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What Is Balanced Scorecard Software—& Should I Be Using It?
There are plenty of scorecard tracking options out there. Find out their benefits and considerations, and get a run-down on why scorecard software could help you.
The Balanced Scorecard is a management framework that’s used to track strategic goals, KPIs, and projects. When used correctly, it accelerates and improves an organization’s ability to execute its strategy.
The catch is that managing a Balanced Scorecard is no easy task. When an organization starts this process, there’s usually a learning curve, and it’s better to initially manage your scorecard with “manual” programs like Excel or PowerPoint. But sooner or later, you’ll experience challenges that indicate it’s time to graduate to more sophisticated systems—like Balanced Scorecard software. The most common issues an organization faces when trying to manage a Balanced Scorecard without software include:
- Gathering data takes a lot of time because it’s owned by many people, scattered across the organization.
- Reporting for each element doesn’t happen on a regular (typically monthly and quarterly) cadence.
- Different people want to report in different formats.
- Data isn’t adapted for different reports and audiences.
ClearPoint solves all these problems. Our Balanced Scorecard software is built to help teams save time and effort as they work toward achieving their strategic goals. Our technology enables organizations to:
- Get everyone on the same page with a SaaS platform that acts as a central hub of information.
- Assign different ownership levels to multiple users.
- Automate monthly or quarterly reporting, from data imports to email reminders and report formatting.
- Receive alerts and notifications when information is updated.
- Create a variety of chart types and custom fields on pages.
- Generate summary reports and briefing books, which can be templated for different audiences and timeframes (e.g. send a report to the management team on the 1st of every month and a different report to the leadership team on the 15th).
If you’re suffering from the pains of using Excel and PowerPoint to manage your strategy, graduating to Balanced Scorecard software is the best next step. Sign up for a tour of ClearPoint’s system and see all of our scorecard management features.
On the other hand, if you’re just getting started and need more information about how to create and manage a Balanced Scorecard, keep reading to learn more.
Balanced Scorecard Definition
The Balanced Scorecard (BSC) framework has been used and adapted over the last 20 years by thousands of organizations. Because of its flexibility, the BSC can be seen as a “framework of frameworks,” allowing organizations to manage the Balanced Scorecard with other strategic frameworks embedded. For example, you can have a BSC and also use Economic Value Added (EVA), Total Quality Management (TQM), Six Sigma, Lean, or other strategic management approaches.
The BSC is a comprehensive management framework—which is where its value lies. It helps you put your entire strategy in one place through finance, customer, internal, and people perspectives with objectives, measures, targets, and initiatives. But in order to get the most value from it, you have to actually use it as a management framework—not just as documentation for your “five year strategy plan.” The companies that get the most value from their scorecards track their objectives, measures, and projects on a monthly or quarterly basis—not just “every once in awhile” or every several years.
So this begs a question: What is the most appropriate way to actually track your scorecard on a regular basis? Most organizations use Excel, enterprise resource planning (ERP) software, or Balanced Scorecard software. Below, we’ll walk through the benefits and considerations of each—so you can pick the tracking method that is most appropriate for you.
Balanced Scorecard Tracking Options
Excel & PowerPoint
Most organizations start by tracking their scorecards in Excel and PowerPoint. For small organizations and those just beginning with a Balanced Scorecard, Excel can be a great tool. It can create quick tables and charts, and it is flexible for manipulation and quick changes. In fact, we’ve created an Excel Balanced Scorecard that you can download for free!
And because most scorecards are presented and discussed with the leadership team in front of a projector, PowerPoint is an obvious option. It requires little to no learning for the person putting the presentation together.
The problem is, the benefits of Excel and PowerPoint are not long-lasting. Version control in Excel, for example, can be a nightmare to deal with. Consider this story:
“I built up quite a bit of Excel experience in my days as a consultant and VP of strategy in a manufacturing company. When I joined the company, they were running their entire production schedule from a single spreadsheet, which was stored on an open-permission file server. One hundred and forty employees had access to the file on any given day, and it was very common to have someone make unauthorized edits to the production schedule. This meant we would have no idea when a product needed to be built and shipped.” Chintan Sutaria, Founder of VisionPDM
While this Excel disaster isn’t specific to scorecarding, it is indicative of what could happen if too many cooks are in the scorecard kitchen. Ensuring that each person in your organization is updating the most recent version of your scorecard is critical—so when your scorecard becomes more complex or robust, using Excel becomes almost impossible.
The final word: Excel is great when you’re getting started with your Balanced Scorecard, but you’ll have issues with scalability.
Enterprise Resource Planning (ERP) Software
If you work at a large organization, you likely have access to SAS, SAP, Oracle, or another piece of enterprise resource planning (ERP) software. If your organization has a dedicated software vendor, he will likely tell you, “We already have access to a Balanced Scorecard module through [said ERP solution]!”
The biggest issue with ERP solutions is the cost of integration and configuration.
In fact, you could easily spend $250,000-$500,000 configuring the ERP module to work for scorecard management—and could take 6-18 months to get up and running. Even if you are able to configure it correctly, changes and upkeep would need to be managed internally from your IT department—which, depending on their bandwidth, could be time consuming (and a big headache for them). For example, ERPs are not designed to track data and create appropriate reports in the same manner that your scorecard needs to be tracked—so your IT team would have to jerry-rig an extreme configuration. The IT team would also be on task for making updates on a regular basis.
The final word: Most organizations find the end result of an ERP/scorecard mashup is not worth the money or the time.
Balanced Scorecard Software: What To Look For
Between the two extremes of Excel (which can become unmanageable) and an ERP scorecard (which requires ludicrous time and money) is Balanced Scorecard software. A great scorecard software option is robust, highly configurable, and available at a manageable price point. And ideally, the software you choose should be able to communicate with both Excel and ERP applications via API or data loader tools.
To understand the value of scorecard software, it’s important to review (and discern between) the elements of scorecard management.
When you’re managing a scorecard, you need to start with your objectives, or goals. There are two ways you’ll know if you’re accomplishing those objectives: through measures and initiatives.
- Measures are typically tracked with quantitative data that can be plotted on a chart. (If you’re using Excel for your scorecard “software” today, you probably want the ability to create charts from your measure data.)
- Projects typically track start dates, end dates, percent complete, milestones, and more.
In an effective Balanced Scorecard, you’re reviewing both measures and projects for every objective, and then writing up your analysis about the results. This helps other team members understand what is going on with each particular goal.
Bring together all your metrics to analyze how your organization is doing with our Department Performance Dashboard.
Balanced Scorecard software provides value by giving you the ability to bring all of this together. With scorecard software, you can examine measures, data, calculations, and evaluations in order to drill down on projects (with start dates, end dates, percent complete, and milestones)—and then bring these things together at the objective level with qualitative information, RAG status indicators, etc. In other words, software gives you the ability to drill down to the appropriate details you need when examining a goal. You also need to have ownership and accountability of the elements in your scorecard, and typically this is native to a BSC application.
If you’re exploring scorecard software, take a look at ClearPoint. This comprehensive tour will tell you all about the features you want and need. But don’t just take our word for it—get free and instant access today so you can start managing your scorecard right away.