BSC Flowdown

How to develop a good IT Balanced Scorecard (BSC)? How can we find the metrics which really measure the performance of IT? In general how could be a general requirement (in our case supporting business strategy) trnslated into clear, specific, easy to measure metrics? In SixSigma there is a method called CTQ (Critical to Quality Tree) exactly for this purpose. Here is a sample CTQ tree shown for IT BSC. An actual BSC-CTQ my differ from it but its a good starting point. We should always begin with the company strategy because the task of IT is to support the company strategy. Company strategies are different but in my opinion they always set three key expectations against the IT. The difference is between the importance and in the interpretation of these.
First is the optimization of the existing functions. What we do should be done more effective; either cheaper or better or both if possible. 
Second IT must optimize business processes. This expectation is very similar to the first only at a higher level; instead of IT processes we concentrate on business processes. 
The third goes even higher; IT should be an enabler of innovation.

Digging a level deeper IT optimization can be done through standardization. Standard solutions are generally cheaper and easier to maintain and replace. Second the internal IT group should concentrate on the core activities and outsource task which is better supported by a supplier (however the reserve maybe true as well) and third a strong IT-Controlling is needed.

Innovation may have three forms: process innovation, product innovation and business model innovation (and marketing innovation, but it's out of scope now). 
Process innovation helps optimizing business processes.

Going again a level down I think ITIL is a good choice of standard but there are other opportunities as well (e.g. Cobit). Concentrating on the core leads to the problem of sourcing and control means cost control, process performance management.

For innovation (which means developing something new) managing projects is the most important and flexibility in services to easily develop new solutions.

Last but not least the human factor is the most important at all.

At the lowest level there are things which can be measured. The first is ISO 20000 which is actually a standard for ITIL. I haven't found any evidence that ITIL really improves performance but I generally believe that order is more effective for day to day operations than chaos.

The next is the outsourcing ratio. Unfortunately again there is no evidence for the use and especially the optimal level of outsourcing. However I think that its is impossible to do everything effectively inside so something most be outsourced. On the other hand IT is also a source of innovation (see technology management) so letting everything out of hand isn't wise. In the car industry - which is very high tech but also a very mature industry - only 20-30 percent of the value produced is made inside, the rest is supplied. I think that at least 60% percent of the IT should be outsourced, however it may be a lengthy process.

Operational cost should be as low as possible while the reserve is true for development costs.

Service level agreements (SLAs) are good tools to measure process performance. A good SLA measures business process performance and not technical data (e.g. claim processing time instead of SQL transactions per second).

Projects can be measured by project metrics (deadline, costs and functions) and user satisfaction gives a general overview about the performance.
There is evidence that Human Capital Management (HCM) improves performance, and it can be measured.