The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment by Robert S. Kaplan & David P. Norton

Author:Robert S. Kaplan & David P. Norton
Language: eng
Format: mobi
Publisher: Harvard Business Review Press
Published: 2000-09-12T14:00:00+00:00

Consultancy and business solutions

Information technology and systems

Business services (accounting, finance, real estate, procurement, etc.)

Human resources services

By mid-1999, SSI was delivering 6,000 different products or services to more than 3,000 individual customers, most within Shell but to some external customers as well. The units of SSI each had a Balanced Scorecard to define their strategic priorities (see Figure 7-3).

The linkage between any service provider in SSI and a customer was accomplished with a Service Level Agreement (SLA). Shared services had existed in Shell since 1985, and their operating costs had already been cut by 50 percent. The goal of SSI had to be broader than low-cost delivery. The SLA established a clear understanding between the internal customer and the service provider. With so many products and customers, SSI could not just offer a single level of service; some business units wanted “gold-plated” services, whereas others wanted the “nickel-plated” variety. Each customer evaluated the cost/value tradeoffs in the service and selected the service requirement to fit its business needs. The service provider, in turn, committed to enhancing its capacity to supply and deliver the desired services at agreed levels of cost and functionality. The providers would also strive to continuously improve their cost and service quality.

Measurements played a key role in implementing the SLA system. SSI developed unit-level costs for all of its products and services. These unit costs could be cost per transaction for repetitive activities, or a cost per hour for engineering and consultative activities. In addition to cost, however, the SLA included a Balanced Scorecard of performance measures relating to the following:

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