First-half goals from Cliff Byrne and Martyn Woolford secured another impressive away win for the Iron, who now have four victories away from Glanford Park this season.
"That is the best performance we have had this season, by far. We had them watched and the reports said they had a real high tempo and get on top with that," said Baraclough.
"It was important we managed the time, and they got frustrated because we were professional - we took our time so they couldn't get into a rhythm, but we tried to play with a tempo when we had the ball. I thought we did that and controlled the game."
Malky MacKay, the Watford boss, conceded his side had been second best.
"I'm disappointed in that we seemed to be second best in a lot of what went on," he said.
"It's obvious goals change games, but if we had got one early on then Scunthorpe would have had to come out a little bit and attack.
"Fair credit to Scunthorpe, they stuck to their game plan and slowed the game down."