Telling something complex in simple terms is not as easy as we would like… Automation of the BSC is a topic that is somewhat of a “thing in itself” series, but I want to share my experience in automating a balanced scorecard, or more precisely, automating some of the tasks and processes associated with developing the BSC, planning and monitoring strategic goals and indicators based on the BSC methodology.
The topic of automation of a balanced scorecard is difficult to cover in one article, therefore, a series of articles is planned that will show step by step, with examples, how QPR Suite 2012 can support the implementation of the following business processes in a company or group of companies:
- strategic planning, business planning and reporting of the company,
- informing about strategy, selective targeted informing about critical KPI values,
- development, planning and control of employee motivational KPI cards,
- KPI planning and KPI reporting processes, KPI development subprocesses, data entry, KPI value approval and coordination, performance calculation, data quality analysis, KPI performance approval and coordination.
Strategic management, KPI management in a company requires a certain systematization, continuity, regular, year after year, increase in knowledge, experience, technologies, specific solutions “for the company”. Such tools as QPR Suite 2012 contribute to the formation of a corporate knowledge management system in the field of strategic management and KPI management by creating a single repository of a company or group of companies for all strategic goals and indicators. Within the framework of a single database, not only are statistics of indicator values maintained, automated calculation of % achievement of indicators is performed, but also methods for calculating indicators are recorded, the distribution of responsibility between employees for achieving target values, calculation of the fact, verification of the calculation of the fact of indicators is recorded.
You can read about the QPR tool and its developer on the website: www.qpronline.ru . In this article, we will consider the system using examples of tasks that need to be solved in the processes of strategic planning and control.
In the first article, we will consider a separate narrow topic of developing a strategic map using QPR, with examples and a description of the capabilities that the system provides. The entire BSC automation project cannot be included in the first article.
The company’s strategic map generated in QPR Suite 2012 looks, for example, like in Fig. 1.
Fig. 1. Strategic map of the company “BE No. 3”
In this example of the strategic map of the company “BE_3”, a certain logical chain of goals is built: achieving the goals of increasing professionalism and satisfaction of personnel should contribute to achieving the goals of the business process perspective, and then, rising higher, ultimately, the goals of the financial perspective should be achieved – increasing the rate of business growth, and increasing the return on assets. The logic of the influence of goals on each other, conceived when developing a strategic map, does not always work in practice. Every year it is necessary to update the map, conduct an analysis of goals and indicators, for example, on the basis of quarterly reporting, and find out for which goals and indicators significant failures to achieve target values have occurred.
In this system, unlike a drawing in MS Visio, a company’s strategic map is a dashboard reflecting the state of the company’s strategic goals and indicators for a selected reporting or planning period, quarterly and cumulatively.
Fig.2. Strategy map as a dashboard
Prospects, goals and indicators on the strategy map are not a drawing, but directly reflect data from the database based on typical visual display layouts. All elements (prospects, goals and indicators) on the company’s strategy map are “active”, i.e. by clicking on any goal, you can find out detailed information about the goal – a goal card will open with data on who is responsible for achieving it (if necessary, the person responsible can also be displayed on the strategy map dashboard), statistics of actual values, what indicators measure the goal, etc.
The strategy map is generated in the QPR Metrics developer module and becomes available to all company employees who have access to this information through the QPR Portal module. All changes to the strategy map during its development or reporting are automatically reflected in the QPR Portal, and users always work with up-to-date strategy maps.
The strategy map in QPR Metrics is generated automatically (based on previously entered goals and indicators) as follows: – from the context menu, select the command “add elements automatically” (see Fig. 3), then you need to specify the types of elements that need to be displayed on the strategy map; in our example, we display a group, prospects (according to the BSC methodology), and 2 types of goals – corporate strategic goals (mandatory for all companies in the holding, and strategic goals specific to a particular company):
Fig. 3. Formation of a company’s strategic map in QPR Metrics
In practice, there is a need to create several types of strategic maps for a company – these can be working versions of strategic maps for discussion and selection of one final version of the map, or 2 complementary types of strategic maps: 1) a map with goals only, without indicators, 2) a map with goals and indicators. This need can be realized as follows – create a new type of strategic map of the company with indicators for the same time period, and select it from the list of types, for example like this:
Fig. 4. Formation of several types of strategic maps for one company, without KPI and with KPI, example “BE No. 3”
Forming a variant of a strategic map with both goals and indicators is accompanied by complexity – how to place everything so that it can be read and understood. Of course, this is a technical issue, it is quite solvable, in the process of setting up the system, you can find a visual solution to this issue acceptable for the company. But sometimes the problem of visibility and clarity of the strategic map can be caused by an incorrect corporate BSC methodology. The problem of the correctness of the methodology is also solvable, but its solution will require more time, money, energy than the option with a technical solution.
As a result, a company’s strategic map with indicators may look, for example, as follows (all settings for visualizing prospects, goals and indicators can be edited to suit your corporate taste through visual layouts of strategic map elements):
Fig. 5. Example of a strategy map with KPI
As noted above, a strategy map is a visualization of previously entered company goals and indicators, which in QPR Metrics have several representations, including in the form of a hierarchy (structure, tree) of company goals and indicators:
Fig. 6. Hierarchy of strategic goals of the company, structure of goals according to the prospects of the BSC
In Fig. 6, on the left is the structure of the group of companies, on the right is the structure of goals for the selected company (business unit No. 3).
Thus, from year to year, useful information about the strategic maps and goals of the holding companies accumulates, to which you can always return and, if necessary, look at the history and analyze the path taken.
In the next issues of articles on the topic of BSC automation using QPR Suite 2012, it is planned to cover the following topics:
- The project of automation of the BSC in general and in detail, the main stages, goals and objectives
- Formation of plans and reports in tabular form
- Uploading the necessary information (strategic maps, plans, reports) from QPR Portal into a PowerPoint presentation
- Data entry
- Example of setting up profitability calculation in QPR Metrics. Calculation of interrelated indicators (ROS, net profit, revenue)
- Calculation of % achievement
- Decomposition of company goals and indicators into department heads and employees
- Formation of (electronic dynamic) management reports on QPR Portal (booklets). Formation of dashboards (dash board)
- Formation of motivational maps of KPI employees
- Formation of a library of indicators and management of its quality, when there are hundreds and thousands of indicators throughout the holding, taking into account the decomposition into department heads and employees
- Macro indicators, market indicators. Unified database of external and internal indicators
- Indicator card, indicator properties (concept of norms and series). Methods for reducing the labor intensity of quality management of indicators when there are hundreds and thousands of indicators within the entire holding. Classification of indicators for setting up effective processes for quality management of indicators and reporting
- Working with built-in mathematics, an example of calculating the formula for the weighted average % of goal completion based on weights and % of performance indicators
- Organization of work with the system, roles of system users – developers, information input, informed employees, report users
- Security. Managing access rights
If readers have their own questions on “how to solve this or that problem?” on the topic of BSC, the practice of its implementation and application, questions on the automation of BSC, I invite you to formulate your questions in the comments to the article, which can also be further disclosed and discussed in this or the following publications.
* When copying an article, a link to the site samsebestrateg.ru and the author is required
