Lecture Accounting information systems: Chapter 13 - Richardson, Chang, Smith

Chapter 13 - The balanced scorecard and business value of information technology. After reading this chapter, you should be able to: Describe the Balanced Scorecard framework, explain the purpose of strategy maps, describe different types of IT and why IT initiatives can be difficult to evaluate, define the Balanced Scorecard management process.

The Balanced Scorecard

and Business Value of

Information Technology

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• LO#1 Describe the balanced scorecard

framework

• LO#2 Explain the purpose of strategy maps

• LO#3 Describe different types of IT and why IT

initiatives can be difficult to evaluate

• LO#4 Define the balanced scorecard

management process

• LO#5 Describe how an AIS system contributes

to a balanced scorecard management process

The Balanced Scorecard

system

government, and nonprofit organizations

worldwide

strategy of the organization,

communications

against strategic goals

13-3

Four Perspectives

13-4

F i n a n c i a l

P e r s p e c t i v e

C u s t o m e r

P e r s p e c t i v e

B u s i n e s s P r o c e s s

P e r s p e c t i v e

L e a r n i n g &

G r o w t h

P e r s p e c t i v e

I m p r o v e

P r o ce sse s

En h a n ce

C u st o m e r

V a lu e

G r o w

R e v e n u e

Lo w e r

C o st s

Learning & Growth Perspective

improvements in tangible and intangible

infrastructure

are available

information

the ability to communicate

creating a unique corporate identity and

culture

aligned with the organization’s strategic

objectives

13-5

Process Perspective

such as supply, production, distribution,

and risk management

such as those involved with the selection, acquisition, and retention of customers,

and growth of the firm’s market

identifying opportunities, research and

development, product design and

development, and product launch

as financial reporting, accounting, and

those that manage environmental, safety

and health, employment, and community

issues

13-6

Customer Perspective

the competition

• Price

• Quality

• Availability

• Function

and new customer acquisition

13-7

Financial Perspective

investments and its ability to deliver value

to customers

(for-profit companies)

13-8

Why a Balanced Scorecard

13-9

Leading Indicators

Lagging Indicators

Internal Perspectives

External Perspectives

Strategy Maps

strategic priorities

among strategic priorities

prioritize gaps between current and

desired performance levels

13-10

Perspective

Customer

Perspective

Internal

Process

Perspective

Learning &

Growth

Perspective

Human Capital Information Capital Organization Capital

Operations Management

Customer Management Innovation Regulatory & Social

Customer Value Product Attributes

Service Attributes

Relationship

Image Value

Roles of AIS/IT in Balanced

Scorecard Framework

difference between

technology, and

that reflects the readiness of the

organization’s technology to support

business processes

computers

networks

support software

effectively

13-12

Nature of Information Technology Investments

worker productivity for standalone tasks

another

organization as well as with external partners

13-13

Summary of 3 IT Investment

Categories

IT

Categor

y

Function

IT

Assists execution with discrete tasks

Does not require complements but impact can increase with the users skill

Network

IT Facilitates interactions Does not require complements but impact increases with users’

skill and extent of teamwork Enterpris

processes and requires

interactions

Requires complements and impact often depends on users’

skills, teamwork, changes to the way work is performed, and

changes in the way decisions are made

13-14

The Balanced Scorecard Management Process

and monitor performance:

competitive environment and identifies ways

in which it can best compete consistent with

its mission, vision, and values

objectives, measures, targets and initiatives,

and develops capital, initiative, and other

long-term budgets to guide resource

allocation and action according to its strategy

operating budgets, prioritizes business

process improvements, and key performance indicators At this point it establishes

necessary IT systems to support strategic

business processes as well as management

reporting and review capabilities

to ensure processes are meeting objectives

and provides feedback to operating

managers to continuous improvement.

effectiveness of its strategy, conducts

profitability analytics, tests the

cause-and-effect assumptions of the strategy, and

identifies potential alternatives.

13-15

13-16

Role of AIS/IT in Balanced

Scorecard Management

Process

and managing the balanced scorecard

management process

formulation

distribute budgets for strategy execution

to assess performance against strategic