The Balanced Scorecard, developed by Kaplan and Norton in 1992, is a relatively new approach towards strategic management that enables organizations to measure a company's activities in terms of vision and strategy.

Recognizing some of the deficiencies and uncertainties in previous management approaches, the balanced scorecard method provides a clear prescription as to what organizations should focus on for their long-term best interest.

The strategic management system balances a financial perspective with customer, process, and employee perspectives. Measures predict future performance. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. When implemented completely, the balanced scorecard transforms strategic planning from an academic exercise into the epicenter of an enterprise.

The balanced scorecard recommends that we view the organization from four perspectives, and to design metrics, gather data and analyze it relative to each of these perspectives:

1. The Financial Perspective
2. The Business Process Perspective
3. The Customer Perspective
4. The Learning and Growth Perspective

1. The Financial Perspective: Kaplan and Norton understand the customary need for financial data. Timely and precise funding data has always remained a priority and will always be, managers put in all the desired efforts to provide it. In fact, often there is more than enough handling and processing of financial data. With the enforcement of a corporate database, it is expected that maximum processing can be centralized and automated. But the point is that the current emphasis on financial leads to the "unbalanced" situation with regard to other perspectives. There is perhaps a need to include additional financial-related data, such as risk assessment and cost-benefit data, in this category.

2. The Business Process Perspective: The business process perspective of balanced scorecard signifies internal business processes. Metrics based on this perspective help the managers to keep a check on their business, and also verifies whether its products and services are satisfying customer requirements. These metrics need to be carefully sketched by those who closely know these processes because these can't be developed by consultants.

Besides the strategic management process, other two kinds of business processes can be identified as: a) Mission-Oriented Processes b) Support Processes

3. The Customer Perspective: Contemporary management philosophy has shown a realization of the significance of customer focus and customer satisfaction in any business. Following are the noted signals:

If customers are not contended with the products and services of a company, they will obviously look for other suppliers who will meet their requirements. Poor performance from this perspective is thus a leading indicator of future decline, even though the existent financial scenario may look good.

While framing metrics for customer satisfaction, customers should be evaluated in terms of kinds of customers and kinds of processes for which we are providing a product or service to those specific groups.

4. The Learning and Growth Perspective: This perspective of balanced scorecard refers to employee training and corporate cultural approaches related to both individual and corporate self-improvement. In the present world of swift technological change, it is becoming essential for knowledge workers to be in a consistent learning mode. Metrics can be put into place to mentor managers in focusing training funds where they can help the most. In any case, learning and growth contribute to the essential foundation for success of any knowledge-worker organization.

Cascading the Balanced Scorecard
Cascading the balanced scorecard through an organization is the next step to corporate balanced scoreboard. Just as a balanced scorecard can be substantiated for whole corporation, one can also be developed for a business unit within a corporation, or even a team within a business unit. While cascading balanced scorecard, the structure of scorecards should define organizational hierarchy, in order to assure unequivocal ownership of goals and objectives. The goals and objectives at lower levels should be aligned with those at higher levels. The process of cascading a balanced scorecard is intricate because formulating the general measures prescribed at the corporate level and precise measures for a business unit can affect.

Balanced Scorecard Software
People can not manage what they don't measure. A well designed balanced scorecard software is a connection between long-term strategies and day-to-day activities by lining up performance measures with the prioritized perspectives of the organization.

A software balanced scorecard can help you in following ways:

1. Provide transparency within your business with clearly identified measures and targets
2. Easy to create and use.
3. Generates Reports, updated with the latest information, for allocation throughout the organization
4. Conforms to operations through employee accountability
5. Focus on problem areas and verifies performance issues through color-coded indicator
6. Enhances the overall alignment with the business community serve
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The Balanced Scorecard software has helped successful CIOs in leading Fortune 1000 companies. Discover the Balanced Scorecard Method for an effective and efficient mechanism.