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Procedia - Social and Behavioral Sciences 143 (2014) 168 173

CY-ICER 2014

Innovative approaches to the modification of BSC model

Jaroslava Kdrov a *, Michaela Durkov a, Lenka Kalafusov a
a

Technical University of Koice, Faculty of Mechanical Engineering, Department of Industrial Engineering and Management,
Letn 9, 042 00 Koice, Slovakia

Abstract
Balanced Scorecard, used as a strategic evaluation tool, suggests that performance of any organizations should be evaluated not
only by using Wnancial indicators but also simultaneously considering non-Wnancial indicators. The concept of the BSC has been
widely adopted and used in the business sector and less in the education sector, although institutes of higher education are also
focusing on ways to render high quality education to their educators and have a better performance. Despite the fact, that
Balanced Scorecard is very sophisticated and in terms of implementation very successful performance measurement system,
some authors have identified a number of shortcomings and have proposed the innovative approaches to the modification of the
traditional model with related performance indicators.

2014 Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license
2014 The Authors. Published by Elsevier Ltd.
(http://creativecommons.org/licenses/by-nc-nd/3.0/).
Peer-review under responsibility of the Organizing Committee of CY-ICER 2014.
Peer-review under responsibility of the Organizing Committee of CY-ICER 2014.
Keywords: Balanced Scorecard, innovative approaches, model;

1. Introduction
The current environment of globalization and economic turbulence has increased the challenges managers
face and, therefore, various organizations try to find the right tools to meet these challenges with appropriate tools
for performance and quality measuring. One the most successful performance measurement system is Balanced
Scorecard. It builds a balance between financial and non-financial, organizational and non-organizational
performance measures, and hence, suggests a more thorough evaluation methodology. It translates an organizations
strategic objectives into a set of performance measures distributed among four perspectives: financial, customer,
internal business processes, and learning and growth. But, in the review of relevant literature has been revealed, that
despite the satisfying levels achieved in conceptual and theoretical dimension of Balanced Scorecard the method has

*Corresponding Author: Jaroslava Kdrov. Tel.: +421-55-602-3242

E-mail address: jaroslava.kadarova@tuke.sk

1877-0428 2014 Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/3.0/).
Peer-review under responsibility of the Organizing Committee of CY-ICER 2014.
doi:10.1016/j.sbspro.2014.07.381

Jaroslava Kdrov et al. / Procedia - Social and Behavioral Sciences 143 (2014) 168 173

some deWciencies in terms of implementation on a quantitative basis and that there remain some problems to be
resolved. And therefore, the article focuses attention on some authors that have proposed significant changes of
traditional perspectives and indicators (applied by the authors Kaplan and Norton), or prefer to use the original
perspectives combined with other methods.
2. Balanced Scorecard Knowledge-based System (BSCKBS)
BSC has proven a powerful tool for strategic planning and communicating strategy that assists in strategy
implementation. Successful strategy implementation is based on effective strategic planning. Owing to the strategic
planning being a virtual necessity in business, this work (Huang, H., 2009) proposes an integrated approach for the
BSC and knowledge-based system (KBS) using the analytic hierarchy process (AHP) method, and then develops an
intellectual BSCKBS (Huang, H., 2009).
The main objective of this work is to fill the gap in the research by combining the BSC, KBS and AHP
techniques to produce in improved approach to strategy planning and decision making.

AHP
method

Model base
Analytis Hierarchy
Process (AHP)

Electronic
questionaire

DBMS
Data Base

DGMS

Rating variable
value
Variable weights

Rule Base
Consistency rule

BSC Knowledge
Base

Financial
Process

MBMS

Rule Base
Customer

Weigh rule

OLAP

Learning and growth

INTERFACE

BSC
USERS
Fig. 1. The architecture of the BSCKBS, Source: (Huang, H., 2009)

BSCKBS comprises three main components of DSSs (Decision Support Systems) including DBMS (Database
management system - primarily comprises a relation database managed by a software program), MBMS (Modelbase management system includes the AHP model that enables the system to determine specific strategy weights),
DGMS (Dialog generation and management system supports a friendly environment for communicating). The
fourth component is knowledge acquisition subsystem that suggests alternatives r actions to decision makers).
BSCKBS database includes current or historical data, financial or non financial information, and expert
questionnaires from multiple applications or units.
3. A proactive BSC methodology (PBCSM)

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Jaroslava Kdrov et al. / Procedia - Social and Behavioral Sciences 143 (2014) 168 173

According to authors Kaplan and Norton (2004), successful execution of a strategy (Breakthrough Results)
requires two components: {Breakthrough Results} = {Describe the Strategy} + {Manage the Strategy}
Later, these authors deal with the issue of strategic maps, which should describe the visualization and strategy
and rewrite the original equation as follows:
{Breakthrough Results} = {Strategy Maps}
[describe] +
{Balanced Scorecard}
[measure] +
{Strategy  focused company}
[manage]
(1)
According to Proactive BSC methodology, both equations are missing an important component - simulation
strategy.
{Breakthrough Results} = {FCMs}
[simulate] +
{FCMs}
[describe] +
{Balanced Scorecard}
[measure] +
{Strategy  focused company}
[manage]
(2)
In order to use this new component, it recommended using fuzzy cognitive maps (FCM). By using FCMs, the
proposed methodology generates a dynamic network of interconnected key performance indicators (KPIs), simulates
each KPI with imprecise relationships and quantiWes the impact of each KPI to other KPIs in order to adjust targets
of performance. FCMs are illustrated as causal-loop diagrams.
MISION
VISION
STRATEGY

Align People with Strategy

Focus and Develop
Performance

PERSPECTIVES

OBJECTIVES
KPI

DESCRIBE

FCM
SIMULATION
what-if scenre
prognzy
iniciatva npravnch
opatren

Fig. 2. PBSCM, Source: Chytas, P. et al. (2011)

In the above equation, in the Wrst phase (simulate), we use the simulation characteristics of the FCMs theory.
The FCM approach involves forward-chaining (what-if analysis). In the second instance (describe), we utilize the
representation capabilities of the FCMs theory, which is very suitable for studying interactions between KPIs. The
main objective of this research is to propose a methodology (not a new performance measurement framework) that
will support existing measurement framework during the process of performance measurement systems design,
implementation and use, and to advance the decision-making process (Chytas, P. et al., 2011).
4. Lean BSC
During the past few decades, many companies in the world have been forced to adopt new Lean production
strategies. So in this research, BSC approach has been implemented for selecting the leanness criteria. For
determining the lean performance measurement through the companys lean strategy map, a set of objectives should

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171

be driven based on the BSC concept. The main objective of this system is to reduce costs, as well as other successes,
such as quality control and human aspects.
Review on overall Performance
Measurement System in company

Implementation of BSC
Extracting Lean Perspectives
Extracting Lean Objectives

Lean Objectives priority

Cause and Effect Relationship
among Objectives
Lean Strategy Map

Extracting Lean CSF a KPI

Company improve its criteria selection strategy by using the higher

weighted Lean Objectives based on Lean Strategy Map
Fig. 3. Lean BSC model, Source: Seyedhosseini, S. et al.(2011)

This model was considered the importance of objective selection within five perspectives - financial, customer,
processes, people and suppliers (Seyedhosseini, S. et al., 2011).
5. Balanced IT Scorecard (BITS)
Implementation of a BSC requires IT support. The BITS methodology proposed monitor KPIs within five
perspectives: financial, customer, internal processes, learning and growth, infrastructure and innovation.
1. Review
Hodnotenie
1.
BSC
BSC
pecifikcii
specifications

4.4.Configure
Konfigurcia
BSC
BSC
software
softvru

2. Data analysis

5.
5. Customization
Prispsobenie
&a Integration
integrcia

7.
7. Integration
Testovanie
systmu
testing
8. Training

9. User testing
3. Design BSC
architecture

6. Documentation
10. Rollout

Fig. 4. Rapid Automation 10 steps process, Source: Managing the Balanced Scorecard Beyond Implementation For All Enterprisers: Workshop
(2005)

Automation of BSC is essential in order to manage the vast amount of information related to a companys
mission and vision, strategic goals, objectives, perspectives, measures, causal relationships, and initiatives. It
consists of an analysis of user requirements and software features and choosing the most effective software that will
process the information about the performance of business processes.
6. BSC ANP model
Despite the high number of studies carried out on BSC framework, authors Yksel and Dagdeviren (2010)

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Jaroslava Kdrov et al. / Procedia - Social and Behavioral Sciences 143 (2014) 168 173

underlined several quantitative weaknesses of the original BSC method, the lack of studies on how to correctly
implement the BSC framework and tried to modernize it. In the light of this observation, they suggested a model
aimed at integration of ANP (Analytic Network Process) and BSC methods (Yuksel, I. & Dagdeviren, M., 2010).
Establishment of a performance
evaluation team

Determine the dependence among BSC

perspectives

Determination of the vision

Determine the inner dependence matrix

of each BSC perspective

Development of business strategies to

achive the business vision

Calculate the global weights of

performance indicators (KPIs)

Identify the BSC perspectives and KPIs

based on these BSC perspectives
Approve
the
weights?

Structure the decision ANP model

NO

Approve
the
model?

NO

YES

Determine the fuzzy evaluation scale and

calculate of KPIs
YES

Determine of the local weights of the

strategies, BSC perspectives and KPIs,
using pairwise comparison matrices,
formed by the team of experts.

NO

Approve
the
weights?

Calculate the performance of the

company for a period of time

YES

Fig. 5. Decision making process of BSC - ANP model, Source: Yuksel, I. & Dagdeviren, M. (2010)

Proposed model has shown that KPIs included in BSC approach can be consolidated with the help of fuzzy ANP
technique. According to this model, total performance score was calculated by multiplying the global weights and
scale values of performance indicators and then by summing the resulting performance levels.
7. COBIT - BSC
The purpose of proposed model is to explore the integrated use of Control Objectives for Information
Technology (COBIT) and Balanced Scorecard (BSC) frameworks for strategic Information Security Management
(ISM). The goal is to investigate the strengths, weaknesses, implementation techniques, and potential benefits of
such an integrated framework. This integration is achieved by bridging the gaps or mitigating the weaknesses that

Jaroslava Kdrov et al. / Procedia - Social and Behavioral Sciences 143 (2014) 168 173

are recognized within one framework, using the methodology prescribed by the second framework. Thus,
integration of COBIT and BSC can provide a more comprehensive mechanism for strategic information security
management one that is fully aligned with business, IT and information security strategies (Ahuja, S. & Goldman,
J., 2009).
References
Ahuja, S. & Goldman, J. (2009). Integration of COBIT, Balanced Scorecard and SSECMM as a strategic Information Security Management
(ISM) framework. In: CERIAS Tech Report 2009-21: The Center for Education and Research in Information Assurance and Security.
Available on: https://www.cerias.purdue.edu/assets/pdf/bibtex_archive/2009-21.pdf
Chytas, P. et al. (2011). A proactive balanced scorecard. In: International Journal of Information Management (pp. 460 468). ISSN 0268-4012
Gontkoviov , B. & Bartkov, . (2013). E-Learning - The Opportunity For SMEs. In: Erenet Profile (p. 33-43). ISSN 1789-624X
Huang, H. (2009). Designing a knowledge-based system for strategic planning: A balanced scorecard perspective. In: Expert Systems with
Applications 36 (pp. 209218)
Managing the Balanced Scorecard Beyond Implementation For All Enterprisers: Workshop (2005). In: 2005 Asia Pacific Conference & Hall of
Fame Awards. Available on: <http://www.kbase.com/pdf/KBBSCAutomationServices.pdf>
Seyedhosseini, S. et al.(2011). Extracting leanness criteria by employing the concept of Balanced Scorecard. In: Expert Systems with
Applications: An International Journal (pp. 10454-10461). ISSN 0957-4174
Yuksel, I. & Dagdeviren, M. (2010). Using the fuzzy analytic network process (ANP) for Balanced Scorecard (BSC): A case study for a
manufacturing Wrm. In: Expert Systems with Applications: An International Journal (pp. 1270 1278). ISSN 0957-4174
This contribution is the result of the projects implementation: Project VEGA 1/0669/13 Proactive crisis management of industrial enterprises
based on the concept of controlling.

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