The balanced scorecard (BSC) was implemented in the early 1990s, and has been used since as a tool for measuring business performance. The BSC concept evolved into an effective strategy execution mechanism. The management performance tool, initiated by Drs. David P. Norton and Robert S. Kaplan, is considered a critical foundation today in the process of holistically executing strategies.
- Managers in all business departments are using the balanced scorecard as a tool to create and manage key performance indicators, by defining the relationship between goals and activities and specifying the significance of the indicators.
The BSC can be created manually, using an excel spreadsheet, or can be created through a corporate Balanced Scorecard Software.
Excel spreadsheets have been widely used to record data and analyze trends, and it represents a fairly good resource for making a start on the Balanced Scorecard analysis. Rather than completely ignoring the concept of key performance indicators, and a constant measurement of business performance, managers are advised to use an Excel spreadsheet to record important data.
However, Excel is not the most efficient platform for balanced scorecard analysis, and the use of an automated BSC software is far more recommended.
BSC Spreadsheets vs. BSC Software
The Balanced Scorecard analysis brings knowledge and control over strategic decision-making and helps the organization successfully meet its objectives. Therefore, it is important to ensure that the BSCs are managed in the most efficient manner. Here there is a need for a system that is functional at a superior level and fast to implement but also accessible and user-friendly, able to incorporate a wide range of objectives and KPIs and portray the core values of the company through the Balanced Scorecard.
- The BSC tool should be well developed from bottom up to keep the context of the Balanced Scorecard principle and performance management in the lead. Thus, it is highly recommended to use a Balanced Scorecard Software because it uses the BSC methodology in the most efficient manner.
The software have been utilized by schools, non-profit organizations, military units, business corporations and government agencies. Although the BSC software has been mostly utilized by large organizations, nowadays, SMEs are becoming more and more familiar with the great benefits the software brings, and are putting it in practice as well.
Unlike the spreadsheets, which offer multiple views of the truth, the software provides a single version of the performance report that comes with a web-based interface. Spreadsheets lack management over data ownership. In addition, the software enables flawless integration of data, people and performance metrics.
Another important point to notice when using Excel as the platform for BSC analysis is that when the project becomes complex, spreadsheets loses scalability. On the other hand, with the software, the user maintains control over the flow of the information.
This is possible because the users have access to the management functionality of the software and can tailor it to meet their business model of performance management.
Finally yet importantly, the software tolerates sharing of performance data to all organization levels, which is difficult when using spreadsheets. Users can create performance reports, risk management, strategic initiative and many others. Since the software has automatic functionality, it allows users to save time, prevent errors and achieve smooth communication of objectives to employees. Such objectives can be aligned with organization’s objectives and employees’ objective, by using automatic scorecards and dashboards.
Overall, using BSC software gives a more professional, effective and user-friendly experience to the entire organization.
Summing up, the benefits of using a BSC software as opposed to a manual spreadsheet are:
- User-friendly interface
- Ease of communicating results across the organization
- Ability to tailor the BSC to the business performance management model
- Effective platform to align KPIs with organizational goals and employee’s objectives
- Automatic scorecards, dashboards and reports
- Effective information management
- Error prevention
- Time and cost saving benefits
Check out more insights about Balanced Scorecard software in the shopper’s guide article.