The Balanced Scorecard method of Kaplan and Norton is a strategic approach and performance management system that organizations use to translate vision and strategy into practice, working from four critical success factors:
|Critical success factors||Examples of performance measures|
|Financial||Operating income & cash flow.|
|Customer||Customer satisfaction –As a vertical market example, some health care facilities measure readmission rate definition which is the number of patients who experience unplanned readmissions to a hospital after a previous hospital stay.|
|Business process||Productivity and speed.|
|Learning and growth (innovation)||Employee training hours and number of new patents or new products.|
Benefits of the Balanced Scorecard system:
- Tracking progress toward achievement of strategic goals.
- Implementing strategy by drawing managers’ attention to relevant, critical success factors, and rewarding employees for the right things !
- Providing a framework firms can use to achieve a desired organizational change in strategy by drawing from trend analysis exposed through BI tools.
Is the Balanced Scorecard method being adopted?
A recent survey of 150 large North American organizations shows the adoption rate of the Balanced Scorecard system is nearly 50% in manufacturing and governmental organizations, and 30-40% in retail and service organizations. (Source: Robert S. Kaplan and David P. Nortan, The Strategy-Focused Organization, Harvard Business School Press, Boston, 2001).
White paper: Designing and Deploying Microsoft Office Solution Accelerator for Business Scorecards uses Business Scorecard Manager 2005 to show how to plan for rolling out a business scorecard solution. For example, organizations need to link performance measurement to strategy, and measure performance in ways that both promote positive future results and reflect past performance. PerformancePoint Server 2007 improves upon the features in Microsoft Office Scorecard Manager 2005 to continue helping companies incorporate the Kaplan and Norton Balanced Scorecard method.
There are several ways that companies have implemented PerformancePoint Server to measure performance.
The article, Microsoft Balanced Scorecard Accelerator for Government, demonstrates a measurement system for government agencies.
Last week I attended a TechReady 2009 session that extends a solution accelerator available on the Microsoft BI site. The accelerators are samples or solutions that typically provide a white paper and downloadable code. The IT Solution Accelerator demonstrates how to use PerformancePoint Server to monitor and analyze the health of your IT infrastructure by connecting to System Center Operations Manager 2007, SCOM (formerly known as Microsoft Operations Manager, MOM) data.