The Balanced Scorecard and BPM: how to measure processes

The Balanced Scorecard (BSC), developed by Robert Kaplan and David Norton in the early 1990s, and BPM appear to belong to different worlds. BSC is a strategic tool, BPM an operational one. Yet in mature organizations the two approaches complement each other fruitfully.

The four BSC perspectives

BSC proposes viewing an organization through four interconnected perspectives:

• Financial — which financial goals are being achieved?
• Customer — how do customers perceive us?
• Internal processes — what must we do well?
• Learning and growth — how do we develop our capabilities?

It is the third perspective — internal processes — that forms a direct link to BPM. The strategic process indicators from the BSC become goals for BPM initiatives.

Cascading the indicators

BSC uses the principle of cascading: high-level strategic goals decompose into operational indicators for departments and processes. For example:

• Corporate goal: Increase customer satisfaction by 15%
• Process goal: Cut claim-handling time from 14 to 5 days
• Operational metric: Average time of the “Initial analysis” step < 2 hours

This cascade ties strategy to concrete process changes.

Process metrics

Typical BPM metrics that make their way into a BSC:

• Cycle time — the total time a process takes to complete
• Throughput — the number of instances completed per unit of time
• Quality — the share of processes completed without errors
• Cost — the cost of running a single process instance
• Satisfaction — a rating from customers or employees

Process mining makes it possible to collect most of these metrics automatically from enterprise systems.

Use in large companies

In large companies BSC and BPM integrate at the dashboard level. Platforms such as SAP Analytics, IBM Cognos and Tableau can surface process metrics directly into the BSC perspectives.

The main difficulty of integration is establishing a correct mapping between strategic goals and process KPIs. This work is often underestimated, and the BSC turns into a formal document disconnected from real activity.

Limitations of the BSC

The BSC is criticized for:

• Bureaucracy — maintaining a BSC takes significant effort
• Lagging indicators — financial and customer metrics react with a delay
• The difficulty of cascading — establishing precise links between levels is non-trivial

Conclusion

BSC and BPM are complementary rather than competing approaches. The BSC sets the strategic frame; BPM delivers the operational implementation. In mature organizations both are integrated through shared analytics systems.