Build a Financial Scorecard with SEM

  • by Paul Halley, Director SEM Practice, Business Information Solutions (BIS)
  • April 15, 2004
The Balanced Scorecard is a helpful and integral part of the Strategic Enterprise Management (SEM) module, but sometimes your data requires a specific functional focus that is unavailable with this tool. For example, if you need easy access to financial information, then using a financial scorecard can greatly benefit your organization. The author takes you through the steps necessary to create a financial scorecard.

Since its earliest days, SAP's Strategic Enterprise Management (SEM) module has included something known as a Balanced Scorecard. This Balanced Scorecard was developed with the expectation that users were interested in viewing a balanced set of their organization's key performance indicators (financials, logistics, HR, customer relationships, etc.). While SEM's Balanced Scorecard does an excellent job of looking at a balanced set of measures, objectives, and strategies, several organizations have broken away from the teachings of the creators of Balanced Scorecard theory (Drs. Robert Kaplan and David Norton). These organizations have found benefits in focusing their scorecards in a functional manner, concentrating each scorecard on a single area such as financials or customer relationship management (CRM) or brand management, to name just a few. This article shows how to set up such a financials-based scorecard.

Difference between a Financial Scorecard and the Balanced Scorecard

While it was originally part of SEM's Corporate Performance Monitor (SEM-CPM), today's SAP Balanced Scorecard is delivered within SEM's Strategy Management (SEM-SM) component. Introduced to SAP users in 1999, SEM's Balanced Scorecard has seen considerable use by those wishing to report on their enterprise's overall performance. The product gives users the ability to monitor and track both quantitative and qualitative factors that measure successes within the organization. However, while a broad scope of measures may be exactly what an executive is looking for, a balanced scorecard may not provide the kind of detail and specificity that functional leaders need to manage their areas.

A good example of why a financial scorecard is needed can be found when comparing the reporting needs of a CFO versus those of a financial operations manager. A CFO, while often thoroughly immersed in the finances of an enterprise, is also an executive officer of the company who is concerned with the overall financial health of the entire organization. This kind of user is often interested in looking at a balanced set of goals and objectives and often wants to see a true balanced scorecard. On the other hand, a financial operations manager whose major concern is monitoring a specific business unit's finances may not be interested in finances outside of that business unit (and may not even be allowed to see this additional data). This user would benefit greatly from a financial scorecard that includes the financial detail that a balanced scorecard would not.

Paul Halley

Paul Halley is director of Strategic Enterprise Management (SEM) for Business Information Solutions, LLC (BIS). Prior to joining BIS, Paul was SAP America's and SAP Public Sector's leading expert on SEM. As the SEM product manager and lead solutions engineer, Paul was responsible for some of the first US SEM implementations and the subsequent rollout of SEM throughout North and South America. He has a BA degree in economics from Illinois Wesleyan University and an MBA from the Owen School of Management at Vanderbilt University.

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