ax40 enus bsc 02 balanced score card part 2

7/27/2019 Ax40 Enus Bsc 02 Balanced score card part 2

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Chapter 2: Scorecards and Measurable Objectives

Microsoft Official Training Materials for Microsoft DynamicsYour use of this content is subject to your current services agreement

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CHAPTER 2: SCORECARDS AND MEASURABLEOBJECTIVES

ObjectivesThe objectives are:

Set up a scorecard framework.

Set up strategic perspectives.

Define posting periods.

Set up objectives for a scorecard.

Set targets for objectives.

Introduction

In Microsoft Dynamics AX Balanced Scorecard, the scorecard framework is a

hierarchy of interconnected components used to:

Communicate the high-level strategy, and the level in theorganization at which the strategy is implemented (scorecard).

Outline measurable operational achievements (objectives).

Identify strategic areas in which to measure performance(measurements).

A business aligns the efforts of its workforce with its strategy by clearly

communicating what to achieve, and the individual steps to achieve it.

This section examines how to create a scorecard at the corporate, department, and

employee levels, and then how to set up strategic, operational level objectives

that include target results.


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Microsoft Dynamics AX Balanced Scorecard


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Scenario

The company wants to diversify its service offering portfolio and plans to launch

a new service. During the start up phase, the company communicates the high-

level strategy and the operational level objectives it wants to achieve as a

business. The company then identifies the measurements that it will use to track

progress toward the objectives.

After determining the strategy, objectives, and performance measurements, thecompany then creates a scorecard that contains the objectives and measurements

in the system. The company relies on its managers to update the performance

values by using measurement journals, so it does not create measurement

elements for the measurements in the scorecard.

Setting Up a Scorecard

Assemble the four primary components of a scorecard in the following order:

Note: The four steps below assume that perspectives are already created.

1. Create the scorecard The scorecard provides the framework in

which to assemble the components used to implement a strategy and

measure progress. The scorecard itself defines whether performance

is being measured at the corporate, organization unit, or employee

levels.

2. Create objectives Define key tasks, goals, or achievements required

in order to realize the strategy outlined in a scorecard.

3. Define measurements for each objective Specify how to measure

progress toward objectives by selecting and monitoring important

strategic contributors. Measurements are described in the section

titled Quantifiable Performance Measurements.

4. Measurement journals or elements Define how and how often to

update performance values in a measurement. Use measurement

journals to manually update values, or use elements to do soautomatically. Measurement journals and elements are discussed

further in the section titled Updating Performance Values.

In short, these four steps define the following:

What to achieve (scorecard)

How to achieve it (objectives)

How to measure progress (measurements, measurement journals, andelements)


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Procedure: Set Up a Scorecard

To create a scorecard, start by typing a name to indicate the strategy it

implements and then specify whether to measure performance at the organization

unit, employee, or corporate level:

To measure performance at the employee or organizational unitlevel, select the person or unit.

For corporate level scorecards, leave the Organization unit andEmployee fields blank.

The following are steps to create a scorecard.

BALANCED SCORECARDSCORECARD

FIGURE 2.1SCORECARD FORM OVERVIEW TAB

1. In the Scorecard field, enter a unique ID for the scorecard.

2. In the Name field, enter a name for the scorecard. This indicates the

strategy represented in the scorecard.

3. To define the level at which to implement the scorecard, do one of

the following:

To create a corporate scorecard, leave the Organization unitand Employee fields blank.

To create a organization unit scorecard, select the unit in the

Organization unit field.

To create an employee scorecard, select the employee in theEmployee field.


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Defining Strategic Objectives for a Scorecard

Objectives represent the operational level achievements necessary to realize a

scorecards overall strategy, and cannot exist independent of a scorecard. It is

important that all objectives focus on the outcomes necessary to achieve the

organizations vision for the future.

Some basic guidelines to consider when creating objectives are that objectives

must:

Communicate strategically important achievements.

Be maintained over periods of time to allow comparisons, andthereby indicate progress.

Contain target values that indicate what is being worked toward.

Contain reliable, verifiable, and accurate measurements.

The following settings are available for each objective:

Field Description

Target Represent the preferred value of the

objective, that is, the value that indicates

that the objective is achieved. Use targets

to quickly measure progress by comparing

the current value of an objective with its

target.

Weighting Because some objectives may contribute

more heavily than others, when severalobjectives are assigned to a single

perspective use weighting to rank

objectives according to importance.The

total weighting defined for all objectives

assigned to the same perspective must

equal one hundred.

Perspective Indicate the strategic viewpoint to which

the objective contributes. Assign as many

objectives to a perspective as needed.

Period Define how often values in an objective

are updated.

Measurements Measurements are used to calculate and

post performance values to the objective.

Measurements are discussed in the section

titled Quantifiable Performance

Measurements..


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Setting Up Perspectives

Before you can begin to create objectives, one or more perspectives must be

created because all objectives in a scorecard must be related to a perspective.

In Microsoft Dynamics AX Balanced Scorecard, perspectives provide balance to

a scorecard by:

Representing multi-dimensional strategic viewpoints from which totarget strategic results.

Providing a way to group strategic objectives according to theperspective to which they contribute.

Remember, perspectives represent general strategic areas, such as finance. This

means that a perspective can contain objectives whose values are not comparableas long as they contribute to the same general strategic area.

HINT: Perspectives can be compared with account types in the ledger chart ofaccounts, which divide ledger accounts into operating and balance accounts. In much

the same way, perspectives divide objectives into disparate but connected general

strategic areas.

A perspective to which objectives are assigned cannot be deleted.

FIGURE 2.2DEFINE PERSPECTIVES


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Procedure: Set Up a Perspective

The following steps demonstrate how to create a perspective.

BALANCED SCORECARDSETUPPERSPECTIVES

FIGURE 2.3PERSPECTIVES FORM OVERVIEW TAB

1. In the Perspective field, enter an ID for the perspective. Thistypically indicates the perspectives strategic focus.

2. In the Description field, enter a brief description of the perspective.This is often the same as, or a simple description of, the

perspectives ID.

Setting Up Posting Periods

Posting periods define how often to update the performance values in objectivesand measurements. Periodically updating performance values enables a business

to make comparisons among periods. Periods are also used when generating

statistics as a way to indicate the time period for which to view results.

A period that is being used by an objective or measurement cannot be deleted.


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Procedure: Set Up a Posting Period

The following steps demonstrate how to create a posting period.

BALANCED SCORECARDSETUPPERIODS

FIGURE 2.4PERIODS FORM GENERAL TAB

1. In the Period field, enter an ID for the period. This typically

indicates the length or duration of the period.

2. In the Description field, enter a brief description of the period. This

is often the same as, or a simple description of, the periods ID.

3. In the Start date field, select a date to define when the period will

start. After a period is used the first time, all periods are consecutive

based on the information in the Unit and Per fields.

4. In the Unit field, select the basic unit for the period in terms of days,months, or years. The unit number in the Per field defines how many

days, months, or years comprise the period.

NOTE: The Last period field group is useful after one or more periods have past. The

dates in this group indicate the next period in which a performance value can be posted.


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Procedure: Set Up an Objective

The following are steps to create an objective.

BALANCED SCORECARDSCORECARDOBJECTIVES

FIGURE 2.5OBJECTIVES FORM OVERVIEW TAB

1. In the Objectives field, enter a unique ID for the objective.

2. In the Name field, enter a name for the objective. This usually

indicates the goal represented by the objective.

3. In the Weight field, indicate the importance of the objective relative

to other objectives assigned to the same perspective.

NOTE: The total weighting of all objectives assigned to the same perspective must

equal 100.

4. In the Perspective field, select the perspective to which the objective

contributes

NOTE: The copy feature can also be used to create a new objective based on thesettings of one that already exists. Copying an objective reduces time spent on creating

new objectives. When this is done, specify whether to also copy its measures and

elements. Afterward, modify settings for each component if required.


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Setting a Target Value for an Objective

Users must set a target value for each objective to represent the preferred result,

that is, the values that indicate that objective are achieved. Users can then

measure progress toward targets by comparing the target value with the

measurements actual (current) value.

Set one target value per objective per posting period. The targets period is

defined either automatically based on the objectives period or on the period

defined for the previous target.

Procedure: Set a Target for an Objective

The following steps demonstrate how to set a target for an objective.

BALANCED SCORECARDOBJECTIVESTARGET

FIGURE 2.6TARGETS FORM

NOTE: The Targets form is used to set targets for both objectives and measurements.

Use the upper part of the form to set a target for an objective.

1. If a period is defined on the objective, the Start date and End date

fields contain those dates that must be used. If no period is defined

on the objective, select dates to define a period.

2. In the Comment field, enter a brief description of the target.

3. In the Value field, enter a number to define the target value.


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Conclusion

When implementing a scorecard in Microsoft Dynamics AX Balanced Scorecard,

a company must define:

What to achieve, and at what level to achieve it (scorecard). How to achieve it (objectives).

What you expect to achieve (Targets)

Although it is easy to set up a scorecard framework in Microsoft Dynamics AX

Balanced Scorecard, it is important not to underestimate its value. The scorecard

is the first window into a strategy, and therefore must clearly and concisely state

strategic intent. From the scorecard, a business must identify targeted strategic

objectives balanced among several perspectives. By assembling components at

the scorecard level, a business ensures that all components are directly connected

to the strategy represented in the scorecard.


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Lab 2.1 Set Up PerspectivesScenario: Although the company plans to implement a variety of perspectives in

addition to the four traditional perspectives, it considers the four traditional

perspectives as a good starting point, and therefore creates each one so that theyare available for use when the scorecard is implemented.

Need a little help?

The four traditional perspectives are Financial, Internal Business Processes,

Learning and Growth, and Customer.

Lab 2.2 Set Up Posting PeriodsScenario: The company plans to create several scorecards that measure different

performance areas at different levels in the organization. To allow for variations

in the posting needs of each scorecard, the company defines a progression of

three period lengths. The shortest period is one week, and the longest is one year.

Need a little help?

Start by defining the shortest period, and then proceed to the next longest.

Lab 2.3 Set Up a Scorecard and ObjectivesScenario: The company wants to improve and diversify the service portfolio

offered by its service department and plans to launch a new service. As part of

the start up phase, the company establishes the high-level strategy in its corporate

level scorecard and the operational level objectives it wants to achieve as a

business. The company then identifies the measurements that it will use to trackprogress toward the objectives. After determining the strategy, objectives, and

performance measurements, the company then creates a scorecard that contains

two objectives in each of the four traditional perspectives.

Need a little help?

Remember the component hierarchy, and start by creating thescorecard and then its objectives.

Consider what high level objectives might be relevant and to whatperspectives they contribute. Also, think about the importance of

each objective in relation to the others assigned to the sameperspective.


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Test Your Knowledge Build a Scorecard1. List the four primary components of a scorecard, and describe the

order in which to assemble them.

2. What must you remember when defining the importance of the

objectives assigned to a particular perspective?

3. List the three levels at which to create a scorecard.

4. List some of the guidelines to consider before creating objectives.

5. What value can be assigned to an objective or measurement in order

to measure progress toward its achievement?


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Quick Interaction: Lessons Learned

Take a moment and write down three Key Points you have learned from this

chapter:

1.

2.

3.


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ax40 enus bsc 02 balanced score card part 2

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