Page 505 -

504 Part Three Key System Applications for the Digital Age

DECISION SUPPORT FOR SENIOR MANAGEMENT:
BALANCED SCORECARD AND ENTERPRISE
PERFORMANCE MANAGEMENT METHODS

The purpose of executive support systems (ESS), introduced in Chapter 2, is
to help C-level executive managers focus on the really important performance
information that affect the overall profitability and success of the firm. There
are two parts to developing ESS. First, you will need a methodology for under-
standing exactly what is “the really important performance information” for a
specific firm that executives need, and second, you will need to develop systems
capable of delivering this information to the right people in a timely fashion.
Currently, the leading methodology for understanding the really important
information needed by a firm’s executives is called the balanced scorecard
method (Kaplan and Norton, 2004; Kaplan and Norton, 1992). The balanced
score card is a framework for operationalizing a firm’s strategic plan by focusing
on measurable outcomes on four dimensions of firm performance: financial,
business process, customer, and learning and growth (Figure 12.7).
Performance on each dimension is measured using key performance
indicators (KPIs), which are the measures proposed by senior management
for understanding how well the firm is performing along any given dimension.
For instance, one key indicator of how well an online retail firm is meeting
its customer performance objectives is the average length of time required to
deliver a package to a consumer. If your firm is a bank, one KPI of business
process performance is the length of time required to perform a basic function
like creating a new customer account.

FIGURE 12.7 THE BALANCED SCORECARD FRAMEWORK

In the balanced scorecard framework, the firm’s strategic objectives are operationalized along four
dimensions: financial, business process, customer, and learning and growth. Each dimension is
measured using several KPIs.

MIS_13_Ch_12 global.indd 504 1/17/2013 2:30:34 PM