Information Quality & The Balanced Scorecard

In the 1990s Kaplan and Norton developed a newof their data and treat it as a critical resource and
approach to strategic management based upon aproduct of its operations.
multi-dimensional view of the organization.Transforming Data into Information:
According to this approach, traditional financialRaw data is not information. Data becomes
measurements provide a "too little too late"information when it is analyzed and transformed
snapshot of the organization, which is inadequateusing the scorecard information goals as a guide.
for companies in the new economy.Data must be grouped and placed into context. It
Today, efficient internal business processes, goodmust be compared to other data and to older
customer relations, and long-term strategicversions of the same data. How does the data
investments in technologies and employees arerelate to other aspects of the scorecard, and
what make companies successful.what trends are emerging overtime?
The balanced scorecard proposes that companies"Transforming data involves not only analyzing and
be viewed and measured in each of four majordistilling it into usefulinformation related to the
dimensions1:organization's strategic goals, but requires that the
· The traditional financial dimensioninformation be presented in a form that is best
· The customer dimensionfor the audience."
· The business process dimensionDelivering the Data:
· The learning and growth dimensionInformation must be delivered to the right
The organization's overall vision and strategy arepersons at the right time. This may seem
particularized for the various organizationalobvious, but often it is the most difficult part of
structures within each of these dimensions-e.g.,the information generation process, particularly for
accounting for the financial dimension, marketinglarge organizations. For these organizations,
and customer support for the customerdelivery may mean more than simply making the
dimension, order and warehouse management forinformation available. Such mass delivery can
business processes, and human resources andresult in the information being overlooked.
business development for the learning and growthTargeted delivery to only those people who are
dimension. Metrics for gauging performanceresponsible for acting on the information focuses
against the specific strategic goals of thethe information process and highlights the
organization's structures are then devised.importance of the information. If no one is directly
Finally, data is collected and analyzed on anresponsible, why is the information being
ongoing basis to evaluate performance against thegenerated?
goals and to provide decision makers with theIn addition, the persons receiving the information
information needed to identify problems andmust understand how it relates to their
trends and to make adjustments while the data isobjectives. Without direct relevance to their
hot. Quality information is the foundation of aorganization, work, and goals, the information is
balanced scorecard.little more than interesting reading material.
Getting Good Raw Data:Finally, the timing of delivery is a crucial
Producing quality information begins with gettingconsideration, which may determine the type of
good raw data. Above all, good data is data thatdata collected. If an operations manager needs to
is directly related to the larger informational needspredict sales quantities in the future so that
as determined by the scorecard. That is, justmaterials can be ordered in advance, historical
because it is true and accurate does not mean itsales data may not be as relevant as proxy
is good data. The data must be relevant to theinformation that is highly correlated to sales.
strategies within the scorecard dimensions. RarelyTiming may also affect data analysis when there
is there a shortage of data. Often we areare data dependencies.
overwhelmed with data, much of it not relevantWhat Information Quality Means for My
or helpful, and we are forced to do our ownOrganization:
faulty filtering. As a result, insignificant orNo matter what your organization does, it relies
misleading pieces of data are emphasized, andon information to make strategic and operational
poor decisions are made.decisions, which ultimately determine its level of
Good data must be accurate and fresh. Gettingsuccess. This information most likely includes
"clean" data is often the greatest impediment tofinancial data. It should also include a broader
effectively using the sophisticated businessspectrum of information related to other
intelligence tools now available. It is estimated thatdimensions of the organization. Whatever the
over 25% of critical data used by majorbreadth of the information, it must be directly
corporations is flawed due to human data-entryrelated to strategic goals or it is a distraction.
errors and a lack of corporate data standards2.The quality of the information must similarly be
Companies are spending much more money andmeasured by how directly it relates to the
effort analyzing data than they are on ensuring itsstrategic goals. Data which is not culled and
accuracy.cleaned as guided by the strategic goals will
"Flawed data not only compromises customerdistract and mislead decision makers. And data
service, marketing campaigns, and supply-chainanalysis and delivery, which transform data into
forecasting, but skews the scorecard andactionable information, can only be effectively
misleads decision makers."performed when strategic goals are understood.
A number of data-cleansing software packagesThe quality of the information generated by your
are available, but data quality degrades quicklyorganization is ultimately measured by its overall
over time. Obtaining clean data should be viewedrelation to the organization's goals.
as an aspect of ongoing business processes1
rather than as a one-time operation of IT2 "Getting Clean," CIO Insight, August, 2004.
organizations. Business units must take ownership