Glossary

Balanced Scorecard (BSC)

The Balanced Scorecard (BSC) is a strategic management tool that is used to align business activities to the vision and strategy of a company, improve internal and external communications, and compare the performance of an organisation with its strategic goals. It was originated by Robert Kaplan (Harvard Business School) and David Norton as a measurement framework with “balanced” performance measures: The financial dimension is supplemented by the perspectives customer, business processes, and learning / growth (employees). These four dimensions are assigned to specific performance indicators (KPIs). As a management system, the BSC is to act as a link between the development of a strategy and its implementation.

Benchmarking

Benchmarking is a method for improving efficiency and / or effectiveness of an organisation. In an IT benchmark, companies can measure themselves against a comparison group (a peer group) in terms of costs, performance, complexity and quality of both the entire IT organisation and individual IT areas. A benchmark comparison delivers detailed facts to optimise the price-performance ratio and take the necessary strategic decisions.

Best-in-class

An organisation is described as “best-in-class” in its segment if it is working at the highest level of efficiency and thus serves as a model for the competitors. To obtain the status of best-in-class, companies usually uses benchmark comparisons and consistently focus on best practices.

Best Practices

Best practices are procedures which have already been successfully implemented in companies. They have consistently shown results superior to those achieved with other means and are used as a “benchmark”. Common best practices are not automatically the perfect approach for any company. They can serve as a model or point of orientation according to the motto: learn from other's mistakes and successes.

Blind Benchmark

In a “blind benchmark”, only the content, quality, complexity and volume of an IT service is taken into account, but not the price for a service or a product. With this information the benchmarking consultant then calculates the price that other companies pay for a comparable product or service. After the completion of the benchmarking process, the real prices are shown to the benchmarker. The blind benchmark is used as a tool to identify a capable benchmarking provider.

Business Case

A business case usually demonstrates the efficiency of a planned project - investments and expected returns are listed to serve as an argument for or against the initiation of a project. An example could be that a software upgrade might improve system performance, but the "business case" is that better performance would improve customer satisfaction, require less processing time, or reduce maintenance costs. Alternatively, the term can also demonstrate the general use of a task for an organization, such as the mandatory compliance with regulatory requirements.

Business Process Maturity Model (BPMM)

The Business Process Maturity Model (BPMM) is developed by the Object Management Group (OMG) and describes the evolution of process maturity of an organization in terms of five stages. The maturity levels are “initial” (no process management), “managed” (defined and repeatable processes), “standardised” (standardised processes), “predictable” (monitored processes) and “innovating” (advanced processes).

Captive/Non-Captive

A captive service provider is a wholly-owned subsidiary of a company that performs particular services only for its corporate affiliates. In contrast, non-captive providers offer their services self-sufficient for all customers in the market.

Capability Maturity Model Integration (CMMI)

The Capability Maturity Model Integration (CMMI) is a reference model in order to improve the product development in an organization. It was developed at Carnegie Mellon University in the Software Engineering Institute (SEI). Although best practices are summarized, there are no specific procedures defined. There are currently three CMMI models: CMMI-DEV (development of IT products), CMMI-ACQ (purchase of IT products) and CMMI-SVC (provision of IT services).

CobiT

CobiT (Control Objectives for Information and Related Technology) is a reference model for IT governance. CobiT includes a generic IT process model that is monitored using control objectives. The 34 processes are divided into four domains: planning and organisation, acquisition and implementation, operation and support, and monitoring and evaluation. Fundamental goal of CobiT is to bring the IT resources and business objectives in line.

Commodity

The term “commodity” describes a commonplace good such as electricity and gas - without distinguishing features except the price and available at anytime and anywhere. In terms of IT, the workplace IT (hardware, software) and the service desk are considered as commodity. This is based on the belief that a company cannot differentiate itself in the competition by basic IT services. As a result, commodities tend to be outsourced to external providers.

Insourcing

Insourcing describes the service provision within an organization. Occasionally, the meaning is mixed with services that are retrieved from external sourcing (re-insourcing).

IT Alignment

IT alignment is the process of adjusting the IT organisation to better meet the business goals of a company. A general plan for the implementation of the IT alignment does not exist, what has opened a large consulting market. Closely related to the alignment is the question of the value of IT. Operational basis of Business-IT alignment is the IT governance.

IT Governance

IT governance refers to the framework in which IT will contribute to the achievement of business goals and thus ensure the alignment of business and IT. IT governance consists of principles, structures and processes to improve efficiency and effectiveness of the use of IT and to minimize risks. A key issue is the expression of IT provision (supply) and IT demand in an organization. The reference model for IT governance is CobiT (Control Objectives for Information and Related Technology).

ITIL

The IT Infrastructure Library (ITIL) was developed in the 80's on behalf of the British government to better plan, provide support and to optimize IT services and their life cycles. From a former guide with comprehensive best practices (or good practices) for all data centres in the public sector in England, ITIL has become the de facto global standard for IT service management. The content of ITIL is continuously developed, since mid-2007 ITIL version 3 is available (ITIL V3).

KPI (Key Performance Indicator)

Key Performance Indicators (KPIs) are metrics that measure and report the effect of drivers (cost, quantity, complexity, quality). Organisation use KPIs to evaluate the performance of its activities like the progress toward strategic goals. Usually a KPI reports an operational level in a specific period.

Normalisation

The normalisation or harmonization of data from complex organizations is an important phase of a benchmarking project. The figures will be adjusted according to various factors (e.g. service content, quantities, quality and complexity) are determined so that they can usefully be compared with the ratios of the peer group. When a "cost per piece" is compared, it is crucial that "a piece" is understood by all participant equally.

Operational Level Agreement (OLA)

An Operational Level Agreement (OLA) is an agreement that is usually taken within a company between different departments. For example, IT and telecommunications services are described in an OLA, with which a service level agreement (SLA) with respect to an external customer is hedged.

Outsourcing

Outsourcing refers to the transfer of parts of the value chain to an external supplier. The focus on the core business shall generally lower costs, increase flexibility and open access to the innovation of the service provider.

Peer Group

The data of the peer group (comparison group) provide the benchmark for a comparison project. The better the individual members of a peer group to match the structure of the client, the more the demand for a fair comparison is met. Deviations to the client’s data are mathematically compensated through normalisation.

Re-Insourcing

Backsourcing describes the process of bringing previously outsourced activities back in-house (into the company).

Retained Organisation

The retained organization is a department within a company that is responsible for the management and control of one or more external (IT) suppliers. In general, a retained organisation is developed in the course of an outsourcing agreement.  It consists of employees who do not change to the service provider, but remain in the company. For a fully equipped retained organization staff functions must be set up so as controlling, purchasing, billing, legal, communications and service management.

Return on Investment (ROI)

The term return on investment (ROI) has been colloquially established as a synonym for cost-benefit analysis - whether, when and to what degree an investment pays off (within the useful lifecycle). The calculation of ROI is not standardized.

Service Level Agreement (SLA)

In a service level agreement (SLA), the assured services of a provider are specified for the client. This includes for example the scope of a service, the response time of service desks or the time taken to resolve an incident. The standardised agreement to the quality of service which is accepted by both sides makes it easier to manage and control the service provisioning.

TCO (Total Cost of Ownership)

The Total Cost of Ownership (TCO) is a computational model for the collection of the entire cost of (IT) capital goods over the full life cycle. In addition to the acquisition costs, operating costs, user costs, and support costs must be considered, too. A unified formula for TCO calculation does not exist.