Balanced Scorecard Approach To Enterprise Systems Performance Measurement Accounting Essay

Enterprise systems are package solutions that automate and integrate all the nucleus concern procedures such as gross revenues, accounting, finance, human resources and fabricating into individual information engineering architecture. Organizations invests to a great extent in these package systems in order to better their concern procedures, better pull off their Information Technology outgo, increased client reactivity, and, strategic concern betterments. But recent studies has showed that Enterprise Systems has been raising dissatisfaction among concern as it is making fiscal losingss and failed to present the expected benefits.


Several surveies have revealed the extent of harm done by Enterprise Systems, critical success factors of endeavor systems and possible causes of low public presentation and some of its benefits. Many of these surveies have proved that it is of import to mensurate the public presentation of Enterprise Systems but at the same clip it has besides been determined that it is really difficult to mensurate benefits of Enterprise Systems financially every bit high per centum of its benefits are intangible.

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“ The purpose of this research paper is to turn to ‘how Enterprise systems benefits can be usefully measured ‘ , with a ‘balance ‘ between qualitative and quantitative factors. The ultimate end is to deduce a comprehensive ‘Enterprise Systems Benefits Measurement Instrument ‘ to ( a ) assess the goodness of the Enterprise System and ( B ) place where organisations should concentrate their ‘benefits realisation ‘ attempts and farther investings. The survey focuses on the populace sector and uses the Balanced Scorecard attack ( Kaplan and Norton, 1992, 1996, 2000 ) to capture both fiscal and non-financial facets of Enterprise System measuring. The research inquiries are:

1. What steps are appropriate for measuring an ES?

2. Is the Balanced Scorecard an appropriate attack for ES measuring?

3. What perspectives should be considered when mensurating the public presentation of an ES? “ ( Sedera et al. 2001 )

“ The survey results will significantly lend to the ES and general MIS sphere by: ( 1 ) supplying a better apprehension of the Balanced Scorecard in the populace sector and for ES public presentation rating ( a sphere antecedently non addressed with this attack ) , ( 2 ) identifying and warranting specific steps that link to collaborate ends and schemes for successful ES public presentation measuring, and ( 3 ) finally ensuing in a comprehensive “ ES Performance Measurement Instrument ” . ” ( Sedera et al. 2001 )


Need of an Enterprise System Performance Measurement

Recent surveies have indicated that the rating and direction of the Information system or Enterprise System are of great importance to directors all over the universe. The increased function of and dependence on Enterprise System, and the ‘uncertainty ‘ of benefits, have in combination magnified the demand to supervise and mensurate Enterprise System public presentation. ( Sedera et al. 2001 )

There are several advantages from using a public presentation measuring system in ES execution, particularly for top direction. These grounds include: ( 1 ) Einsteinium disbursals are important – as ES outgo grows and becomes a important part of concern costs, top direction and stakeholders become progressively interested in being able to [ a ] compare the value of these outgo with the obtained benefits and [ B ] compare those benefits with how other organisations benefit from a similar ES ; ( 2 ) To happen out the benefit bring forthing countries – top direction wants to happen the benefit bring forthing points ( if any ) so that they can foster work these and use disciplinary steps where the benefits are little ; ( 3 ) ES have a ‘holistic ‘ impact on every operation in an organisation ; ( 4 ) ES public presentation steps aid in a competitory push – public presentation steps help exceed direction to obtain and keep Cardinal Performance Indicators ( KPI ) ; and ( 5 ) As an assistance for invention – as a effect of the above, top directors can place and work countries for deploying advanced concern schemes ( e.g. United Communications Group, 1989 ; Sethi et al. , 1993 ; Sedera et al. 2001 ; Parker et al. , 1988 ) .

Balance Scorecard: as a public presentation method

What is Balance Scorecard?

The Balanced Scorecard ( BSC ) is a measuring system developed by Kaplan and Norton ( 1992 ) that includes both fiscal and nonfinancial information on factors that contribute in accomplishing the house ‘s strategic ends and point towards success. This system enables organisations to clear up their vision and scheme and interpret them into action. The balanced scorecard is non merely a measuring system but it ‘s besides a direction system which provides feedback sing the internal concern procedures and external results in order to continuously better strategic public presentation and consequences. Organization use the balanced scorecard 1 ) to increase focal point on scheme and consequences ; 2 ) to better organisational public presentation by mensurating what matters the most,3 ) alining organisational scheme with the work employees do on a daily footing ; 4 ) focussing on the critical success factors and bettering communicating of the organisation ‘s Vision and Strategy. ( Rohm, ( n.d. ) )

Balanced Scorecard Perspectives

Balanced scorecard includes the house ‘s critical success factors in four different positions. One of the positions is fiscal and the other three are nonfinancial:

Fiscal Performance measures the house ‘s profitableness and market value bespeaking how good the house satisfies its investors and stockholders.

Customer Satisfaction measures quality of merchandises, service provided by the house and low cost indicating how good the house satisfies its clients.

Internal Processes measures the efficiency and effectivity through which the house produces its merchandise or service.

Learning and Growth measures the house ‘s ability to develop and use human resources to run into its strategic ends.

Why companies need Balanced Scorecard?

Balanced scorecard is quickly increasing in demand and is being used by assorted concerns all over the universe. More and more companies in different industries have adopted balanced scorecard attack to accomplish their strategic ends and step public presentation. At the same clip balanced scorecard is besides in high demand in authorities and non-profit-making organisations. Now with all this said we may inquire us a inquiry that why balanced scorecard is so much in demand or why concerns need Balanced Scorecard? It seems like there are so many public presentation measuring tools in the market but the companies merely want to utilize Balanced Scorecard as a public presentation measuring tool with merely one purpose in head – is to optimise the company public presentation in order to increase its value. There are 4 major marks which indicate that the company needs the Balanced Scorecard

1. The company has both scheme and mission but lacks top direction engagement in strategic planning. ( BSC Designer – Balanced Scorecard Software. ( n.d. ) )

2. Company ‘s forces do non understand strategic ends of the company and therefore fails to take part in execution of these goals.A

3. The companies with no common strategic end usage of Balanced Scorecard system are extremely recommended.A ( BSC Designer – Balanced Scorecard Software. ( n.d. ) )

4. There isA no operational controlA on execution of strategic goals.A ( BSC Designer – Balanced Scorecard Software. ( n.d. ) )

Mistakes in implementing balanced scorecard

1. Balanced Scorecard will non work efficaciously in the company where there is no clear and comprehensive strategy.A

2. Before implementing Balanced Scorecard company should hold clear budgeting, human resource direction and compensation systems

3. Largely the company ‘s implements the balanced scorecard but its employees are non ready for it or make non desire to utilize the balance Scorecard in their twenty-four hours to twenty-four hours work modus operandi.

4. Besides the companies should non use the Balanced Scorecard in particular fortunes but should utilize it across all the concern processes in the organisation in order it to work efficaciously.

Benefits of utilizing Balanced Scorecard

1. The primary benefit of a balanced scorecard is the balance itself. Rather than concentrating on a specific country of public presentation — -usually fiscal — -business leaders learn to see the full spectrum of concern public presentation. In add-on to fiscal steps, they look at steps ofA customerA experience, employee development and keeping and procedure efficiency. ( Wiesenfelder, H. ( n.d. ) .A )

2. By and large balanced scorecards reflect overall company public presentation at the highest degree. But an advantage of the scorecards is that they are scalable: the same or related prosodies can be used at different degrees of operations to measure public presentation. ( Wiesenfelder, H. ( n.d. ) .A )

3. The balanced scorecard inherently highlights the client position, instead than concentrating entirely on internal concern ends and financialA results. Understanding and reacting to client demands is a critical constituent of quality methodological analysiss, and is a requirement for implementing sustainable betterments to procedures and merchandises. ( Wiesenfelder, H. ( n.d. ) .A )

4. Business leaders who incorporate a balanced scorecard besides derive penetrations into the employee experience. Prosodies in the growing and development country provide information about employee satisfaction, which finally affects employee keeping and therefore concern productivityA and profitableness. They may besides include appraisals of the success of employee development and sequence planning attempts, which are necessary for concern growing. In add-on, many employees appreciate that their public presentation prosodies are tied in a direct manner to overall concern public presentation, doing the measuring system seem more just and appropriate. ( Wiesenfelder, H. ( n.d. ) .A )

Balance Scorecard: as a Public sector ES rating method

A cardinal characteristic of the Balanced Scorecard is that it requires that each step should associate to the corporate schemes and to each other in a cause and consequence relationship. The single steps at each case would be alone depending on corporate ends and schemes. Therefore, placing the corporate ends and schemes in relation to the nucleus perspectives is a critical preliminary measure in a Balanced Scorecard attack. ( Sedera et al. 2001 )

The Balanced Scorecard is applied in Private and Public sectors from two different point of views. In the Private sector, the chief accent is on fiscal indexs for pull offing the organisation. The Private sector responds to fluctuations in market portion, portion monetary values, dividend growing and other alterations in the fiscal position. In the Public sector nevertheless, entities must react chiefly to legislative Acts of the Apostless and are responsible to higher Government governments. The most common difference between a Private sector Balanced Scorecard and a Public sector Balanced Scorecard lies in the intent of using the Balanced Scorecard. Public sector focuses on cost decrease and client satisfaction, while Private sector is chiefly focused on gross coevals and profitableness. ( Sedera et al. 2001 )


This subdivision describes an enterprise by the State Government of Queensland to recognize the ‘full potency ‘ from their implemented ES – Sap. In late 2000, the Queensland Government, through the enterprise of the Office of Financial Systems and Training ( OFST ) , initiated a ‘Benefit Realization Network ‘ , aimed at maximising benefits from the Enterprise System ( SAP R/3 ) investing. The Queensland Government ‘s Benefit Realization Network ( QGBRN ) is a voluntary association of bureau representatives, who seek to portion SAP benefits realisation experiences and ‘learn from each other ‘ . The QGBRN has recognized the importance of the Balanced Scorecard and has integrated this into a model for deducing increased benefits of Enterprise System. ( Sedera et al. 2001 )

The Queensland Government attack was really much focused on utilizing the Enterprise System as a common coverage and fiscal direction tool ( Queensland Treasury, 1998,2000a ) . The aims of the QGFMS ( Queensland Government Financial Management System ) are to supply a fiscal direction system to Queensland Government bureaus that will: ( 1 ) support the Pull offing for Outcomes ( MFO ) model and fiscal direction betterment activities, ( 2 ) encourage best pattern resource direction across Queensland Government, ( 3 ) facilitate the consolidation of Queensland Government fiscal information, ( 4 ) run into the concern demands of bureaus and ( 5 ) achieve economic systems of graduated table in chief operations ( Queensland Treasury, 1998, 2000a ) . ( Sedera et al. 2001 ) . The Queensland Government has chosen to use the Balanced Scorecard attack to measure the public presentation of their SAP Enterprise System and to steer its bureaus to maximise benefits through strategic determinations. There are three chief “ tools ” that the Queensland Government uses to maximise benefits and therefore accomplish concern aims: ( 1 ) a clear vision of the strategic direction program, ( 2 ) a Balanced Scorecard, and ( 3 ) a benefit realisation program ( Sedera et al. 2001 ) .

The Queensland Government ‘s Balanced Scorecard attack is tightly integrated to the “ Managing for Outcomes ” ( MFO ) budgetary system. The expected benefits from the Queensland Government Balanced Scorecard are to: ( 1 ) understand the direction attack in a holistic mode, ( 2 ) relate scheme to public presentation and action, ( 3 ) set public presentation marks, ( 4 ) focal point, communicate and co-ordinate attempt, ( 5 ) cut down /eliminate blind musca volitanss, and ( 6 ) Improve direction and public presentation of the organisation. The proposed Balanced Scorecard will cover all quarter-circles ( Financial, Customer, Internal Process and Learning and Innovation ) and a broad spectrum of information demands. The smaller concern units ( i.e. organisational entities ) need to associate their Balanced Scorecards to the overall corporate Balanced Scorecard and lower degree schemes should be aligned with the Queensland Government mission and vision ( Sedera et al. 2001 ) .


The end of this paper was to suggest the Balanced Scorecard as an appropriate attack for mensurating the public presentation of Enterprise System employed in the populace sector. It introduced the design and aims of the research, and so warranting the demand for a balanced Enterprise System public presentation measuring. The Balanced Scorecard attack was so introduced, suggesting its rightness for Enterprise System public presentation rating in both private and public sectors. Finally, the Queensland Government Balance scorecard attack was discussed depicting the overall ends and techniques of using a balanced scorecard in the populace sector. ( Sedera et al. 2001 ) .


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