Despite the widespread use of very good financial/ERP systems and business intelligence tools, many companies are still struggling to achieve a single, balanced view of their performance.
Two factors are generally lacking in local business: a management framework or portal through which all managers can share a single and balanced view of their company`s performance against its strategic objectives and intent; and secondly, the ability to both track strategic progress and take appropriate action through the same management framework.
According to Naldus Pienaar, managing director of Consilia Consult, the internationally recognised Kaplan and Norton Balanced Scorecard has become the preferred strategic performance management tool for South African companies. More than 50% of medium to large companies in South Africa are using balanced scorecard or are in the process of evaluating or implementing it.
The most difficult part of implementing balanced scorecard is defining the company`s strategic objectives, key performance indicators, and associated measures in terms of the four Kaplan and Norton perspectives: "financial", "customer", "internal processes" and "learning/growth" or "people". Most of the time, strategy maps are built that explain the causality and the inter-relationship between the different objectives in each of these perspectives. These strategy maps, if done correctly, are a very powerful tool to communicate the company`s strategy to lower management and employees.
Elements (strategic objectives, key performance indicators, and associate measures) of the strategy map are normally cascaded down into the organisation and become the performance management framework of the company. Not only is everyone in the company on the same page but there is also general consensus on what is expected from each division, department, team and individual and how their contributions will help the company to succeed.
"The problem, however, is that in spite of the soundness of the balanced scorecard philosophy, in bigger organisations it becomes very difficult to update and communicate a dynamic scorecard to everyone involved on an ongoing basis," says Pienaar. "In the end, it is the shear administrative burden, the time lags, and inflexibility of the balanced scorecard that brings the initiative to a grinding halt with people feeling that it was just another management fad that did not deliver on its promise."
Pienaar adds that the problem with self-built electronic balanced scorecard systems is that they usually start off as simple Excel or Access projects with functionality added as people, elements and user requirements increase. "Unfortunately, nine times out of 10 the companies end up with a poorly documented monster -- a combination of spreadsheets and/or databases that can not fulfil the basic balanced scorecard requirements."
"Successful companies realise the complexity of compiling and communicating balanced scorecard information and the importance of getting it right," says Pienaar. "These companies invest in intelligent, purpose-written, balanced scorecard software, implemented by experienced technology partners, to achieve the best results."
Consilia Consult is an affiliated partner of the listed Finnish international company, QPR Software. Pienaar says QPR Software was founded in 1991 with the sole objective of creating interactive software applications to significantly improve corporate decision-making at all levels within an organisation. Today it is a leading provider of corporate performance management software.
QPR seamlessly combines corporate performance management (QPR ScoreCard) and process management (QPR ProcessGuide) into a comprehensive collaborative management suite. Planning, implementation, communication and commitment to company objectives are the cornerstones for collaborative management. QPR automates the transition from data to information, providing visualisation of performance and a collaborative environment for improving performance and achieving business objectives.
South African companies using QPR with great success include Standard Bank, Nike, Johnson & Johnson, African Rainbow Minerals, Tshwane Metro and SAA.
"The QPR solution enables organisations to realise the full benefits of their performance and process management efforts, which are linked to corporate strategy," says Pienaar. "These benefits are significant and can accrue at every level of the organisation. Balanced scorecards constitute a new way of thinking about company strategy, encapsulating and integrating the articulation, documentation, measurement, communication and management of strategy."
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