Balanced Scorecard Simulation

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"Marek Susta"
Junior Member
Posts: 4
Joined: Fri Mar 29, 2002 3:39 am

Balanced Scorecard Simulation

Post by "Marek Susta" »

Dear colleagues

Do you know if anybody´s working on the Balanced Scorecard Simulation? I am not interested in Management Flight Simulators only (mostly non-existing companies and their stories) but in using SD models and simulators as a top-part of a information system.
Any experiences?
Thank you

Marek Susta
CEO Proverbs Inc.
Czech republic
From: "Marek Susta" <proverbs@iol.cz>
Lambros Karavis
Junior Member
Posts: 3
Joined: Fri Mar 29, 2002 3:39 am

Balanced Scorecard Simulation

Post by Lambros Karavis »

Hi Marek,

Some thoughts to share with the SD community about my experience with
the BSC and SD modelling.

You obviously know about the Harvard Business School Balanced
Scorecard CDROM which uses a management flight simulator as the front
end to an underlying systems dynamics model. There have been two
versions published (both developed by HPSInc.). Version 1.0 has a
more detailed SD model than version 2.0 of the CDROM and I have to
say a far better description of the underlying SD model. (From some
earlier reading I suspect the model is probably based on a "real
life" consulting assignment of HPSInc or Norton and Kaplan).

I have used both versions for teaching the Balanced Scorecard to
executives in a large Asian conglomerate. By themselves the CDROMs
can be very frustrating to learn from. However, properly facilitated
(as a strategic management tool) with relevant presentations and
guided use of the CDROM, this is a fun experience for participants.
The only problem is that we get to the SD model only at the end of
the program, not at the beginning. Interestingly, this only whets
their appetite to learn more about SD because they see the usefulness
of modelling!

Which brings me to the pointy part of your query; SD models and
simulators are not easy to introduce as part of the information
system. Firstly, executives have to be led to understanding that
proper modelling of their business is an important shared view of how
their business works. Secondly, the Balanced Scorecard can be used
in many different ways in reality and there are many different ways
of implementing it. (In this one company, I have seen the BSC
implemented as a an executive compensation system and as a business
performance reporting tool but not as a business planning tool yet).
Not once yet have I seen people using SD to develop their business
model prior (or even after) developing their BSC.

You may want to contact Nils-Goran Olve, Jan Roy and Magnus Wetter
from CEPRO Management Consultants in Sweden who have written a book
called "Performance Drivers: A Practical Guide to Using the Balanced
Scorecard" published by Wiley (1999) for information on what they
have done with clients.

You may also want to contacy HPSInc. as they have run at least on BSC
Workshop using the SD methodology with real clients.

Hope thats useful information.

Regards,
Lambros Karavis.
Karavis & Associates
5/101 Beleura Hill Rd.
Mornington VIC 3931
Australia

Phone: (+61) 414 997 997
Fax/Voice Mail: (+61) 3 9923 6999
eMail:
lkaravis@karavis.com
Rene van Egmond
Newbie
Posts: 1
Joined: Fri Mar 29, 2002 3:39 am

Balanced Scorecard Simulation

Post by Rene van Egmond »

Dear Marek,

We at SAP have a full range of products around Business Intelligence
management and support.

Please refer to:
http://www.sap.com/solutions/bi/index.htm for further
information and whitepapers.

With respect to the BPS functionality, we actually run the latest version of
Powersim (Constructor V3.0 to be released) fully integrated as part of the SAP-SEM
product. This means that BPS:

1) can download any information from the underlying Business Information Warehouse
(BW), which consolidates operational data from the underlying SAP R3 or other external
or legacy systems, and integrate this information into the system dynamics models as
constants, variables, or historical time series to be fitted by Powersim Solver if you want.
we fully support the Powersim dimensions concept. Multi-dimensional arrays of constant values,
auxilliaries and graphs.

2) next can run any number of simulations in-place and save the results as
(intermediate) planning versions

3) next save any information back into the data warehouse as plan data

for trend watching in the management cockpit
for target setting in the balanced scorecard environment
or actual source information for planning data distibution for budgetting.

The integration via the underlying data warehouse is bi-directional for all
SEM components.

>From this short description you can see that we position and support System Dynamics
as a fully integrated component for executive decision support in our Business
Intelligence product offering.

If you have any further questions or want to know more about our
SAP Business Intelligence Strategic Initiative please contact me.

Kind regards,

Drs Rene van Egmond,
Email to: rene.vanegmond@c3i-smc.com (preferred)

Product Manager BI - Strategic Enterprise Management
SAP America Inc.
XBRL Steering Committee Member
Email: raynier.van.egmond@sap.com
Voicemail: +1 (650) 286 3072
Nancy Cloud
Newbie
Posts: 1
Joined: Fri Mar 29, 2002 3:39 am

Balanced Scorecard Simulation

Post by Nancy Cloud »

Lambros,

I work for HPS and would like to briefly respond to your posting.

You said that the underlying model for the first version of the Balancing
the Corporate Scorecard LE was more complex than that used in the second
version, and thats not the case. The model was identical for both. In
addition, upon inquiry, feedback from Harvard, with whom HPS partnered to
create the LE, is that Version 2.0 is much more user-friendly, and easier to
fly. It only takes two hours to work through versus 12-14 hours for Version
1.0. In addition, in version 1.0, users receive "lectures" at the end of
each run, versus in version 2.0, in which users receive coaching right when
they are making critical pricing, headcount, salary and investment
decisions.

The reports from Harvard are that users overwhelmingly prefer version 2.0 to
1.0 in terms of both ease-of-use and learning.
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