They built the Balanced Scorecard as the solution to this problem. Together, Kaplan and Norton wanted to develop a way to manage strategy performance – and strategy isn’t something that easily translates to numbers and metrics. Finances can’t define where a business will head. Robert Kaplan and David Norton recognized a significant shortcoming: while finance is imperative to business health, it only reports what has already happened. In the early 1990s, two professors at Harvard Business School found that the vast majority of companies managed their business based solely on financial measurements. Today, the BSC for IT is one of several IT frameworks you can implement.
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It is this prioritization that makes the BSC approach a true management system, going beyond a mere measurement system.Īs organizations adopted the Balanced Scorecard in the 1990s, however, one issue emerged universally: how to measure the IT department’s contribution to the Balanced Scorecard, and ultimately to the bottom line. But the real success of a BSC lies in its prioritization of measurements that are most meaningful to the organization. Initially, the balanced scorecard (BSC) turns strategy into something tangible, so that it can be measured. In simple terms, it’s a way of understanding how well the department or entire organization is doing – an alternate, or preferred, way to measure successful strategy implementation that goes beyond financials. The Balanced Scorecard is a management system that clarifies the strategy and vision of an organization, translating them into action that can be tracked.