Performance Measurement: Linking Balanced Scorecard to Business Intelligence

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What is the balanced scorecard? A framework for organizational success | CIO

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The Four Things I Wish I’d Known - Part 3

The strategy map is a visual, one-page representation of the interrelationships among the activities across the four balanced scorecard perspectives. Associated with each activity in the strategy map are supporting metrics. The Tableau de Bord was created in recognition that financial measures alone do not provide enough information for executives to monitor enterprise health. In , Mr. During the effort, Mr. In the early s, several papers were published on the design of a balanced scorecard with the Kaplan and Norton paper garnering the most success.

The balanced scorecard helps enterprises in several ways. It reminds executives that in addition to tracking financial metrics, it is also important to track quality and service. Too many companies focus exclusively on sales and expenses to the exclusion of other metrics.

Second, the strategy map provides a clear, concise way to communicate priorities and goals to employees, customers, suppliers, and other stakeholders.

What is the balanced scorecard? A framework for organizational success

The balanced scorecard also creates an explicit linkage from enterprise strategy to day-to-day activities. Enterprise goals and metrics can be decomposed into business unit or departmental goals and metrics, enabling all stakeholders to understand how their projects and activities contribute to overall enterprise success. Fourth, the balanced scorecard facilitates business planning by providing clear metrics that help the enterprise rank projects into priority sequence and enterprise products by importance. Finally, the framework helps the enterprise monitor and measure progress towards strategic objectives.

Implementing the balanced scorecard is a great deal of work with some implementations being abandoned before completion. Enterprises enjoying the best results share the following characteristics. They all have:. The balanced scorecard needs a great deal of high-quality data from the ERP and other foundational systems. When these systems are error-prone or produce incomplete data, additional manual effort is required to collect the necessary data. Typically, the people affected waste time so much time arguing about whose data is correct, they lack the time to analyze the data and take corrective action.

Enterprises that are grounded in one of the STEM disciplines normally make decisions based on data and analysis.

arevertrap.ml They are comfortable analyzing a comprehensive set of metrics that considers the same product or process from multiple perspectives. By contrast, enterprises that downplay the importance of data and rely on executive passion and energy, often find the executive team is uncomfortable discussing more than a handful of metrics. Enterprises operating on instinct are better off either not using the balanced scorecard or waiting until a new CEO or the board of directors demands data-based decision making.

Even with CEO or board support, the balanced scorecard still represents a major cultural change. Implementation requires a long time and needs to be accompanied by significant organizational change management. In the absence of strong executive support, the necessary resources to collect and monitor the required information are unlikely to be available.

Even if by some miracle all of the information could be collected, the executive team must use the balanced scorecard data or the rest of the enterprise will also ignore any corrective actions suggested by it. When this happens, the program will be neglected and eventually cancelled. Appropriate metrics vary by industry and enterprise.

Reward Yourself

While the balanced scorecard does not provide rigid rules regarding appropriate metrics, it is critical to select metrics that accurately support enterprise goals. Good metrics should be easy to understand and quantitative, that is, expressed as a number. In addition, a good metric should show the trade-offs between cost and service. The call center of a large enterprise that prided itself on excellent customer service, measured call length without a corresponding quality measure. Not surprisingly talk time decreased. Unfortunately, so did customer service, much to their chagrin.

The Differences Between a Dashboard and a Balanced Scorecard

As we know, what you measure is what you get. It can be difficult to select the right number of metrics. Enterprises that are just starting the balanced scorecard journey sometimes make the mistake of trying to measure everything. Although enough metrics are needed to provide a complete picture of enterprise health, too much data is overwhelming and can make it difficult to understand what conclusions to reach and what actions to take.

Key Concepts in Cascading Balanced Scorecards and Performance Measurement Solutions

It usually takes multiple years to get a large enterprise to fully embrace the balanced scorecard. Even with a well-designed initial implementation, updates will be required as lessons are learned, competition changes, and new challenges emerge. Regular feedback is critical for the enterprise to learn, adapt, and improve. This is particularly important in the public sector where performance targets are often a matter of public record.

A number of consulting firms offer tools to promote and support the balanced scorecard. Most tool can be evaluated for a few months at no cost. A number of ERP vendors, recognizing the balanced scorecard popularity, created their own balanced scorecard tools. These firms want their customers to use the ERP directly without another piece of software between the customer and the ERP.

Although, there are some free tools, most are simply PowerPoint or Excel templates that allow data collected elsewhere to be displayed as a balanced scorecard or a strategy map. Unfortunately, the free tools rarely do much else.


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However, they provide the individuals accountable with the necessary information to make informed decisions and take appropriate actions. Here are the latest Insider stories. More Insider Sign Out. Sign In Register.

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