Balanced Scorecard and Enterprise Systems
- 1. Balanced Scorecard & Enterprise Systems Douglas A. Wardle
- 2. Problem Statement Provide a solution to the difficulties with assessing the value of enterprise system investments. Investigate how a derivative of the Balanced Scorecard System will facilitate performance measurement of Enterprise System.
- 3. Background & History Evaluation of Enterprise Systems (ES) is important to management. Financial Metrics (ROI, EVA, IRR) do not account for intangible (non-financial) benefits. ES expenses are significant & operations impact the total organization.
- 4. What is the Balanced Scorecard (BSC) System? Technique developed by Kaplan & Norton (1992). Translates mission & strategy into set of performance measures. Provides strategic management system.
- 5. Balanced Scorecard BSC Measures Organizational Performance Across Four Perspectives: Financial Customer Internal Business Processes Learning & Growth Performance measures assist in establishing Key Performance Indicators
- 6. Strategic Enterprise Management Process Enterprise Modeling Sourcing Data Strategy & Enterprise Planning Business Consolidation Performance Monitoring Take Action Define Enterprise Structure Collect internal & external data Market & Business Strategy Modeling & Simulation Enterprise Planning Risk Valuation Legal Cons Mgmnt Cons Value Adjust Performance Analysis Management Cockpit Meetings Change Tactical Targets Change Enterprise Structure Communicate to Stakeholders
- 7. What are our main focus areas? What results do we want to satisfy our customer needs? Mission Vision Strategic Perspectives Strategic Themes & Results Objectives Strategy Map Performance Measures & Targets Strategic Initiatives What is our purpose? What do we do? What is our picture of the future? What performance “lenses” should we use to evaluate results? What continuous improvement activities are needed to get results? How do we create and improve value for customers? How will we know if we are achieving the results we want? Specifically, what projects and programs will contribute to the desired results? Balanced Scorecard Strategic Planning Logic
- 9. Objectives To assess both financial (quantitative) and non-financial (qualitative) costs and benefits of an ES system, through the utilization of a modified Balanced Scorecard (BSC) performance measurement system.
- 10. Implementation Activities Identify how the BSC can be utilized to measure both quantitative and qualitative costs and benefits of the implementation and use of ES. Qualify KPI that categorize and identify both quantifiable and qualitative costs and benefits for implementation and productive use of enterprise systems. Examine current approaches that add value to the BSC methodology, and lead to the establishment of an “Enterprise System Scorecard”.
- 11. Identification of Objectives Financial Increase revenue Reduce costs Develop accurate cost allocation model Internal Business Processes Develop and promote integrated enterprise processes Develop policy review process Develop integrated business model Reduce paper-based processes Employees and Organizational Capacity Develop succession plan Develop employee career planning Enhance training & professional development Customers & Stakeholders Establish joint process to review and understand customer requirements Conduct ongoing passenger satisfaction surveys Develop accurate revenus model based on financial reporting
- 12. Strategy Map Customer Internal Processes Employees and Organizational Capacity Financial Develop revenue model Promote integrated enterprise processes Enhance training & professional development Develop accurate cost allocation model
- 13. Develop Process – Logical Model Write a Rule Why? To Enact a Financial Policy So costs are allocated accurately Allowing for detailed analysis So that the cost structure is understood To develop effective revenue model Why? Process Output Intermediate Outcome Intermediate Outcome Intermediate Outcome End Outcome Why? Why? Why?
- 15. Enterprise Technology Stack EAM Business Warehouse & Business Intelligence Strategic Enterprise Management Revenue ERP Point of Sale, Mobile Applications Transactional Analytical Strategic Reports Analytical Reports FI, MM, HR Reports Work, Asset A/R, Customer / Lease Reports Transaction Reports
- 16. Management Cockpit KPI – Reporting & Management Cockpit Consolidation General Ledger and Profit Center Accounting Data Profit Center Accounting General Ledger B/S Accounts I/S Accounts Management/Cost Accounting Non-Financial Measures