1 A Balanced Scorecard Approach for Strategy- and Quality-driven Universities Elsa Cardoso*, Maria José Trigueiros*, Patricia Narciso* *Instituto Superior de Ciências do Trabalho e da Empresa, Portugal. Elsa.Cardoso@iscte.pt , mjtrig@iscte.pt, patricianarciso@iol.pt Keywords: Strategic Planning, Balanced Scorecard, Decision Support Systems. 1 Introduction This paper describes a Balanced Scorecard Strategic System integrated in the Decision Support Systems for University Effectiveness and Efficiency (DSS-UEE) project, developed at the Department of Sciences and Information Technologies (DCTI) of Instituto Superior de Ciências do Trabalho e da Empresa (ISCTE), a Management, Social Sciences and Informatics University in Lisbon. This Strategic System is presented as the main system driving the departmental level implementation of an effective Information Architecture at ISCTE. The Balanced Scorecard (BSC) approach was selected due to its inherent characteristics: it enables the planning of the strategy and its dissemination to all levels of the organization; it identifies the initiatives necessary to the execution of the strategy; and finally, it generates the performance measures that will allow a quality-driven information management of the University. The paper describes the development of the Strategic Information System for the Creation and Restructuring of Higher Education Degrees. The relevance of this issue has acquired a greater importance in Europe with the Bologna reforms, which represent a unique opportunity for Universities to reconsider their internal strategy and the quality of their degrees. The paper reports on the results achieved in the development of this Strategic System applied to a case study: the creation of a new Master degree (MSIAD). 1.1 Outline of the paper This paper is organized in five sections. Section 2 discusses how the University Strategy must be regarded as a key issue in the context of the Bologna process reforms. Section 3 presents the DSS-UEE project, and the Decision Support Systems (DSS) Architecture that is being specified to effective and efficiently manage the academic information of an university department. This section contextualizes the development of the Strategic System as the top layer of the generic DSS Architecture. Section 4 describes the adopted Balanced Scorecard methodology used in the implementation of the Strategic System. Finally, in Section 5 the BSC approach is presented, applying the first phase of the methodology to a case study: the creation of a new Master degree. 2 University Strategy and the Bologna Challenge Corporate Strategy is, as defined by [1], the pattern of decisions in a company that determines and reveals its objectives, purposes, or goals, produces the main polices and plans for achieving those goals. It defines the range of business the company is to pursue, the kind of economic and human organization it is or intends to be, as well as the nature of the economic and non-economic contribution it intends to make to its stakeholders. Applying this broad definition of Strategy to Higher Education Institutions (HEI) entails the exercise of looking upon Universities as “companies”. What are the current strategic objectives, purposes, or goals set down for the University? The “range of business” for HEI is related to the core research and teaching areas. What is then the current University’s “range of business” in which we must promote excellence? Which plans and polices have been outlined to execute the strategic decisions in the University? The stakeholders of the University are the students (our clients), the academic and administrative staff, the institutional leaders, and the public community (which includes the market). Are all our stakeholders aware of the defined strategy of the University in their daily actions? The fundamental mission of an University is, as defined in [2], the advancement of excellence in the creation, sharing and application of knowledge, typically described in terms of teaching, scholarship/research, and public service/outreach. Three core business processes may be identified from this mission statement: (1) the Teaching (or training) Process, related with the application of knowledge; (2) the Research Process, associated with the creation of new knowledge; and (3) the Sharing Process, the dynamic process of sharing knowledge between the other two processes. The values that drive our University mission are innovation, progress, excellence, and trust. The advancement will be responsible for the evolution (i.e., continuous learning and growth) of all three processes (see Figure 1). 2 Teaching ResearchSharing THEORY PRACTICE INNOVATION EXCELLENCE PROGRESS TRUST Teaching ResearchSharing THEORY PRACTICE INNOVATION EXCELLENCE PROGRESS TRUST Figure 1: Dynamics/Evolution of the Academic Business Processes The Bologna process represents a great opportunity for Universities to improve both institutional quality and their strategic management capacity. To improve institutional quality we need to improve the internal business processes in the core business areas of teaching, researching, and public service (as defined by the University mission statement). The main challenge for HEI in the future will be to turn the different reforms into everyday reality for both teachers and students [3]. Legislative changes must be translated into meaningful academic strategic objectives and into institutional realities. As mentioned in the Graz Declaration [4], successful implementations of reforms require leadership, quality, and strategic management within each institution. The role of the Information Architecture in Higher Education (HE) has been largely discussed and implemented in virtual campus and e-learning environments. However, DSS or Business Intelligence Systems, and particularly Strategic Information Systems are also a very important layer of this architecture. Although often overlooked, these are valuable instruments that enable quality-driven Universities to effectively define and implement a “HE business” strategy. The Balanced Scorecard (BSC) [5] is an example of a Strategic System that has been widely and successfully used by many organizations in the for-profit, non-profit and public business domains. We, as others [2], have chosen the BSC system to be applied to HEI in the implementation of an University’s quality-centred Information Architecture. Moreover, we believe that the usage of a BSC system is a step towards the fulfilment of the Bologna reforms. The BSC tool should be used with the full extend of its three elements [6]: a measurement system (as originally designed in 1990 by Kaplan and Norton [5]), a strategic management system, and a communication tool involving all academic stakeholders into a new culture of “strategy and quality awareness”. 3 The DSS-UEE Project The Decision Support Systems for University Effectiveness and Efficiency project, with the acronym DSS-UEE, is a research project developed at the Department of Sciences and Information Technologies (DCTI) of Instituto Superior de Ciências do Trabalho e da Empresa (ISCTE), a Management, Social Sciences and Informatics University in Lisbon. The main objective of this project is the specification and implementation of a generic Decision Support System architecture [7] to assist the academic stakeholders in their daily job decisions towards the fulfilment of the University long-term decisions or planned goals. The idea is to inspire change by implementing Business Intelligence technologies of proven utility, which will guide the University into a new culture of self-assessment and self-effectiveness, as defined in [7]. The second objective of the project is the Architecture's development, using an iterative DSS development process [7] based on short time-to-market implementations, and two case studies: one at ISCTE and another at a different university. The theory and practice of business management has shown that culture changes occur very slowly. It is necessary to gradually lead people to decide guided by their goals within the limits of the organization’s values. Hence, another objective of this project concerns the evaluation of the stakeholders’ acceptance, the systems’ usage and the cultural changes occurred. To inspire cultural changes in Portuguese Universities, motivation should be used rather than imposition. Traditionally, these Universities do not have a hierarchal structure, as professors have freedom to decide and manage their own courses. At the same time we collect data from professors we have to give them back some return, in terms of the required information for decision-making, and to foster a new culture of self-effectiveness and efficiency. Collection of data must be justified by strategic objectives. If data is required without declaring its strategic purpose there will often be resistance to provide it. This situation is more evident in Mediterranean cultures that are not so comfortable with performance evaluation and control, as others are. Information Technologies (IT) play an important role in this process and we need to motivate professors to use them. The DSS architecture is organized in three upper layers of systems on top of the Operational Systems (see Figure 2) enabling the iterative strategic planning, monitoring, and evaluation of performance of a HEI [7]. They are: (1) the Monitoring and Evaluation Systems; (2) the Strategic System; and (3) the Planning System. A central activity in the DSS-UEE project is the definition of the Business Model for strategy- and quality-driven Universities. The concept of quality assumed for a HEI engages all Academic Stakeholders into a new culture of self- assessment and permanent improvement in pursuit of excellence of the business processes. A business model based on the quality concept should enable a fast and clear assessment of the degree of accomplishment in satisfying the needs and expectations of Academic Stakeholders. Moreover, it should enable the evaluation of the propagation or communication of the University strategy to individual Academic Stakeholders. The Business Model is the fundamental input of the Strategic System. This paper 3 describes the Strategic System that is been developed at ISCTE since the end of 2003. The case study of Section Five presents the results achieved in the development of the Strategic Information System for the Creation and Restructuring of Higher Education Degrees. OPERATIONAL SYSTEMS MONITORING AND EVALUATION SYSTEMS PLANNING SYSTEM STRATEGIC SYSTEM OPERATIONAL SYSTEMS MONITORING AND EVALUATION SYSTEMS PLANNING SYSTEM STRATEGIC SYSTEM Figure 2: DSS Architecture The Monitoring System provides the diagnosis of the current state of affairs of business processes. This system will include the specification of a large set of dashboard indicators with the relevant data for evaluation of the current status. This layer has been presented at [7, 8] with a prototype implementation of a Data Warehousing Monitoring System. The Evaluation System is the complementary part of the Monitoring System. Together they constitute a Management Control System. These systems will enable not only to assess the current state of affairs of the University but also to evaluate if the organization has reached the desired state of affairs, i.e., the defined strategy. The specification of the Planning System comprises two subsystems, one for the creation and analysis of alternatives and another for time-management. The Planning subsystem for creation and analysis of alternatives will be based on model-driven DSS and knowledge management systems associated with the specific decision processes of a HEI. Given the input provided by this subsystem, the aim of the other Planning subsystem (for time-management) is to plan the action steps the decision-maker needs to carry out to implement the decision. The output of this subsystem will be a plan, i.e., a detailed schema or method for attaining the objective of the decision taken. This is actually a crucial point of the overall DSS Architecture, since goals can only be accomplished when tasks are assigned. Therefore, this subsystem will integrate common individual and project time management tools. 4 The “9 Steps to Success” BSC Methodology The 9 Steps to Success methodology [10] was developed by the Howard Rohm Consultants, LLC company, in 2001. The methodology identifies two phases (see Table 1): Building the Scorecard, and Implementing the Scorecard. At the end of the first six steps (Phase One), the high-level organizational Balanced Scorecard is developed. Building a scorecard is an iterative process. Typically, it takes at least three iterations to fully build and implement a BSC system. The execution of the nine steps of the methodology constitutes a single iteration. It is important to remember that the BSC is a management information system that is supported by measures of performance (or key performance indicators). These measures help to: (1) optimize strategy and manage organizational activities; (2) test strategies; (3) evaluate results and accomplishments; and (4) make corrections to strategy to reflect learning. Phase One: Building a BSC Performance System  Conducting an Organizational Assessment  Defining Strategic Themes  Choosing Perspectives and Developing Objectives  Developing a Strategic Map of the Organization  Defining Performance Measures  Developing Initiatives Phase Two: Implementing the Balanced Scorecar d  Computerizing and Communicating Performance Information  Cascading the Scorecard throughout the Organization  Using Scorecard Information to Evaluate and Improve Performance Table 1: The 9 Steps to Success Methodology [10] Phase One: Building a BSC Performance System STEP 1: Conducting an Organizational Assessment. The key components of organizational assessment are: (1) Analysis of the organization (usually through the exercise of a SWOT analysis); (2) Creation of a “picture of the future”; (3) Organizational commitment to performance-based management; (4) Selection and empowerment of the BSC sponsor and team; and (5) Elaboration of the BSC project plan and timetable. The third above mentioned component represents a significant cultural change, since it involves a management commitment to change, a commitment to the concept of ownership and responsibility for actions at every level of the organization, and an organizational commitment to a BSC performance framework. STEP 2: Defining Strategic Themes. This step encompasses the following actions: (1) Definition of the mission and vision of the organization; (2) Definition of the customer value proposition; (3) Development of strategic themes; and (4) Development of business strategies. The Mission statement defines the core purpose and the values of the organization. An effective mission should inspire change, be easily understood and communicated, and be long term in nature [6]. The Vision statement provides a picture of what the organization intends to become in the future (3 to 5 years). Values are the timeless principles that guide an organization, demonstrated through the day-to-day behaviour of all employees. The Strategic Themes define the long and short- term value propositions for the customers. They are the main focus areas of the business and allow the organization’s vision to be decomposed into specific business strategies that people can work on. Business Strategies are the detailed operational game plans describing what is to be done and how it is to be accomplished [10]. Strategies are hypotheses to be tested, and if needed, changed to meet new challenges and opportunities. STEP 3: Choosing Perspectives and Developing Objectives. The key components of this step are: (1) Selection of scorecard perspectives; (2) Definition of strategic objectives; and (3) Categorization of objectives by strategic theme and 4 perspective. Perspectives are used to help decompose strategy into operational terms. Kaplan and Norton originally designed the Scorecard with profit-seeking enterprises in mind, and developed four broad perspectives to satisfy that group: Financial, Customer, Internal Processes, and Employee Learning and Growth. For public and non-profit organizations financial measures still have a place in the BSC but they don’t represent the main focus, since these organizations don’t exist to produce wealth for the shareholders. The scorecard perspectives can be renamed and new perspectives may be added to the model. A Strategic Objective is a measurable statement of strategic intent indicating how a strategy will be made operational [10]. Objectives are the basic building blocks of strategy – the components or activities that make up complete business strategies. STEP 4: Developing a Strategic Map of the Organization. This step encompasses the following actions: (1) Identification of the cause-and-effect relationships between strategic objectives; and (2) Creation of the Strategic Map. In a Strategic Map the components of the strategy, i.e., the objectives, are connected through cause-and-effect relationships (if-then logic connections) and placed in the appropriate scorecard perspectives. These relationships are defined among objectives that are causes (performance drivers) and objectives that are effects. STEP 5: Defining Performance Measures. The key components for defining performance measures are: (1) Development of results (outcome) and process measures; and (2) Definition of expected targets and thresholds. Performance Measures must be developed to track both strategic and operational progress. In order to do so, it is necessary to understand the desired outcomes (i.e., results, accomplishments) and the processes used to produce outcomes. Desired outcomes are measured from the perspective of internal and external customers, whereas processes are measured from the perspective of the process owners and the activities needed to meet customer requirements. For each measure, targets (i.e., desired level of performance) and upper and lower thresholds must be defined. STEP 6: Developing Initiatives. Initiatives are key action projects that need to be funded and implemented to ensure that the defined strategies are successful. The list of candidate initiatives must undergo a selection process based on well defined criteria, such as resources required, potential impact on strategy, and time needed. Phase Two: Implementing the BSC This phase comprises three steps: (7) Computerizing and Communicating Performance Information; (8) Cascading the BSC throughout the Organization; and (9) Using Scorecard Information to Evaluate and Improve Performance. To computerize data means dealing with several issues such as data quality, validation, and ownership. Cascading is the process of developing scorecards for every level of organization and aligning the scorecard elements through all layers of the organization (e.g., business units, teams and individuals). 5 A BSC Approach for the Creation and Restructuring of Degrees in Higher Education The processes of creating and restructuring degrees are closely related. Restructuring may in fact be regarded as a “re-creation” of the degree. As such, we have started to investigate the degree creation process as a strategic issue linked to the core of the University’s mission. The case study began with the creation of a new Master degree in Decision Support Systems at ISCTE [9], using a strategic approach. A Balanced Scorecard system has been developed to support each step of the creation of this specific degree. Given this starting point, the next step of the case study will comprise the development of a generic BSC approach for the creation of HE degrees. This work is being accomplished at the same time the system is being used by the DCTI Department of ISCTE to support the Bologna curricula reforms. In Portugal, the current Bologna reforms discussions concern the restructuring of the five-year undergraduate degrees in order to make them compatible with the Bologna system based on two cycles. At ISCTE, and particularly at the DCTI Department, the Bologna process has been actively discussed by all members of the academic staff. A Restructuring Coordination Commission (RCC) has been empowered to implement the changes in the curriculum of the degrees offered by the Department. The objective is to supervise and coordinate the restructuring process using the DSS-UEE Strategic System, and the proposed methodology for the Creation and Restructuring of Degrees in Higher Education. The current topics subject to discussion at ISCTE, and generally in other Portuguese universities, concern the best duration of each cycle, and the consequent adaptation of the curricula to fit the chosen duration and still provide the students with the required competences at each cycle. An important hurdle is the lack of a measurement system to provide some insight or some sort of guarantee that with a shortening of undergraduate training duration – but with a quality-driven teaching – our students will still be taught the right set of competences that will give them the desired employability. It is important that the Bologna degrees’ restructuring will not become a formal readjustment and slicing of courses in the current study plans over the two cycles. Instead it should be regarded as a great opportunity to implement a profound redesign of curricula in light of the desired output students profiles and training of core skills. 5.1 Case Study: the BSC-MSIAD System This section describes the results achieved in the early phases of development of the Strategic System for Creation of the MSIAD Degree – a new Master degree in Decision Support Systems that will be offered by ISCTE in the next academic year [9]. This Strategic System is based on a Balanced 5 Scorecard approach, implemented using the Nine Steps to Success methodology, described in Section 4. The system is been developed using the SAS Strategic Performance Management platform. STEP 1: Conducting an Organizational Assessment A SWOT (Strenghts, Weakness, Opportunities, and Threats) Analysis of the Department has been conducted. The principal strengths identified are the existent fruitful partnerships between the Department and the business companies in the IT area, and the scientific competencies of professors in integrating areas of Informatics & Management and Informatics & Telecommunications. For several years now these partnerships have generated an active participation of companies in final-year student projects, promoting a rich sharing of knowledge between the University and the Business and Industrial Community. A BSC team has been established. The BSC-MSIAD project is being developed in the context of a Master and PhD thesis. STEP 2: Defining Strategic Themes MSIAD is an advanced training degree with the mission of providing to the market skilled professionals capable of managing, specifying, implementing, and using successfully Decision Support Systems properly integrated in the information management of the organization. Currently, companies feel the urge to provide the decision-makers with the necessary information to increase their ability to analyse, plan, and react. In spite of the large volume of data gathered from transactional databases (operational systems) and the existing information analysis techniques, the difficulty of generating the key performance indicators (KPI) that give us an objective view of the business’ reality (in real-time) still persists. The no so bright reality is that the failure rate of Data Warehousing projects is thought to be around 70% to 80% [11]. Thus, the vision set out for MSIAD is to train skilled professionals with the necessary competencies to enhance the success rate of Business Intelligence (BI) projects in Portugal. In order to achieve this vision, two strategic themes have been defined, as displayed in Figure 3. The first one Provide an advanced training adequate to DSS Projects will be accomplished with the Quality Assurance, and the Focus on Market Demands business strategies. The second strategic theme: Develop synergies between the business world and the university is decomposed in two other business strategies: Market Approach, and R&D Empowerment. STEP 3: Choosing Perspectives and Developing Objectives The traditional four perspectives proposed by Kaplan and Norton have been selected for the scorecard: Customer & Stakeholders, Financial, Internal Processes, and Learning & Growth. We have decided to add the Stakeholders dimension to the Customer perspective. To put the business strategies into operation, eight strategic objectives have been identified (as presented in Figure 3) as well as a number of sub- objectives. These objectives have then been categorized by perspective. Figure 3: Strategic Themes, Business Strategies and Objectives STEP 4: Developing a Strategic Map of the Organization The Strategic Map of the MSIAD degree representing the cause-and effect relationships among objectives and sub- objectives is displayed in Figure 4. We have selected a different layout for the Strategic Map with both the Customers & Stakeholders and the Financial perspectives at the top. Although the degree has been created with the uttermost objective of maximizing customer satisfaction with the level of service provided (i.e., teaching), financial restrictions are preponderant, determining the existence of the degree. Financial profitability (which is dependent on the number of students) became a basic requirement in the Bologna context. It must be clear that the aim of the degree is not to generate profit, but to have financial independency. The strategic imposition of balanced accounts (incomes and costs) will enable to invest as much as possible in the quality of the training provided to students, and as such benefiting the customer. STEP 5: Defining Performance Measures Performance measures have been identified for each objective and sub-objective. To exemplify this step, let us consider the quantification of the sub-objective 2.2: Training evaluation. This sub-objective is measured using a weighty average of three KPI, as displayed in Table 2. The selection of these high-level indicators is the result of a strategic analysis of the set of indicators generated in the Course Performance Evaluation Data Mart [12] specified in the SADIA System, a DSS for IST Academic Information [8]. Performance Measures Weight Real approval rate (Nb. approved students) / (Nb evaluated students) 30% Final retention rate (Nb enrolled students – Nb approved students) / Nb enrolled students 40% Learning indicator Average classification of evaluated students 40% Table 2: Performance measures of Sub-objective 2.1 6 Customer & Stakeholders Financial Internal Processes Learning & Growth 1. Training with Quality 1. Training with Quality 5. Adequate training to market demands 5. Adequate training to market demands 4. Secure financial profitability 4. Secure financial profitability 4.1 Guarantee the sufficient number of students 6. Establish partnerships with BI experts 6. Establish partnerships with BI experts 1.1 Provide a scientific training component adequate to the desired professio- nal profile 1.2 Provide a pedagogic training component adequate to the desired professio- nal profile 6.2 Involve business experts in training 1.3 Promote concept coherence between acade- mic scientific areas 6.1 Establish synergies with companies to projects’ development 7. Promote infor- mation sharing between business community and University 7. Promote infor- mation sharing between business community and University 7.1 Promote conferences and work- shops to divulge academic and business projects 2.1 Promote a cultu- re of monotoring/evalua- tion and management by objectives 2.2 Training evaluation 2. Adequate monitoring and evaluation 2. Adequate monitoring and evaluation 3. Adequate infrastructures 3. Adequate infrastructures 3.1 Infrastructures and resources adequate to training needs 4.2 Effective and efficient management of administrative processes 3.2 Foster a stimulant working environment 8. Generate BI R&D 8.1 Produce academic thesis 8.3 Promote regular publishing 8.2 Develop R&D projects 1.4 Promote pedagogical training activities to lecturers Figure 4: Strategic Map of MSIAD Future Work A list of initiatives with a foreseeable implementation during the next academic year have already been identified. Phase One of the methodology is now completed, and the implementation of the BSC-MSIAD (Phase Two) using the SAS Strategic Performance Management platform (version 1.4) is ongoing. 6 Conclusions The paper describes the development of the Strategic Information System for the Creation and Restructuring of Higher Education Degrees. This system generates, but most of all justifies, the performance measures that will allow a strategic- and quality-driven information management of the University. The most valuable and motivating information is the one that make changes happen in the desired direction. A well defined and synthetic strategic information, as the strategic map in Figure 4, guides stakeholders in their daily actions to “begin with the end in mind”, towards the excellence in the creation, sharing and application of knowledge – the University mission! References [1] Andrews, Kenneth. The concept of Corporate Strategy. 1975. [2] Ruben, Brent. Toward a Balanced Scorecard for Higher Education: Rethinking the College and University Excellence Indicators Framework. Higher Education Forum, QCI, Center for Organizational Development and Leadership, Rutgers University, 1999. [3] European University Association. EUA Statement on the Bologna Process. Berlin Ministerial meeting, September 2003. [4] European University Association. Graz Declaration. May 2003. [5] Kaplan, Robert, and Norton, David. The balanced scorecard. Cambridge, MA: Harvard Business School. [6] Niven, Paul. Balanced scorecard Step-by-step for Government and Nonprofit Agencies. John Wiley & Sons, Inc. 2003. [7] Cardoso, Elsa, and Trigueiros, Maria José. Decision Support Systems for University Effectiveness. In Proceedings of the 10 th International Conference EUNIS 2004, Bled, Slovenia, 2004. [8] Cardoso, E. , Galhardas, H., Trigueiros, M. J., and Silva, R. A Decision Support System for IST Academic Information. In Proceedings of the 9 th International Conference EUNIS 2003, Amsterdam, July 2003. [9] Mestrado em Sistemas Integrados de Apoio à Decisão (MSIAD, in Portuguese). http://www.dcti.iscte.pt/msiad [10] Rohm, Howard. Building and Implementing a Balanced Scorecard – Nine Steps to Success Course Notes. Howard Rohm Consultants, LLC, 2001. [11] Inmon, Bill. Little White Lies. 2001 http://www.billinmon.com/library/library_frame.html [12] Cardoso, E. Sistema de Apoio à Decisão para a Informação Académica do Instituto Superior Técnico. Master Thesis, 2003 (in Portuguese) . 1 A Balanced Scorecard Approach for Strategy- and Quality-driven Universities Elsa Cardoso*, Maria José Trigueiros*, Patricia Narciso* *Instituto Superior de Ciências do Trabalho e da Empresa,. throughout the Organization; and (9) Using Scorecard Information to Evaluate and Improve Performance. To computerize data means dealing with several issues such as data quality, validation, and ownership necessary information to increase their ability to analyse, plan, and react. In spite of the large volume of data gathered from transactional databases (operational systems) and the existing information