Balanced Scorecard

The balanced scorecard is a methodology for assessing an organization’s business performance via four components:

1. Financial. The financial aspect focuses on more traditional measures of business performance related to how shareholders view the organization’s performance.
2. Internal business processes. The internal business processes relate to the organization’s ability to identify its core competencies and to assess how well it performs in these identified areas of competency.
3. Customers. The customer component focuses on identifying how customers perceive an organization.
4. Innovation and improvement activities. Innovation and improvement activities are monitored to assess how the organization is continuing to improve and how it is creating additional value.

The concept of balanced scorecard has been around for several years, but it has been only within the last few years that enterprise system vendors have focused on integrating this functionality and in turn making assessment a reasonable possibility. Fundamental to incorporating effective balanced scorecard assessment is the aggregation of varied data in a data warehouse (discussed in Database Management Systems) that can then be analyzed using powerful analytical tools—i.e., business intelligence tools as discussed in the next section. Because an enterprise system provides the ability to aggregate the necessary data in its underlying database, linking this data with other data to create the data warehouse is a logical and efficient way to provide balancedscorecard capabilities. In the past two years, all of the major enterprise system vendors have announced new product integration to provide the balanced scorecardfunctionality. Consider how data captured in the various business processes could be used to support assessment in each of the four areas underlying the balancedscorecard.