Creating a Balanced Scorecard for your organization is a smart, strategic move. Its takes work and thought and planning that can make you feel like you climbed a mountain once it’s complete. But you can’t stop ascending now. Figuring out how to manage your scorecard over time is just as important as creating it. Your organization’s stage of growth will determine whether it’s better (and easier) to use Excel or Balanced Scorecard software.
When you’re first initiating the Balanced Scorecard framework, don’t write off Excel and head straight for the strategy software package. For small businesses or companies focusing on one scorecard, Excel can be a great tool. Here’s why:
- It’s affordable. (Translation: It’s free!)
- It’s familiar and comfortable. You won’t need to invest in training the team how to use it.
- It offers simple Balanced Scorecard templates to get you started.
Because it’s free and familiar, you can easily build and organize your prototype in Excel, experimenting with your scorecard to perfect it. All companies go through an initial trial-and-error phase, and it’s often a smarter move to work out the kinks in Excel. It won’t cost anything, and it’s more user-friendly than a new scorecard software system.
With Excel, changing a measure is as simple as typing over your old text. Of course, you have to be careful you don’t replace things you need and diligently keep track of versions and changes.
While it’s possible to successfully manage your scorecard in Excel, it’s not built for managing scorecards specifically. So it’s important to recognize the red flags signaling you may be outgrowing it. If you’re having any of these problems, you’re putting too much time and work forcing Excel to manage your Balanced Scorecard the way you need it to:
If your organization is growing, your Balanced Scorecard needs to scale with it. This typically involves creating more scorecards, for both the corporate and department levels. And what happens when you start a new quarter or year—do you duplicate your Excel sheet? Add to the existing one? Managing several scorecards in Excel is difficult and complicated. You’ll find yourself trying to navigate endless tabs in multiple spreadsheets, and not understanding how the elements of each scorecard align with your strategy.
If you want to get more people involved with managing your company’s Balanced Scorecard, using Excel can lead to version control issues. Because of Excel’s limited ability to assign access levels and its lack of online collaboration, it’s hard to tell who made what changes and which scorecard is the most current. There’s no easy audit trail and no user hierarchy with Excel.
Once your organization reaches a stage where it wants to focus on making data-driven decisions, accurate reporting will be critical. Creating custom reports that pull information from your Excel-based Balanced Scorecard is complex and time-consuming. There’s no way to “automate” the information grab—it’s a manual process that carries the risk of user error. One typo can throw off a complex formula and misreport a number. Plus, you typically have to pull the information from Excel into Word or PowerPoint, and then format it for readability. When this needs to be done every month or quarter, it’s not sustainable.
Excel is pretty good at managing data and formulas on someone’s desktop computer. But what happens when you need 15 people to add qualitative analysis for the results? Where do you put that information in the Excel sheet and how to you manage all the people making updates? It’s almost impossible and can lead you into Excel Hell.
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As your company grows and involves more people in the strategic planning process, or the strategic plan becomes so complex it can’t be managed within a single scorecard, then it’s time to upgrade to balanced scorecard software. Here are the top advantages of managing your Balanced Scorecard with software:
Scorecard software is much better than Excel at including quantitative and qualitative elements, providing both historical data and situational context. For example, you can see why an objective is important and how it has performed over time by simply clicking on a link or pulling up a report. Instead of digging through massive Excel files, you just need to log into the system to get answers. And the data will be cleaner because the information is pulled automatically, so no user errors from manual data entry or formulas.
With scorecard software, you can assign people as owners of measures and objectives. Your executive team will know who’s making updates and when, and each owner will be clear on their responsibilities. Nothing will be lost in the cracks. Plus, you can see the audit trail (revision history) and follow the data back to its owner.
You control who can see and update each element of the strategic plan with strategy software’s administrative features, even setting different access levels depending on user role. For example, you can ensure everyone in the organization can view the strategic plan, while only the strategy owners can make updates, and only the leadership team can view executive reports.
As your strategic plan gets more complex, you’ll have multiple levels of measures and KPIs that roll up into each other. Balanced scorecard software organizes these strategy elements in a hierarchical manner and helps you understand the relationship between your measures and goal statuses. How? As one example, you can display your KPIs in a graphical list and then click on each one to see how it’s measured. You can continue to drill down into each measure to get more information, helping you manage and make sense of how all the strategy elements connect to each other.
Scorecard software makes reporting ridiculously easy. You can assemble a report that contains any and all information from your Balanced Scorecard—it’s as easy as clicking, dragging, and dropping. Your reports can be one-time custom reports, or templates that can be generated at any time in the future with a click. You can also brand your reports with your colors, logo, and header and footer content. Generally, scorecard software reporting features save employees a significant amount of time compared to Excel’s manual number crunching. You can also have reports for different audiences with the same data—one for your leadership team, one for the management team, and one for each department head.
Cherry pick information from your Balanced Scorecard and publish it online. Whether you need to share something on your intranet or home page, it just takes one click to refresh the information online with the latest data.
Still not sure whether you need Excel or scorecard software? Think of it this way: Managing your Balanced Scorecard shouldn’t be a job that’s so time consuming it never gets done. If you can easily manage your scorecard in Excel using minimal hours—great. If not, it’s time to move to Balanced Scorecard software.
Managing a Balanced Scorecard well takes experience. Check out how these five for-profits successfully managed their strategic plans and Balanced Scorecards.