Automating the Balanced Scorecard

Silk, S. 1998. Automating the balanced scorecard. Management Accounting (May): 38-40, 42-44.

Summarized by Henry Stoll
Master of Accountancy Program
University of South Florida, Fall 2000

Balanced Scorecard Main Page | Executive Information Systems

"Like an airplane’s control panel, an automated Balanced Scorecard helps managers steer their business by providing a comprehensive picture of performance. It builds that picture with financial and nonfinancial measurements such as customer loyalty, quality, revenue, and employee knowledge. An accurate view of these factors enables management to measure overall performance rather than focusing on short-term, bottom-line results."

BALANCED SCORECARD VS. EIS

Vendors are trying to market an enterprise system for delivering a Balanced Scorecard, but it’s actually just an Executive Information System providing a graphical representation of key high-level performance indicators.

BALANCED SCORECARD	EXECUTIVE INFORMATION SYSTEM
Fluid. Constantly changing based on how people meet their goals.	Mostly hard-coded. Requires significant maintenance.
Focus on both leading and lagging indicators.	Focus primarily on lagging (financials) indicators.
Use networks to allow information to be distributed to everyone in a company. A system for the masses.	Focus on moving information from a mainframe to individual PCs. A system for a few.

THE AUTOMATED BALANCED SCORECARD

Software solutions must be aligned with the Balanced Scorecard methodology.

TECHNOLOGY DRIVERS

Business Intelligence - Translates quantitative data into a Balanced Scorecard summary that shows the goals
that the company is and is not achieving.
Text processing - Incorporates feedback and explanations to provide qualitative assessment capabilities.
Internet - Makes the system accessible to anyone anywhere.

SCORECARD ARCHITECTURE
FINANCIAL	CUSTOMER	LEARNING	INTERNAL
Product profitability	Market segmentation	Training	Portfolio management
P&L Reporting	Customer profitability	HR	Distribution
Risk management	Retention management	Technology	Process control

KEY ELEMENTS

Enterprise wide deployment to thousands of users.

Need for organizational scorecards down to individual scorecards.
Automated assessment and feedback loops.
Client/server and web deployable.

Easy to use.

Windows based.
Use wizard technology to make and modify personal scorecards.

Quantitative and Qualitative Analysis.

Automatic signaling and alert for management (smart technology)

Centralized Administration.

Adding groups, users, applications a user can access, scorecards a user can access, and defaults for each user.
Security is essential.

Balanced Scorecard systems need to be highly integrated with:

Online Transaction Processing Systems
Enterprise Resource Planning Systems
Data warehouses
Data marts
Analytical Applications