Tax and Enforcement and Compliance; In turn these are supported by six corporate services including the Chief Finance Officer Group, Chief People Officer Group and Chief Information Officer Group.

The Chief Information Group consists of Information Technology and Information Management Services (IMS). The subject of this case study, IMS, which is headquartered in Telford, England, has about 1300 employees and comprises seven business units (BUs) that include business partners; live services; sourcing and contracts and finance and performance. IMS has a vision, "to provide the most highly valued IT service in the UK." A substantial amount - about 2/3 - of HMRC's IT services are outsourced. 

The Balanced Scorecard - Take Two 

As with many companies, IMS's eventual success with the Balanced Scorecard followed a first failed attempt. IMS's Head of Performance and Planning, explains why the earlier attempt, which was facilitated by an external consultant, was unsuccessful. "All that was created was a random bunch of metrics that the organization tried to group together within four quadrants," he says. "There was no structure to the metrics and no Strategy Map. It was a bottom-up exercise and the scorecard did not help IMS move its performance forward." 

Creating a Strategy Map 

In 2007 IMS began to put greater structure to the scorecard and switched the design from bottom-up to top-down. But the effectiveness of the scorecard in enabling step-change performance improvement took a massive step forward in 2008 when, following advice and facilitation from the Advanced Performance Institute (API), the concept of strategy mapping (the most important part of of the scorecard creation process) was introduced to IMS. "The idea of the Strategy Map was a real "lights on" experience for me," recalls the Head of Performance and Planning. "A few days after completing the API training course, I attended the IMS board meeting that was held to start the 2008 planning process. The then CIO [Chief Information Officer] was leading a discussion on the latest strategic thinking of HMRC and how we could support those strategic goals. During that meeting I drew the first IMS Strategy Map." He says that final Strategy Map that appeared in the business plan wasn't that dissimilar to the first draft. "But I cannot emphasize enough how the process of reviewing it, discussing it with colleagues, changing it, putting in more links and changing back again was extremely useful for the management team to collectively agree on and understanding our objectives and KPIs [key performance indicators]," he says. 

IMS Strategy Map 

Moreover, the Strategy Map is relatively simple. This was a purposeful decision. "The IMS board wanted the map to be as simple as possible," comments the Head of Performance and Planning, "But they also wanted great clarity around how the objectives linked to the strategic objectives of HMRC." 

Impacting HMRC Objectives 

Figure 1 shows the IMS Strategy Map. The map is designed to shows how the IMS strategic objectives support those of HMRC, thus fulfilling the main requirement of the IMS Board. Note for example how the IMS objective "ensure IT security standards are maintained," feeds into the IMS flagship

program (essentially major initiative) "IMS information security," and from that through to the HMRC objectives of: "improve our professionalism of dealing with - the security of our customers information - our stakeholders - our external impact," and "improve the extent to which individuals and businesses pay the tax due and receive the credits and benefits to which they are entitled," which in turn impacts the HMRC vision. Creating a Strategy Map that so effectively shows the linkages to the HMRC objectives is of value to the whole IMS organization and not just the Board, explains IMS's Head of Performance Improvement, Finance & Performance: "Before building and rolling out the map we were a very siloed organization," she says. "People were almost wholly focused on their own work with little real understanding of how what they did impacted others functions within IMS or the relationship with the overall objectives of HMRC." She adds that the Strategy Map has been instrumental in enabling staff to see and appreciate the wider context of their work. Indeed, a recent IMS survey found that about 65% of staff had a good line-of-sight from their personal objectives and what HMRC was trying to achieve. This, says the Head of Performance Improvement, is substantially higher than it would have been pre the Strategy Map.

The IMS Strategy Map is supported by a scorecard that is collocated to the perspectives of "performance," (that includes the financials), "customer centricity," "supplier engagement," and "employee engagement." It is important to note that already broadly the same the objectives that appear within the scorecard are not exactly the same as those on the Strategy Map. The objectives on the latter are designed to show the direct causal impact of IMS's work on the HMRC goals. The objectives in the scorecard are focused more on internal IMS improvement, but roll-up to and provide line of line with those on the Strategy Map. For instance, although there is only one direct supplier related objective on the Strategy Map "deliver value for money from supplier relationships." This is further granularized within the scorecard to show more strongly how IMS must deliver that value. That said, many Strategy Map/Scorecard objectives are the same. As an example of how one is captured on the scorecard consider "provide strategic insight and innovation," which appears within the "customer centricity" scorecard perspective. This is supported by the KPI "% of senior stakeholders that agree that IMS provides strategic insight and innovation to their business and program outcomes." This has a baseline target and one for end of 09/10, with an owner identified, frequency of reporting and RAG (red, amber, green) traffic light score where red equals below target, amber on target and green, above target. From an "employee engagement," perspective consider "improve capability and professionalism of staff," which is supported by the KPI "% uplift in capability skills levels in IMS people', with accompanying targets, etc. 

Balanced Scorecard Training 

The scorecard design and implementation was originally championed by the IMS Financial Director, which IMS's Head of Performance Improvement says was absolutely critical as the then siloed nature of IMS would have made it near impossible to drive the process forward (especially the implementation of cross-unit objectives, initiatives, etc). But, however valuable, IMS also recognized that the likelihood of success would be significantly increased if a large number of staff undertook scorecard training. This in-house training was delivered by API. The Head of Performance and Planning comments: "It's important to note that a wide range of people went through this training. This went from a member of the IMS Board, through members of the performance sub-committees to the planning and performance coordinators to every member of the planning and performance team" [we elaborate on all three functions below] he says, adding that. "They have all gone through the same course and have all found something to help them understand how their work impacts our strategic objectives." Head of Performance Improvement adds her own perspective of the value of the API course. "Along with some of my colleagues I attended a two-day national training course on performance management," she says. "Although we gained benefits from that course, we found that what API delivered in one day was much simpler, easier and valuable. The templates and analogies that API used made it all very accessible and made it remarkably easy to translate the theoretical learnings back to the workforce in a practical manner."

Training Program Overview 

As a brief overview, the one-day Balanced Scorecard training program delivered to IMS involved sessions that broadly introduced the concept of measuring and managing performance; creating meaningful public sector scorecards; designing and testing performance indicators and key performance questions; performance measurement and managing as an enabler of learning and improvement and automating performance management. 

Creating Devolved Strategy Maps and Scorecards 

Not only did this day's training program catalyze the creation of the highest-level IMS Strategy Map and scorecard but it also provided much of the learning required to create devolved scorecards. "Each of our Business Units has its own scorecard which is owned by the unit director," explains the Head of Performance Improvement. "These devolved scorecards directly support the IMS map and so we are now have a direct and causal line-of-sight form BU performance all the way up to the HMRC objectives and vision." 

Performance Sub-Committee 

The fact that each member of the performance sub- committee completed the one-day training program was critical for succeeding with the BU scorecards. This sub-committee, of which the Head of Performance and Planning is the secretary and which is chaired by an IMS Board member comprises the senior members of each business unit that have responsibility for a BU scorecard. The committee meets monthly to critically review the scorecard and to identify and green-light performance improvement initiatives. 

Business Unit Performance Coordinators 

Within each BU, the responsible leaders are supported by dedicated performance coordinators, who are tasked with pulling together all of the information at the business unit level and to deliver this to the Head of Performance Improvement's planning and performance team by the eight working day of the month. This seven-strong team collates all of the information for the monthly performance sub-committee meeting and also uses the results from the BU scorecards to inform and update the IMS scorecard. The Head of Performance Improvement stresses that the team's role is much more than simple data collection and reporting, however important that might be. "The team reviews the scorecard and will challenge back if required." She says. "The team talks to each coordinator to discuss how their unit's KPIs are impacting those in other Business Unit. And we hold monthly meetings with the coordinators to discuss progress and share best practices." 

Improving the Monthly Board Meeting 

Another meeting that has benefited from the scorecard is the monthly board meeting, and in particular the financial conversation, as the Head of Performance and Planning explains. "When we go to the board and talk about how our finances are being invested we now always take the scorecard and the risk register," he explains. "By doing so we can clearly show how, for example, cutting back investment in one area will impact another," adding that IMS has always understood the links between planning and risk and performance management, but had never had something to hang it on. "With the Strategy Map and Balanced Scorecard, we now have," he adds. 

Overcoming the Challenges of a Scorecard Implementation 

Although the process of putting in place the Strategy Man and scorecard within IMS has clearly been successful, it has not been without its challenges. The structure of IMS, through which the majority of IT services are actually outsourced, led to some initial difficulties. "As we have a massive external IT contract, we do a lot of performance measurement," says their Head of Performance and Planning. "But this is measuring somebody else." He goes on to say that this led to some issues around getting people inside of IMS to take accountability for their performance. "Some members of staff would say "we can't tell you what our performance is until we speak to our supplier," or else they would say" "we can't tell you what our performance is and we can't comment on it." He adds that much effort was expended on explaining that, even when outsourced, the IMS units were accountable for that performance. "We said that you own it, it's your performance, you outsource responsibility for it and you are accountable within the organization." Another issue was that some staff saw IMS as simply an overhead, so couldn't figure why there was need to use a Balanced Scorecard. A further challenge was caused by the historic siloed nature of IMS's work. "Some people asked why they had to justify their work. They had trouble seeing how their work fitted in with the wider aims of IMS and indeed HMRC." 

Market Stalls 

In addition to the one-day training, other techniques used to overcome such cultural challenges have been concerted communication programs where the maps and scorecards are presented and explained. For example, IMS introduced a publicity technique called "market stalls" in 2008. Devised by the IMS Communication team, the planning & performance team created a "market stall" (as did the other business units) and visited all the IMS main locations and explained their work to local staff. The planning & performance team stall included an A1 sheet with the developing Strategy Map and scorecard. "We were able to talk people through the process and explain how the work that they did fed up into the IMS plan and then to the HMRC plan," explains their Head of Performance Improvement. "This sort of communication exercise had never been done before and through the map and scorecard people began to see the strategic importance of their work and the difference that they made." 

The Balanced Scorecard: The Next Steps 

It is evident that the Balanced Scorecard is now established and accepted within IMS. But this is not the end of the journey. Presently IMS is creating a CIO performance hub, which is a highly visible and electronic representation of the Strategy Map, scorecard KPIs and the HMRC plan. The IMPS Board and performance sub-committees will be able to view current performance to all metrics and, if required, add notes to the KPIs. There is also a large wall for problem solving so that when observers have identified an issue they can use problem solving tools to uncover root causes. Countermeasures can then be indentified and owners assigned for the problem resolution. Individuals will be able to view KPIs from various perspectives as examples, from an internal IMS delivery perspective, or from supplier cost, project or even events perspectives. Furthermore, it will enable an employee perspective, such as KPIs around sickness absence. "The Balanced Scorecard will be the centerpiece of the work of that hub," says their Head of Performance Improvement. "The scorecard will become the crux of the business and of business reporting." There is also an intention to start to use Key Performance Questions (KPQs) as a key part of the scorecard process. As a brief description, a KPQ (an innovation introduced by API), focuses on and highlights what the organization needs to know in terms of executing existing strategic objectives. KPQs enable a full and focused discussion on how well the organization is delivering to these objectives and serve as an important bridge between organizational goals and KPIs. Indeed KPQs are used to provide a performance context to KPIs and to more effectively prioritize the indicators chosen. The IMS organization is in the early stages of experimenting with KPQs. There is also an intention to introduce lean methodologies into IMS and to do much more in understanding the performance requirements of external as well as the internal customer. As their Head of Performance and Planning states this is not an easy task for a support organization which is always one-step away from the external customer. 

Key Success Factors 

In conclusion, both Head of Performance Improvement and Performance and Planning point to the importance of buy-in, and at each organizational level in succeeding with the Balanced Scorecard. "It's critical to secure the buy-in and support of the senior management team," says their Head of Performance Improvement. "Without this there's no chance of succeeding with the scorecard." But she adds: "With that in place it's also crucial to secure the buy-in of lower level managers and staff, as they must make this all work on a day-to-day basis. And it's also important that they understand the impacts across the business units and work-streams." Their Head of Performance and Planning also concurs that total ownership and understanding are key, but continues: "There also needs to be an efficient process underneath this to make it all work smoothly." He also stresses that other critical success factors included the fact that the board mandated some of the lower level KPIs. "This has greatly helped us to manage individual components of an overall aggregate," he says. "And it gives the senior management team a lot of information that they can drill down into. They now know what's going on across the organization much more than they did previously." Finally, given the fact that the original scorecard effort was something of a failure and that this was much to do with poor consulting advice, Head of Performance and Planning highlights the importance of good external facilitation. "Having somebody in that could explain in simple and straightforward terms the benefits of performance management and, importantly, how to implement it was invaluable," he says. "Our previous experience was that people who didn't understand any of this tried to explain it or people who had some knowledge tried to make it very complex in their explanations. API kept is simple and accessible. And, at the end of the day, keeping it all simple is critical to succeeding with the Balanced Scorecard."

Bernard Marr is a globally regognized big data and analytics expert. He is a best-selling business author, keynote speaker and consultant in strategy, performance management, analytics, KPIs and big data. He helps companies to better manage, measure, report and analyse performance.
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