Infographic Resume

Balanced Scorecard and BI

As we move from data analysis to strategy, there is an obvious need to align your analytics with the overall strategy of the organization. This is where the interface between BI and strategy lies. While we know that there are a lot of tools to measure performance, the strategy of the organization tells what performance measures are relevant and this information can be used to customize the BI tools. But before that it would definitely make sense to know the components of a strategy in order to maximize the relevance of BI tools. One widely used strategic management tool is the Balanced Score Card.

Balanced score card is a performance management tool that helps executives at different levels guage the performance of their respective units in such a way that their performance matches with the performance of the overall organization. Strategy by definition gives a unique position to a company while making some trade offs to achieve that position (unless you adopt a blue ocean strategy).  In order to achieve that unique position, the company has to look at four interrelated perspectives as show in the figure below.

BI tools in short can be used to provide the different performance metrics on each of these perspectives. However the process is seldom one sided meaning it is almost never the case that the metrics are formulated and the BI tools are just used as another other information system to provide those metrics. The information provided by these tools help the organization change its strategy which in turn can make some other metrics relevant to their strategy.  So in short, BI has an instrumental role in framing an organizations strategy. Here is a video on the value of BI.