Balanced Scorecard Reporting Tips
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Strategy-Focused Organization: The Key To Balanced Scorecard Reporting Initiatives
The discerning student of business intelligence trends, understands the role of scorecarding to the performance organization. Dr. Robert Kaplan, Harvard Business School professor and co-developer of the Balanced Scorecard, offers that the twin necessities of leadership and management drive such organizations, and scorecards – a key element of a performance management system - are part of their solution. Given this observation, he further proposes that a Strategy-Focused Organization (SFO) is best suited to perform effectively, employing the principles of leadership and management.
Dr. Kaplan envisions three phases in the process to become an SFO. Common to most project management constructs, he sees the first phase as a mobilization effort where the case for change is made. Early successes characterize the second step, the alignment phase. Finally, he sees "irreversible momentum to be ingrained in the sustainment phase." Before each phase is dissected, it is worth noting that Dr. Kaplan portrays that each phase is further comprised of guiding principles, leadership objectives, core competencies, and management tasks. In this elegant model of how a SFO, or any fine organization could develop a desired set or sets of identity traits, we see direct links to performance efficacy through leadership.
Mobilization is charged to establish change through executive leadership. Clear objectives include achievement of commitment from the top down, development of an executive team, and foment a case for change. Since leadership is the catalyst for this kind of culture change, the executive (or team) takes on the role of the missionary in order to make change happen. This is embodied in advocating, educating, and then selling a novel way of managing. In order to see it through to the end, a number of management tasks are required ‘close the sale' including, communications through outreach, one-on-one discussion, and study. Most importantly, iterative assessment is needed throughout the process to measure the state of change.
Alignment is the initialization of execution and includes translating the strategy to make it transparent to all business unit functions throughout the organization. This has the effect of aligning the performers and, if done successfully will serve to produce the ‘early wins' needed to instill the motivation to make change happen. It is here that we flashback to the constructs of scorecarding through establishing and communicating long-term targets and the overall strategy. As with any coordinated organizational effort, a project team will have to be assigned. This group of managers serves as consultants and change agents for the leadership, and performs numerous mapping, scorecarding, and alignment tasks. Important to the overall effort, the managers on the project team are also tasked with problem solving and overcoming resistance within the organization.
The model assumes success has been achieved as the result of the previous
Finding Cost Cutting Measures Using Scorecards
Cost cutting seems to be the mantra of businesses large and small in these highly competitive times. However, many such actions appear to be misdirected and result in erosion of market position and profit potential. How does this happen? The answer lies in knowing what cost factors are really important to the bottom line.
Business intelligence reporting and analysis software techniques involve many advanced methodologies to query the vast stores of data resident in the average business enterprise. Foremost among these is the concept of the scorecard. The scorecard serves as the reporting vehicle for information found as the result of an executive's query of a database to answer critical questions.
One area to query such a system for is cost cutting. Structure a query using a BI software suite to determine the areas where cost cutting can generate the most savings and impact to the bottom line, without introducing unexpected negatives in other functional areas. The answer, if successful, will provide guidance to decision-makers that will lead to true performance management.
Business Intelligence Category Glossary
Analytics: Technology approaches that process current and historical data to enhance business management performance such as, to establish policies, assist in making predictions, and multi-level decision making, to name a few.
BI - Business Intelligence: Technology and software applications used to collect, make available, and manipulate business information for effective reporting, planning and decision-making.
BI Consumer: A user of business intelligence information and the products it produces. The terms “customer” and “stakeholder” also apply to BI and may sometimes include consumers. However, a customer of BI information commonly refers to the business component or function that pays for the BI process or product. A stakeholder is an entity that has a legitimate interest in the information or product and can include users, consumers, customers, even stockholders and any other party given access to the intelligence.
Business Consumers: Business consumers are the rank and file members of the organization's functional business area teams.
Business Intelligence Reporting: A series of software tools and applications that provide advanced management information to decision makers from broadly disparate data sources.
CRM - Customer Relationship Management: Customer relationship management (CRM) is a generic business term that describes approaches used to exploit the inherent information associated with a company's customers. This includes many classes of BI techniques involving the capture, storage and analysis of customer information.
Dashboard: Includes digital dashboard, executive dashboard, or enterprise dashboard. BI tools used by decision makers to visually monitor the state of the enterprise. The term derives from the analogy of the automobile dashboard, from which the operator (executive) can drive or operate the business.
EEA - Economic Espionage Act of 1996: A federal statute directed to theft or misappropriation of trade secrets. The law applies to BI due to the goals and practices of BI in regards to collection and analysis of both open and limited source information and the legal and ethical considerations involved.
Executives: Executives are the key decision makers within an organization. An executive's influence spans the strategic and tactical operations of the business and they are the main drivers of most policy components.
IT- Information Technology Administrators: IT Administrators are the BI user group including, information architects, technical support, and other IT professionals that configure, deploy and support the entire BI technology suite.
KPI - Key Performance Indicators: The term used for the most important information residing in a business' varied stores of raw data. One of the principle objectives of BI is to use research and analytical techniques to identify the KPIs and easily separate them from the chaff for processing into reports and other sophisticated management products.
Managers: Managers consist of the tactical-level executers of corporate policy and are responsible for directing most functional business area activities.
Performance Management: Performance Management is a collective term for the BI/management approach also known as business performance management (BPM), corporate performance management (CPM), or enterprise performance management (EPM). The discipline encompasses systems, methodologies, metrics, processes and software technologies used to identify ways to improve overall business performance.
Performance Planning: The product of applying performance management techniques to the planning and forecasting decision area. Performance planning provides keys to establish a reliable view of the future and empirically determine appropriate courses of action.
Professional Report Authors: Professional report authors, also called ‘power users,' are expert authors that are the developer's ‘users of choice' for BI software, despite representing only 5 percent of users.
Scorecard: Robert S. Kaplan and David Norton introduced the concept of scorecards in 1992. Basically, it is a concept for quantifying business activities and strategies, to give managers a more sophisticated view of the performance of a business. It's ultimate value to BI lies in the relationship of performance-driven quantified activities and strategies to the complex analytical and reporting abilities of BI.
Identifying The Best Practices In Scorecarding
Dr. Robert Kaplan, Harvard Business School professor and co-developer of the Balanced Scorecard, identifies a technique he calls strategy mapping as an important component. He goes on to offer that the approach aids scorecarding through helping to motivate scorecard users and to communicate or express value to the process.
There are many best practices that impact scorecarding and, in fact, business intelligence as a whole is merely a collection of vast amounts of best practices in business collected in an automation environment. Dr. Kaplan further offers the notion that strategy mapping, in its role of motivating and communicating to users acknowledges that people are the greatest resource of any business and should receive proper attention and support.
Metrics, Performance Management, and Business
Performance management is a powerful notion with much to offer business intelligence users. Dr. Geoffrey Moore, author of “Crossing the Chasm,” discusses an evaluation approach related to performance management in a paper published by Cognos. This idea proffers that “markets and companies are on a technology, product, or service adoption curve.” What he is really saying is that one should use metrics to evaluate what kind of business is being operated. Such an evaluation, Moore suggests can help you set a “performance management agenda” and make it happen through:
· Differentiating your business as complex or volume.
· Find metrics that apply to your business, not another's.
· Sell the agenda to stakeholders.
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