Using the balanced scorecard application from business solutions giant, SAP, is one of the easiest ways for organisations that have bedded down their information technology (IT) systems to exploit them to drive strategic differentiation from competitors.
So says SAP Africa senior consultant, Marco Bronze. "The management trap in stabilising your transactional systems and presumably, therefore, optimising operations is believing that you have achieved a strategic advantage. In fact, a strategic advantage is about doing things in new ways, not just doing the same things more efficiently.
"But, as many studies have shown since David Norton and Robert Kaplan devised their balanced scorecard in the early 1990s, while organisations can relatively easily come up with new strategies, they battle to actualise them, to make them operational realities.
"For instance, they don't have mechanisms in place to adapt business processes so as to execute new strategies or to relate bonuses and incentives to the success of strategy implementation. No one is made responsible for driving the strategy into the business and the allocation of resources is not related to the strategy. Where attempts at implementation are made, feedback tends to be tactical rather than strategic. There is always a focus on the past - what has happened rather than what should happen. And, in any case, management teams spend very little time in strategic, as distinct from operational, discussions.
"At the same time, because business has for centuries been based on accounting-driven management, there is very little focus by companies trying to change strategy on non-financial factors, such as the credibility of management, the ability to attract talented staff, or the organisation's ability to innovate. And yet, portfolio managers give non-financial issues a 35% weighting in their investment decisions.
"The balanced scorecard solves most of these problems by providing a framework for dividing strategy into its operative business processes, making it executable.
"But, for as long as the balanced scorecard is not integrated into an organisation's overall systems, there's no practical way to either cascade the strategy into the organisation or access the kind of information about the organisation that will show you whether your strategic objectives are being met and, if not, what action plans would correct the situation.
"Which is why SAP has for some years now incorporated in its standard Financials solution a strategic enterprise management (SEM) application that includes a balanced scorecard toolset. The toolset comprises SEM best practice templates that an organisation can use to both impose and measure implementation of its strategy."
SAP Balanced Scorecard templates help an organisation build a strategy - based on financial, customer-centric, internal revenue and growth views. From there, the application helps it develop a strategy map, objectives, measures, targets and initiatives and assign persons responsible for execution.
SAP Balanced Scorecard also enables reconciliation of performance targets for all business units and ongoing performance assessments. All elements include definition, status calculation, written assessment and comments, time series, graphics, textual documents - and SAP Business Warehouse reports that allow the inclusion of non-SAP data. Cause-and-effect chains illustrate dependencies between objectives.
Says SAP Africa consulting manager, enterprise management, Desiree Katz: "The balanced scorecard approach to strategic management is easy to use and an excellent differentiator. So, we're reminding all our mature customers now looking for ways to add value to their organisations that all they have to do is implement a toolset that they've already paid for and have in their possession.
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