In the Balance

Microsoft's new methodology will further validate balanced scorecards

Score one for enterprise performance management: microsoft is fashioning a new methodology that gives customers a roadmap for building balanced scorecard applications.

The Microsoft Balanced Scorecard Framework (BSCF) is based on the premise that balanced scorecards, which are quite transformational in nature and, hence, often risky to deploy, are most successful when they're developed and deployed quickly and at every organizational level. For that reason, Microsoft believes that many customers have the opportunity to pursue low-risk balanced scorecard initiatives by leveraging Microsoft applications that are already deployed in numbers across their organizations, including the Office XP suite, SQL Server/Analysis Services, and SharePoint.

The company also believes that both stand-alone balanced scorecard software companies and business intelligence (BI) vendors have failed to make the case that their offerings are the basis of effective strategic business applications.

Business performance measurement systems based on financial metrics have been around for decades, but in 1992, Harvard Business School (HBS) professors Robert Kaplan and David Norton published a paper that popularized the application of this concept to nonfinancial measures as well. Later, in their book The Strategy Focused Organization (HBS Press, 2000), Kaplan and Norton described how model organizations use balanced scorecards as enterprise performance management systems that help all employees, not just managers, track their daily activities against strategic goals.

BSCF has analytic, event-driven, and collaborative elements deriving from various existing products, but its core is a new toolkit called Scorecard Builder, based on specifications devised by Kaplan and Norton's Balanced Scorecard Collaborative consulting organization (www.bscol.org), which includes a SQL Server database to automate the consolidation and management of the data against which organizational measures are calculated. (At press time, the pricing and general availability of the toolkit was undetermined, with free download being one possible option.)

Microsoft's proffer of the BSCF is likely to further validate the Balanced Scorecard concept, as well as broadly expand access to the methodology by small to mid-sized companies. Traditionally, balanced scorecard applications are favored by large companies.

According to BI technical evangelist Francois Ajenstat, the BSCF reflects an overall effort to increase the awareness among customers that their existing Microsoft technology investments are building blocks for BI solutions. Microsoft is now actively marketing Office XP offerings such as Excel, MapPoint, and Project as BI products (see www.microsoft.com/office/business/intelligence), and it recently extended Office XP's analytic capability with the Data Analyzer online analytic processing/visualization tool.

Ajenstat concedes a need for tighter integration and some type of workflow functionality, but he believes that available offerings — when placed in the context of frameworks such as the BSCF — will nevertheless help most customers "do more" with their data.

— Justin Kestelyn

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