A Balanced Scorecard Approach to

Enterprise Systems Performance

Measurement

PREPARED BY:
POOJA GUPTA-09609011
ABHINAV SHARMA-09609018
ABHISHEK SHARMA-06502909

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 OBJECTIVE
 The aim is to address ‘how Enterprise systems benefits can
be usefully measured’, with a ‘balance’ between qualitative
and quantitative factors.
 The ultimate goal is to derive a comprehensive ‘Enterprise
Systems Benefits Measurement Instrument’ to
(a) assess the goodness of the Enterprise System an
(b) identify where organizations should focus their ‘benefits
realization’

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 INTRODUCTION

 Enterprise Systems are customizable, standard

software solutions that have the potential to link and
automate all aspects of the business and main
administrative functions into a single information .

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 Organizations have invested with the expectation of;
improvements in business, better management of IT/IS
expenditure, increased customer responsiveness

 ES have failed to deliver the anticipated benefits.

 High profile ES implementations (e.g. Fox Myers,

Unisource worldwide, Dell computers, Hershey Food
Cooperation, Whirlpool and Gore-text) have raised serious
questions about the credibility of ES.

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 Research on ES success and failure
A comprehensive study of nearly 100 large companies
 only 33 % of ES projects could be classified as Successful.
 15% of the companies believed that they had received
‘nothing’ out of their ES.
 25% of the organizations received modest results from ES,
and they are not positive about gaining further benefits.
 The remaining 23% were unable to report any specific
quantifiable benefits.
 The over all research figures show that as many as half of
the companies have not realized sufficient benefit from
their ES investment

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 Need of an ES Performance
Measurement
 The ES / IT investment is correlated with
organizational revenue as well as provide intangible
profits
 ES have a ‘holistic’ impact on every operation in
an organization.
 To find out the benefit generating areas-for further
exploitation of resources to make profit.
 Top management can obtain and maintain Key
Performance Indicators (KPI)
 As an aid for innovation-exploit areas for deploying
innovative business strategies.

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 BALANCE SCORECARD

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 Balanced scorecard
 The balanced scorecard is a strategic planning and
management system that is used extensively in
business and industry, government, and non-profit
organizations worldwide to align business activities
to the vision and strategy of the organization,
improve internal and external communications, and
monitor organization performance against strategic
goals.

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To embark on the Balanced Scorecard path an
organization first must know (and understand) the
following:

•The company's mission statement

•The company's strategic plan/vision

Then

•The financial status of the organization

•How the organization is currently structured and
operating
•The level of expertise of their employees
•Customer satisfaction level
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 CHARACTERISTICS
OF BALANCESCORECARD
 A properly developed Balanced Scorecard should:
(1) Represent financial and non-financial measures from
all levels of the organization (front line to executives)
(2) Maintain an equilibrium between :
a) External measures and Internal measures
b) Outcome measures ( past) and Future
performance
c) Objective and Subjective measures
(3) Include that are elements in a chain of cause-and-
effect relationships that communicate the
organization's strategy.
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BSC Translate Performance at multiple levels

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 BENEFIT OF
BALANCESCORECARD
Organizations have used the Balanced Scorecard to:
(1) clarify and translate vision and strategy
(2) communicate and link strategic objectives and
measures
(3) plan, set targets and align strategic initiatives and
(4) enhance strategic feedback and learning, and
succeed in realizing both tangible and intangible
benefits of their investments

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A Balanced Scorecard approach generally has
four perspectives:

•Financial
•Internal business processes
•Learning & Growth (human focus, or learning and
development)
•Customer

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 Four perspectives

The financial perspective: to succeed financially, how

should we appear to our shareholders? Examples of this
perspective include financial ratios and various cash
flow measures.

The customer perspective: to achieve our vision,

how should we appear to our customers? Examples of
this perspective include the amount of time spent on
customer calls and customer survey data.

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 The internal perspective: to satisfy our shareholders
and customers, what business processes must we excel
at? The internal business processes that are often
classified as mission oriented and support oriented.
Examples of this perspective include the length of time
spent prospecting and the amount of rework required.

The learning perspective: to achieve our vision, how

will we sustain our ability to change and improve?
Includes employee training and organizational attitudes
related to both employee and organizational
improvement. Examples of this perspective include the
amount of revenue that comes from new ideas and
measures of the types and length of time spent training
staff.
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 Balanced Scorecard Cause -
Effect Hypothesis

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 Balanced scorecard supports EMS

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 Comparison of Balanced Scorecards in the Private
and Public Sectors

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 DESIGN OF BALANCE
SCORECARD
Four steps as being part of the Balanced Scorecard
design process:
 Translating the vision into operational goals;

 Communicating the vision and link it to individual

performance;
 Business planning; index setting

 Feedback and learning, and adjusting the strategy

accordingly

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 Improved design methods

In the new method, measures are selected based on a

set of "strategic objectives" plotted on a "strategic
linkage model" or "strategy map".

To develop a strategy map, managers select a few

strategic objectives within each of the perspectives, and
then define the cause-effect chain among these
objectives by drawing links between them.

A balanced scorecard of strategic performance

measures is then derived directly from the strategic
objectives
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 CASE STUDY:
QUEENSLAND GOVERMENT
BENEFIT REALISATION
NETWORK
•Government of Queensland realized full potential
by implementing ES SAP.

•Initiated a Benefit Realization Network aimed at

maximizing benefits from the ES SAP investment.

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 Queensland Government’s
Benefit Realisation Network
(QGBRN)
Voluntary association of agency representatives SAP
benefits realization experiences .
Learn from each other
• Providing advice and recommendations on data
collection .
• Tools for sharing experiences.

• Recognized the importance of the Balanced Scorecard.

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 Objectives of QGFMS
• Support the Managing for Outcomes (MFO)
framework and financial management improvement
activities.
• Encourage best practice resource management across
Queensland Government.
• Facilitate the consolidation of Queensland Government
financial information.
• Meet the business needs of agencies .

• Achieve economies of scale in main operations.

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 Tools
• Clear vision of the strategic management plan.
• Balanced Scorecard.

• Benefit realisation plan.

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 Benefits
• Understand the management approach in a holistic
manner.
• Relate strategy to performance and action.

• Set performance target.

• Focus, communicate and coordinate effort.

• Reduce eliminate blind spots.

• Improve management and performance of the

organisation.

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 Steps Involved
• Specifying the appropriate business drivers.
• Identifying key stakeholders.

• Determining the Balanced Scorecard perspectives.

• Identifying and applying method/s of measuring (or

quantifying) the benefit.
• Identifying initiative to achieve the recognised benefit.

• Deploying a risk management strategy including

potential risks, constraints and dependencies.

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 Department of Primary
Industries (DPI)
The Department’s outputs against statewide trends.
This broad approach, based on the Balanced
Scorecard, takes both internal and external
perspectives of DPI into consideration in measuring
performance.

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 DPI’s Performance Management
Framework

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Internal Strategies and Measuring Performance

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 CONCLUSION
 Balanced Scorecard for measuring the performance of
ES employed in the public sector and private sector.
 The need for a balanced ES performance Measurement.

 Goals and techniques of applying a balanced scorecard

in the public sector.
 Balance scorecard approach.

 Queensland Government Balance scorecard approach.

 QGBRN

 DPI

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