Balanced Scorecard: Elements
A scorecard contains strategies. The strategies in turn contain objectives. You define objectives in a pool and then assign them to a strategy or to several strategies contained in a scorecard. This means that several strategies can contain the same objective.
You use perspectives to group the objectives. This way, you have an additional ordered view of the objectives of a scorecard.
Finally, you assign measures and initiatives to each objective. Measures are defined with theMeasure Builder. You determine the individual initiatives with the responsible person in the context of a scorecard.
The concept of the Balanced Scorecard, along with the system-specific implementation as a scorecard, is illustrated below. The arrows used in this diagram should be interpreted as follows:
- An arrow with a continuous line means "contains"
- An arrow with a dashed line represents a link (the links between objectives and the technical key figures from the SAP
The following terms are explained in more detail to show the relationships between different elements:
Scorecard: you create a scorecard to monitor the implementation of a global strategy. In the scorecard, you define strategies and objectives, and place the objectives within different perspectives. To be able to evaluate the implementation of objectives and consequently of the strategy, you assign measures and initiatives to the objectives.
The term "Balanced Scorecard" denotes the concept of the Balanced Scorecard. The term "scorecard" on its own describes the system-specific implementation of the concept.
Strategy: a strategy is the top-most element of a scorecard. It expresses how an enterprise intends to deal with the business challenges in its environment. From the business point of view, this is often part of the company-wide global strategy, which is broken down into (sub-)strategies for modeling. You design one or more scorecards for each global corporate strategy.
Objective: objectives describe the strategic goal from the viewpoint of a perspective that is defined in the scorecard. Objectives help to formulate subgoals, which in their entirety are designed for the implementation of a strategy. The degree of attainment of the goal is determined by comparing the current value of measures assigned to the objective with the planned values of the measures. You can link objectives in a cause-effect chain to visualize the influences they have on each other.
Perspective: the Balanced Scorecard defines various perspectives from which the success of the company in implementing its individual strategies and objectives is viewed. Usually, four perspectives are created (including the financial perspective, which corresponds most closely to classical reporting). However, depending on the business requirements, you can have more or less perspectives.
Initiative: a collection of activities that serve to achieve one or more objectives. To each initiative, you can assign an owner, a time-frame, and a specific amount of resources.
Measure: measures help to measure the degree to which a strategy has been implemented. They are assigned to objectives and also linked to an evaluation scale. This allows you to qualitatively classify the current value of a measure when compared to the planned measure ("unsatisfactory", "satisfactory", "good", "excellent", etc.).
In the context of Strategy Planning and Performance Measurement, it is important to distinguish between two concepts:
- Measures defined from a purely economic point of view using the Measure Builder, also called "non-technical key figures"
- Key figures defined in the environment of the SAP BW, also called "technical key figures".
While a scorecard is generally designed with reference to business-oriented, non-technical measures, these measures have to be assigned to technical key figures so that you can process figures and (in comparison to a plan value) derive a status from these key figures. The distinction between technical key figures and business measures makes it possible to divide work with the scorecard into one area that is conceptionally oriented and another that is technically oriented. With this, the system supports the distribution of work processes, where the experts involved can concentrate on their respective core competencies.
In addition to the above, the following terms, which are not included in the graphic, play an important role in the context of a scorecard:
- Strategy category : strategy categories are used to group the strategies you defined. The grouping is based on a 1:n-relationship, that is, a strategy category groups several strategies belonging to exactly one category. Strategy categories are designed to help you gain a better overview of the existing strategies.
- Common objective : common objectives are used to group several objectives in one category. This is useful if you want to emphasize the equivalence of objectives that express the same business facts but differ slightly in their details. This may be the case if the objective is to be used in scorecards of different industry sectors, and if these industry sectors designate facts in different ways even though the same is meant. In such a case, common objectives ensure that different scorecards can still be compared even though they use objectives that are named differently.
- Strategy template : strategy templates are a collection of strategies for specific industries, which are pre-defined by SAP and made available to you. These templates can be adjusted to your needs.
Scorecard-Dependency of Elements
Most relationships between the elements of a scorecard are not permanent but defined for a specific effective period. For example, you can determine for which time period an objective should be included in a scorecard. Beyond the defined time period, the element is not displayed in the scorecard and has no effect on the status assessment.
Strategies, perspectives, objectives, and measures are cross-scorecard elements that are defined independently of specific scorecards and can be used in various scorecards. These elements are defined in a central pool - the element pool - which you use when you develop a scorecard.
Initiatives, on the other hand, depend on the context of a specific scorecard and are therefore defined at that level. This is also true for the assignment of elements to each other, for example for the assignment of measures to objectives.
The technical measures from BWInfoCubes are not assigned to an objective directly but by means of a non-technical measure that is defined from a business point of view. This measure is created with the Measure Builder function and contains a reference to the corresponding technical key figure of the SAP BW.
You can assign any BW report (web reports,queries, and workbooks) of the SAP Business Information Warehouse (SAP BW) and documents created with the SEM Business Information Collection (SEM-BIC) component to all element types in the context of a scorecard.
If you performHR integration, you can retrieve HR data on the responsible persons who are assigned to the individual scorecard elements.