Automate your Strategy - using software to map it

Automate your Strategy - using software to map it
By
Bernard Marr
Centre for Business Performance
Cranfield School of Management
Cranfield
Bedford MK43 0AL
United Kingdom
Telephone: (44) 01234 75 11 22
E-Mail: bernard.marr@cranfield.ac.uk
Automate your Strategy – using software to map it
So many times in organisations the wrong problems are being addressed whilst the
real problem remains unchallenged. Such mistakes can be very costly and at times can
take down an entire business. However, strategies are often complex and rarely do
employees clearly understand the strategic objectives and how they can contribute to
achieving these objectives. Many believe that a workforce needs clear and detailed
information to execute a business strategy successfully.
Enterprise performance management systems such as the Balanced Scorecard or the
Performance Prism are designed to address exactly this problem. One of the key
advances are mapping approaches such as strategy maps, success maps, and value
creation maps which allow organizations to visualize the strategic objectives and how
they are interlinked.
Mapping diagrams such as a strategy maps can be used to understand the complexities
of strategies. Narratives are often unsuitable to capture the essence of causal
complexities. Maps help us to view links and relationships at a glance and they
provide a tool to visualise the cause-and-effect relationships between objectives for all
organizational areas e.g. innovation and learning, internal processes, customer
satisfaction, and financial performance. They therefore explain how intangible assets
contribute to achieve higher-level organizational objectives. A strategy map explicitly
lays out the levers that managers can pull and the impact that pulling these levers will
have on performance. Instead of just listing objectives a map goes one step further
and looks at how the different objectives are interlinked in order to create value for
the organization. Each organization’s strategy map is unique and has to reflect the
business value proposition of this one specific firm. Many organizations use the
scorecard perspectives as a guiding template to design their strategy map, however, it
is sometimes better to start with a blank sheet of paper to create a causal map that
reflects the strategy from performance drivers to performance outcomes. Especially
public sector and not-for-profit organizations change around the perspectives.
Latest developments in software application to support corporate performance
management facilitate the design of strategy maps. These applications allow bringing
strategy maps into the center of understanding, communicating, and reviewing
performance. In fact they allow the development of maps and then feeding these with
intelligence about relationships and underlying measures. It therefore allows to
automate traffic lighting of performance (e.g. green for good performance, yellow for
medium performance, and red for bad performance). Some applications go a step
further and provide more sophisticated performance evaluation such as Six Sigma.
Having all this information allows organizations to actually text their strategic
assumptions. A strategy map is a hypothesis of causal relationships between strategic
objectives and how intangibles translate into organizational value creation. The
automation allows monitoring and testing these assumed relationships. This could in
fact bring strategic management to an entirely new level even though it will take some
time until many organizations will have the appropriate quantity of reliable
performance data.
Today, many organizations around the world are implementing corporate performance
management systems. Businesses as well as government and not-for-profit
organizations realize the need to manage their strategy more proactively. A critical
aspect of any successful implementation is the use of the 'right' software tool.
Software applications not only enable organizations to build strategy maps but are
instrumental in collecting data, analyzing performance and communicating
performance information.
It is important to pick a solution that meets the requirements of the organization in
order to ensure the usage and subsequent success of an implementation. The problem
managers face today is that there are over 30 application providers to choose from,
each of them claiming that their solution offers unique and important features. This is
a significant issue for organisations since the development of a BSC – i.e. deciding
what and how to measure – can be a time-consuming and expensive exercise. Making
the wrong decision, buying the wrong software, can not only result in a significant
waste of time, energy and money, but can also undermine the entire BSC
development effort and the credibility of the performance management system you
are trying to put in place. This decision process is a fundamental one and needs to be
taken with great care.
In order to develop a selection framework we conducted a longitudinal research
project involving over eighty companies in three years. Using theoretical sampling
techniques we attempted to gather data from a broad range of companies with the
intention to develop a selection framework applicable across organisation types. In
addition we interviewed 25 senior members from consulting firms including
Accenture, Gap Gemini Ernst & Young, KPMG and Gartner who were involved in
BSC implementations and accompanying software selections. Furthermore, we
interviewed over 45 members of software companies specialised in providing BSC
and performance management software. This broad data set allowed us to code the
data and extract the key aspects organisations need to consider when selecting a BSC
software solution. Bringing those aspects together enabled us to develop a framework
to guide organisations through the software selection process.
We identified ten selection criteria each organisations needs to answer for themselves
in order to create their unique list of requirements. Due to the fact that each
organisation has unique requirements it is not possible to create a generaliseable list.
The following ten selection criteria need to be considered (for more detailed
information see Marr & Neely 2003):
1. Company and Product (vendor background and expertise, licence fee,
maintenance fees, training and implementation costs)
2. Scalability (scalability of the programming, database communication
approach) should be scalable so that it is easy to disseminate the information
through e.g. the
3. Flexibility and Customisation (flexibility in terms of methodology and
approaches)
4. Features and Functions (security and access control, exception alerting,
collaboration and reporting)
5. Communication (web-based, commenting, e-mail integration)
6. Technical Specifications (technical requirements, integration with existing
infrastructure and data bases)
7. User Interface/ Data Presentation (information display and strategy maps)
8. Analysis Functionality (analysis capabilities, statistical functionality,
forecasting)
9. Service (levels of service, implementation support, technical support)
10. Future (developments and release frequency of the product, future
compatibility}
A new Gartner/Cranfield Report evaluates all major Performance Measurement
Software applications. Over 30 applications including products from SAP, Oracle,
Peoplesoft, Hyperion but also many more specialised vendors are discussed in detail.
For more information please see:
http://www.som.cranfield.ac.uk/som/cbp/bscorecard.html
Further reading:
Marr, B.; Neely, A. (2003) Automating your Scorecard: The Balanced Scorecard
Software Report, InfoEdge (Gartner/Cranfield School of Management), Stamford, CT
Marr, B., Neely, A. (2003) Automating the Balanced Scorecard – Selection Criteria to
identify the appropriate software application, Measuring Business Excellence, Vol 7
No 3, pp 29-36