Balanced Scorecard

The balanced scorecard, or BSC, is another term that can get lumped in with the business intelligence universe. Some experts lump it in with performance management. I think it’s important to discuss because of its definite connection to BI systems.The concept started back in the late 80s. Several industrial management consultants published several articles about the subject, and then a book that proved to be popular in the business world. From there, it got very popular with the bigger consultancies (Bain, BCG, etc…)

A balanced scorecard is basically a short report or presentation that contains key financial and other metrics “scored” against a benchmark or goal value. You may also hear these metrics called KPIs, or key performance indicators.

The concept seems simple enough. A big challenge for organizations though is to determine what kind of metrics to track, how to track them, and what kind of benchmarks. Many consultancies and industry advisors can provide guidelines, but implementing and systematizing it is often the trick. That’s where the software can come in. Most scorecards can be handled by big stack BI packages, but sometimes a specialized visualization or requirement is needed to be filled. Spider Strategies is one of the specialized vendors that may be worth checking out.

Sometimes you’ll hear about internal view metrics, customer metrics (external), or other breakouts. These are often data that need to be measured in ways other than dollars or sales, and often are the non-financial metrics that could be tracked.

In general though, these values and KPIs should be driven through by an overall strategy. If the overall strategy is to increase quality, perhaps product defects would be an indicator. If it is customer satisfaction, then a survey index might be used. The number of metrics is critical. A BSC should really be a one-page document for executives or managers to know if they are hitting their targets. Too many numbers are hard to manage, but too few might not provide enough visibility into the various company goals.

Sometimes the scorecard is called a dashboard. In my opinion, the scorecard is usually a direct comparison of metrics against goal values, a scoreboard in effect. While a dashboard can certainly have this information on it, they are generally used more for tracking trends or other data across time.

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