The use of data warehouse technology to implement the balanced scorecard (in the financial industry)

Abstract

Companies in the financial industry have to navigate their companies through the stonny seas of the internet age. Strategies have to change in a flash where traditional concepts are becoming more and more under threat by new business models which are enabled by IT systems. The Balanced Scorecard provides a framework to firstly align the different strategic viewpoints of different business units and divisions and then translate the strategy and the vision of a company into operational terms. It is also a performance management system focused on and aligned with the strategy identified by top management. The implementation of the Balanced Scorecard adds significant value for companies, mainly initially in the strategic learning area and as a tool to communicate the strategy to the higher levels of the company. It also adds value by forming a basis on which MIS and EIS systems can be built. More specific advantages were achieved, such as the successful identification of initiatives which support the strategy. Examples of such initiatives include the total reengineering of some business processes, identification of skills gap and the closing thereof on client service centers and many more. The Balanced Scorecard implementation should be a business project supported by an IT system and the survey found that the IT systems definitely have a significant impact on the success or failure of a Balanced Scorecard initiative. The ideal IT system should not be too complex, but should have an intranet front end which communicates progress against measures to staff, allow drill down capabilities for more senior staff members and it should be based on a data warehouse fronted by an OLAP tool. The front end must be able to link objectives together and should be simpler rather than more complex. Several third party "front end tools" are available, the most notable being Gentia, SAP and Oracle. The IT system should also support the capability to confirm the cause-effect relationships between measures by correlation analysis.