What is a Balanced Scorecard?

Implementing the balanced scorecard methodology in a project gives you quick access to important metrics - for example cost, expected return of investment (IRR) for the project, customer satisfaction, innovation... All these help you continously monitor the performance of a project.

The Balanced Scorecard (BSC) is a conceptual framework enabling an organization in clarifying its vision and strategy, thus effectively translating them into action. This performance management approach provides feedback around both the internal processes and external outcomes, essentially focusing on four indicators: Customer Perspective, Internal-Business Processes, Learning and Growth and Financials.

The concept of Balanced Scorecard was developed in the early 1990ís by Robert S. Kaplan and David P. Norton. They describe this innovation as follows:

"The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation."

What is a Balanced Scorecard?
Sample Balanced Scorecard report made with Power Point(ppt)

There are currently about forty different companies offering Balanced Scorecard software. Some of the most established include ActiveStrategy, Cognos, Corda, Corvu, Dialog Strategy, Pilot Software... Many can be used for project management, but they are more designed for strategic planning and corporate use and they lack the flexibility needed in project management. In most cases, we have found that Excel and Power Point are the easiest solution. Automating your balanced scorecard reports is easier done if you can access to the database that contains the relevant data.

Business indicators to motivate the team

Hence, the approach of Balance Scorecard is an effort to improve its processes, motivate and educate employees, and enhance the information systems, while monitoring the projectís progress toward the organizationís strategic goals.

If you want to buy a Balanced scorecard software package, choose one that allows collaborative work.

In terms of Customer Satisfaction, the approach analyzes the organizationís ability to provide quality goods and services and their effective delivery, while the financial perspective of the Balanced Scorecard generally represents the clear long-range targets. Now in order to lead to the success of the above two mentioned perspectives, the internal business indicator provides data regarding the internal business results against its measures. The fourth and the last major perspective concerns with learning and growth, which aims to align all of the above toward an overall organizationís success.

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