The well-known term “Business Intelligence” (BI) generally refers to the idea of generating data-driven insights on business performance. Balanced Scorecard deals with business performance as well. Although these two business methods work in the same field, there is not much information about integration Balanced Scorecard in BI or probably about the integration of BI into the Balanced Scorecard.
First, let’s take a closer look at what Business Intelligence is all about. When we talk about Business Intelligence we often have in mind the process. The BI process could be represented as:
- Obtaining data or information
- Using analytical tools to process the data
- Making decisions according to data insights
It appears to be very similar to a Balanced Scorecard. Does BI have something to do with the Balanced Scorecard? What is the role of a Balanced Scorecard in BI if any?
Before moving on in our discussion we need to mention that the BI term is a buzz-term that can change its meaning from company to company and from business school to business school. The BI process mentioned above is a scholastic one and is followed in some way by most companies. So, let’s take it as an example.
Focusing BI on what is important
Another question brings us closer to the idea about how BSC and BI work together.
- How do you know what data you should analyze and what kind of insights should you search for?
While the possibilities of data collection seem to be unlimited and growing each day, we should be focused on what matters. Here is where BSC helps.
Any effort to collect data and analyze it to obtain information should be aligned to the strategic objectives of the company represented in the strategy map of the BSC. In this way you will focus on what matters and won’t waste your time analyzing something that makes no sense for your company right now.
BSC gives you an idea about what kind of insights you should search for by using BI analytic tools.
Converting insights into KPIs
What happens next? Collected data should be properly converted into a data source for the KPI or KPIs of the Balanced Scorecard.
As a result, data-based insights of BI might be used for action plans aligned to KPIs of the BSC. For sure, there might be different sources for the action plan for KPI and business objectives, but normally BI is what helps to generate actionable KPIs.
Integration between classical BI and classical BSC
We could summarize BSC and BI interconnection (both classical versions) in a few simple words:
- BSC focuses BI data collection and analytic on what matters by providing strategic objectives
- BI feeds KPIs of Balanced Scorecard with insightful data
- BI can be a source for action plans aligned with strategic goals and KPIs
Other BI architectures
All of what was said before can be applied to classical BSC and classical BI. With different architectures different approaches should be applied. For example, if we will examine business-centric BI architecture, then BSC could be integrated with it in a completely different way.
I do not promote any specific BSC and BI integration. What is more important is that when making your choice, you should use a common sense.
- If you have a strong business-centric BI architecture then BSC will be a valuable add-on to your existing system.
- If you have a classical BI consider using BSC to get data that matters, as it was described in this article.