1. Balanced Scorecard in Business Practice Phasit K. 26 April 2002

2. Agenda  Balanced Scorecard in Business Practice  Balanced Scorecard Applications  Implementation  Applications

3. Agenda  Balanced Scorecard in Business Practice  Balanced Scorecard Applications  Implementation  Applications

4. 4 57% lack well-defined strategy 53% lack linkage of strategy to operational plans 45% lack individual accountability for results CFO Magazine, 1998

5. Balanced Scorecard The financial measures tell some, but not all, of the story about past actions and they fail to provide adequate guidance for the actions to be taken today and the day after to create future financial value.” (page 24) The Balanced Scorecard by Kaplan and Norton

6. Balanced Scorecard Internal Process Learning and Growth Financial Sales Growth Return on Equity EVA, CFROI, etc. Customer Customer Satisfaction New Customers/Month Customer Profitability Defects Administrative Expense Ratio New Product Launches Employee Retention Training Levels Customer Database Accuracy

7. Barriers to Strategy Implementation “ Why do 9 of 10 companies fail to execute strategy?  The Communications Barrier - The business strategy is not understood  The People Barrier - Personal goals incentives and competencies are not linked  The Budget Barrier - Budget process is separate from strategic planning  The Management Barrier - Management systems are focused on S/T operational control

8. A Balanced Scorecard is a structured framework that focuses on shareholder, customer, internal and learning requirements of a business in order to create a system of linked objectives, measures, targets and initiatives which collectively describe the strategy of an organization and how that strategy can be achieved. To Overcome the 4 Barriers ….. The Balanced Scorecard Approach is Used Source:Renaissance Worldwide

9. Balanced Scorecard

10.  Translates a company’s strategy into a balanced set of coherent internal and external KPI’s, enabling management to :  articulate their enterprises goals  communicate these goals throughout the organization and,  align individual, organizational, and cross department initiatives

11. Market Segmentation 1Industry 2Company Characteristics 3Executive Profile

12. 1Industry Segmentation  Growth  Industry Changes  Deregulation  Competitive Pressure Examples: Telecommunications, Utilities, CPG, Banking, Automotive, etc.

13. 2Company Characteristics  Size : Large & Medium  Change:  Recent Acquisition  Organizational Change  New Investors

14. 3 Executive Profile  New Management  Strong Leaders  Young CEO

15. Readiness PromCommodity ExcelERP Leads Client has no clue of what BSC is and has no metric defined Client embraced BSC “ religion ” - has designed System No System

16. Industry Issues Automotive Aerospace & Defense Financial Services Healthcare High Tech Manufacturing Public Sector Telecommunications Utilities

17. Automotive Key Business Issues ·  Globalization ·  Financial pressures ·  Customer intimacy ·  Advancing technologies Key Performance Indicators · Return on assets · Return on sales · Profit margins · Capacity · Quality · Cost of production · Inventory · Overhead · Customer satisfaction

18. Financial Services Key Business Issues  Globalization  Deregulation  Demographic Changes  Technology Advances  Customer Relationship Management  Competition  Profitability Management  Risk Management  M&A and Alliances & Partnerships Key Performance Indicators  Loan portfolio growth  Net interest margin trends  Aggregate loan portfolio loss rates  Non-performing assets

19. Agenda  Balanced Scorecard in Business Practice  Balanced Scorecard Applications  Implementation  Applications

20. IDC: Analytic Applications: 1998 Worldwide Market and Trends, p.6.

22. Types of Application Vendors  Enterprise Applications Vendors  Analytical Applications Vendors  SEM Niche Vendors, and  Business Consulting Firm

23. Enterprise Applications Vendors  Oracle, SAP, PeopleSoft, Lawson, J.D. Edwards, etc.  Focus on SEM space around second half of 1998 Analytical Applications Vendors  Traditional analytical applications companies have added the BSC and ABM software to their mix  Hyperion, SAS

24. SEM Niche Vendors  ABC Technologies, Armstrong Laing, Gentia, CorVu, Panorama, Graphical Information Inc. (acquired by Oracle) Business Consulting Firm  Provide Strategic Advice  AnswerThink, Cap Gemini, Computer Science Corp., Deloitte Consulting, KPMG, PwC, Accenture, McKinsey, etc.

25. Agenda  Balanced Scorecard in Business Practice  Balanced Scorecard Applications  Implementation  Applications

26. BSC “Stage Segmentation” Strategy Design Software Cascading 4 - 6 months

27. Challenges  KPI ???  How to measure “Qualitative” ?  How to collect data?  Data Quality  How to communicate?

28. Agenda  Balanced Scorecard in Business Practice  Balanced Scorecard Applications  Implementation  Applications