The Balanced Scorecard Meets BPM

Should the Balanced Scorecard be a guiding force in business performance management? Some say it's too much effort -- but the results can be stellar.

What lies at the heart of a successful business performance management (BPM) initiative? Above all, it's building powerful combinations. Effective BPM projects link key software, such as business intelligence, with performance management processes and use metrics to align an organization's activities with corporate strategy. BPM is a profoundly holistic way to view how well a company is doing. Logically, then, you might expect that the Balanced Scorecard, a strategic management tool for gauging an organization's performance in all areas -- nonfinancial as well as financial -- would be a natural part of any BPM effort. Frequently, however, that's not the case.

"Balanced Scorecard implementations often fail to deliver anticipated benefits because they are not integrated with the BPM processes, particularly those used at an operational level," says Frank Buytendijk, research vice president of Stamford, Conn.-based Gartner Inc. "We believe that by the end of 2003, 80 percent of enterprises that fail to integrate the Balanced Scorecard into BPM will drop the Balanced Scorecard and return to a less-organized set of metrics."

If that happens, it won't be due to any deficiencies in today's Balanced Scorecard software applications, which have grown substantially more sophisticated over the past two or three years. "Sixteen different software vendors have achieved functional standards [a measure of Balanced Scorecard effectiveness]," says Dylan Miyake, director of Balanced Scorecard Collaborative Inc., a training and consulting firm in Lincoln, Mass.