The balanced scorecard  it’s a powerful methodology to improve a ISO 9001 QMS.
This post illustrated how it can also be used to support a  strategy to growth in the public sector

The balanced scorecard for BIT.
The same team that perfomed the SWOT analysis met the 26th March 2009 to perform a balanced scorecard analysis.
The future account manager for public institutions has been invited at the workshop; he participated as consultant (remunerated day) with the obligation to sign a Not Disclosure Agreement.  Also  the HR director participated to this section.
As a preliminary task, the financial director illustrated the new financial model created to deal with the exchange rate challenge. Then the HR director presented the CV of the future account manager (presented at the workshop) and the future team leader of the customer service dedicated to public institutions (not present at the workshop).

Based on the business plan created in the workshop of the 5th January,  the team formulated the Company strategy to grow in the public sector.  As to the methodology of Kaplan and Norton, in a cause-effect chain, first the financial, then the  Customer, then the Internal Business Process and finally the Learning and Growth strategic objectives have been identified.

In the second part of the workshop, the team identified the Financial,  the Customer, the Internal Business Process and finally the Learning Growth Strategic Measurements (Core Outcome and Performance Drivers).
The team decided to develop the Diagnostic measures in futures, dedicated (with the involved Company functions),  workshops.

The file balanced scorecard for BIT summarizes all this work.
Here below there are some specific points of the methodology that, in my opinion, deserve a specific note.

FINANCIAL perspective.
“BUILDING A BALANCED SCORECARD should encourage business units to link their financial objectives to corporate strategy. The financial objectives serve as the focus for the objectives and measures in all the other scorecard perspectives.” ξ

For BIT is strategic to develop a balanced scorecard for each tender that has a potential value equal or major of 10 million euro. This assures a methodological uniformity in evaluating the major tenders, including the relative risks.

BIT believes strategic to be able to keep the request of liquidate damages less than 0.5% of the order inflow. I will return on the subject of liquidate damages in European Tenders with a dedicated post.

The Lead indicators of this perspective should have a financial nature. However, the performances in delivery and in the resolution of maintenance tickets are so importants  in predicting the request of liquidate damages that BIT has decided to consider them in this section.

CUSTOMER Perspective
“IN THE CUSTOMER PERSPECTIVE of the Balanced Scorecard, companies identify the customer and market segments in which they have chosen to compete ” ξ
As the strategic target is the public sector, market segmentation is in reality linked to the selection of the tenders. This is developped in the next perspective.

Once the tender is won, the target becomes to convince each partecipant of the tender to achieve (and even over achieve) their ceiling budget declared in the tender.  This target has not to jeopardize the overal margin target.  To monitor this perspective, an index value at customer level is built for each tender.  Fig   1  is an exemple for an (hypothetic) tender of 10 million euro with  a target of 10% margin. In this tender there are  10 public istitutions (with different budgeted revenues).
Based on the declared (in the tender) consumation of each tender and the total marging target for the tender,  the % revenue (revenue of the institution/total revenue*100) and the % of profit (profit from the institution / total profit *100) is calculated. Finally, the Index (% revenue / % profit) is calculated.
Each Index should not be lower than 1.

One of the performance driver is the customer sattisfaction. In public sector is extremely difficult to conduct a classic customer sattisfaction research. For European Union Institutions, it is even forbidden. For this reason, BIT has decided to build a customer sattisfaction index based only on indirect measures (Fig 2).

OFor the first year of activity, BIT decided not to use the customer service claim index as the procedures and the team members are too new to have solid reports.

These index are considered together with the index related to SLA and performances of the contract (Fig 3)

In the second year of the activity one single index will summarise the above 4 index (plus the index of the customer service claim).

INTERNAL BUSINESS PROCESS Perspective
‘For the Balanced Scorecard, we recommend that managers define a complete internal-process value chain that starts with the innovation process— identifying current and future customers’ needs and developing new solutions for these needs— proceeds through the operations process— delivering existing products and services to existing customers— and ends with postsale
service— offering services after the sale that add to the value customers receive from a company’s product and service offerings.’ ξ

BIT decided that it is strategical to be able to define and manage the tender pipeline.  The pipeline is composed by signed tenders, by answered tenders  and by tenders that will be answered in the following 3 years.

In order to minimize the risk of liquidate damages, BIT believes necessary to develop a new process and IT tool capable of tracking the respect of  SLA (with the customer) and milestones (internal process) at order level (Fig 4).

This process must be also integrated with the ISO 9001 QMS measures (Fig 5)

In order to have a minimun impact on the workload of the Customer Service team, the process shall be automatized. However, the change on the current IT system requires 4 years; a temporary and manual solution has to  be developped in Sharepoint.

LEARNING AND GROWTH perspective
“We have found most companies use employee objectives drawn from a common core of three outcome measurements (Figure 6 ) ξ

BIT decided to introduce an employee satisfaction  index. The necessary data will be collected during the annual appraisal.

“We have found that many companies already have excellent starts on specific measures for their financial, customer, innovation, and operating process objectives. But when it comes to specific measures concerning employee skills, strategic information availability, and organizational alignment, companies have devoted virtually no effort for measuring either the outcomes or the drivers of these capabilities.” ξ
When the  litterature and best practice doesn’t offer an accepted set of measures, it can be useful to  to implement  a standard like OHSAS 18001.
BIT decided that the implementation of the Belgium Law of  4th August 1996 is for the moment enough to assure an acceptable set up of the “Enablers”.  This Belgium Law implements implements the Council Directive 89/391/CE of 12 June 1989 (the most important Europeen Directive for H&S). 

To know more:
Analysis of a major type of public tender for IT Infrastructure: the one winner, one catalogue.
Lesson learnt in Tailoring Prince2  to asnwer a public tender (balanced scorecard for DCSS lot 1).
A visual approach to project management reporting: Story Mapping.

ξ (Kaplan, Robert S.; Norton, David P.. The Balanced Scorecard: Translating Strategy into Action)