CAPÍTULO II MARCO TEÓRICO
A TU CIELO QUERIDO LLENITO DE SOL…”
Scorecards have their genesis in the work of Robert Kaplan and David Norton. In 1992, they published a paper in Harvard Business Review about a way to monitor the health of a business using Balanced Scorecard, discussing perspectives and metrics that could be used to for companies to measure their relative success. They argued that companies could not successfully manage items they could not measure, so measurement became critical. In 1996 Kaplan and Norton published The Balanced Scorecard: Translating Strategy into Action, a book that more fully laid out the Balanced Scorecard concept.
Kaplan and Norton argued that companies spend far too much time focused on financials, and that financials are often a trailing indicator of the health of the business. Since it takes companies some time to close out a particular quarter, it might be mid-to-late April before a business realizes just how bad the previous quarter was, and by then some of the data is almost four months old. Kaplan and Norton argued that while examining financial data is important, it must be only one part of a broader picture. In other words, the financial perspective must be balanced against other, equally important, areas.
A Balanced Scorecard is aimed at an overall view of the entire enterprise and looks at four areas, called perspectives. These four perspectives are:
䉴 Financial 䉴 Customer 䉴 Internal Process 䉴 Learning and Growth
The financial perspective covers the standard financial goals of an organization and is of interest to those both inside and outside the organization. For most
companies, the focus is on business owners or shareholders. Nonprofit organizations focus on those funding the organization through donations or other payments. KPIs often found in the financial perspective are relatively easy to identify: gross revenue, profit, earnings per share, and so forth.
The customer perspective focuses on such areas as targeting and then acquiring customers, retaining those customers, and growing business at existing customers. Businesses want to develop lifelong customers and provide comprehensive solutions. Some of the KPIs in this area might be collected through focus groups and customer surveys.
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B u s i n e s s I n t e l l i g e n c e w i t h M i c r o s o f t O f f i c e P e r f o r m a n c e P o i n t S e r v e r 2 0 0 7The internal process perspective focuses on internal business processes. Not only are internal management processes examined, but so are customer management processes, such as maintaining an open and ongoing dialog with existing customers. Processes such as research and development, quality control, and regulatory
compliance are also covered here.
Finally, the learning and growth perspective covers the development of the people in the organization and the informational infrastructure. This may include training of employees, satisfaction surveys, and the development of technology to support people in their work. Note that training and internal systems might be designed to provide better customer service, but even systems that provide less tangible benefits may still be part of the overall strategy.
Part of the reason for the different perspectives is the belief that while financial information is often a lagging indicator, the other perspectives can be current or leading indicators. Customer surveys are especially important to some companies in helping to determine product changes and future directions. Sliding customer satisfaction in the same quarter as strong sales may foretell weaker future sales, so identifying these issues early can lead to proactive solutions to address issues. In addition, high employee turnover might indicate problems with aspects of the corporate culture that can be addressed before the loss of experienced workers begins to affect product quality.
What makes a true Balanced Scorecard is the use of the four perspectives and the KPIs in each perspective representing the metrics that are driving the business. Since Kaplan and Norton published their original Balanced Scorecard article, variations on the Balanced Scorecard theme have appeared, and the general term of “scorecards” has grown to encompass nearly anything with KPIs. These general, or business, scorecards may have KPIs from only a single perspective or may include many perspectives, which may or may not be related to the four perspectives identified by Kaplan and Norton.
Business Scorecards
A business scorecard is a general term used in this book to identify any scorecard that is not a true Balanced Scorecard. This includes an enterprise-wide scorecard that might not have Kaplan and Norton’s four perspectives, or any lower-level scorecard that focuses on more narrow KPIs. The Balanced Scorecard typically only has five or six KPIs per perspective, so the KPIs are usually very general and highly aggregated. A gross revenue value in a Balanced Scorecard is for all products, while a product manager might want to analyze such a value broken down by product categories or subcategories.
C h a p t e r 4 : S c o r e c a r d s a n d K e y P e r f o r m a n c e I n d i c a t o r s
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Sometimes a business scorecard is even narrowly focused on a single problem, but the nature of scorecards makes them an effective way to solve the problem. Chapter 1 discussed a scorecard that was built for a nonprofit organization.
Technically, there were only two true KPIs: Expenses Per Patient Day and Number of Patient Days. However, a number of KPIs were created. There was the Number of Patient Days KPI, and the overall Expenses per Patient Day. In addition, there was a Rent per Patient Day, Food per Patient Day, Utilities per Patient Day, and so on, with approximately twenty expense categories getting their own KPIs. The screen was presented with each facility showing just two KPIs and an overall score. One KPI was for the Expenses per Patient Day and the other was for the Number of Patient Days. Each facility could then be expanded to see the individual expense KPIs rolled up into the Expense per Patient Day KPI. In true scorecard fashion, some expenses were deemed more controllable than others and those expenses had higher weights when contributing to the overall score. The actual value of the score wasn’t important, but it was a way to rank each facility and determine which ones were controlling costs better than others. An example of this scorecard can be seen in Figure 4-2.
Another example of a business scorecard is one employed by a company that does specialized construction. Their projects go through a series of approximately 15 phases,
Figure 4-2 A business scorecard ranking facilities based on their expenses, where the top level KPI could be broken down into more granular KPIs.
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B u s i n e s s I n t e l l i g e n c e w i t h M i c r o s o f t O f f i c e P e r f o r m a n c e P o i n t S e r v e r 2 0 0 7including initiation, locating real estate, negotiating buy or lease contracts, and so forth. Each phase has a target for the amount of time it should take, so the time in each phase became a KPI. Each KPI is assigned a weight and then all the KPIs for the various phases are rolled up into one overall KPI that is used to sort projects. Those with the worst scores are the ones spending longer than planned in various phases, and these troublesome projects were easier to identify and examine.
One question about this scorecard might be, “Wouldn’t a report have worked just as well? Couldn’t the customer have just listed out the troublesome projects based on the criteria mentioned?” Certainly that’s possible, but scorecards created with PerformancePoint Server have the ability to link to a strategy map (described next), analytic tools such as charts and graphs, and more. An online report could have contained some of this interactivity, but having the ability to easily identify a problem project, expand it to see the KPIs for each phase, and then assess their health proved to be an ideal way to present the information to project managers and upper level management.
It’s also important to remember that some scorecards focus on a single perspective and a very narrow set of KPIs, while many others include multiple perspectives and therefore are often broader in scope and far more high level than most traditional reports, which tend to focus on details.