Enhancing the Prognostic Power of IT Balanced Scorecards with Bayesian Belief Networks

Balanced Scorecard (BSC) is one of the most important and widely adopted performance measurement methods, and especially its recently evolving usage for IT governance makes it an attractive tool to measure and evaluate IT contribution to firm performance. Integral parts are corporate causality relationships that are modeled within the BSC. Surprisingly, these causalities within the Balanced Scorecard approach are neither thoroughly introduced in theory nor applied in practice in a sound way. In this paper, an integrated approach is developed which addresses both challenges. It is shown how causal modeling employing Bayesian Belief Networks can be used to improve Balanced Scorecard methodology and to support organizations in introducing a Balanced Scorecard. The integration allows for an a priori validation of causalities with significantly reduced effort in validity maintenance and results in better prediction of value chain figures and enhanced corporate learning.