Choosing Balanced Scorecard Software: 3 Factors To Consider

How BSC Designer stands among other automation tools for the Balanced Scorecard and Strategy Execution.

3 Factors To Consider when Choosing Balanced Scorecard Software

I was making a presentation about BSC Designer software to a prospective client. He seemed to be happy with what the product does, and in the end he mentioned the names of some BSC packages that were in his short list together with BSC Designer. Then he asked me:

  • How do you compare BSC Designer to other Balanced Scorecard software?
  • Why do you think we should buy BSC Designer, and not that web-based tool with a $99 monthly fee?

We had some interesting discussion that I believe will be interesting for anyone who is now looking for software to support their company’s business scorecard. Here are the ideas that we discussed:

  • Core and must-have functionality of any BSC product
  • Data security issues for SaaS* and their legal regulations
  • Total ownership cost of web-based vs desktop software

* SaaS stands for software as a service, in simple words it is a web-based software solution, accessible via an Internet browser. 

1. Functionality: it’s not about KPIs only

Let’s talk about the functionality. If you are looking for the real Balanced Scorecard then you need to make sure that the tool you are reviewing has two main functions:

  • Strategy Maps – to visualize the various aspects of your strategy, business goals, and the relationship between them
  • KPIs – to track strategy execution progress

Balanced scorecard software is not about KPIs only - two main functions any BSC software need to have

For sure, BSC Designer has all of the required functionality and we don’t hide it behind aggressive sales persons, you can download and try the fully-functional demo version of BSC Designer right now to see how it works and see if it’s what you are looking for. What makes BSC Designer special?

BSC Designer takes strategy maps seriously

The software allows you to build various types of strategy maps automatically taking into account your business goals, connections between them, aligned metrics, and initiatives.

The success of the Balanced Scorecard depends on the buy-in from participants:

  • If BSC tool can generate a professional strategy map in few seconds, then you’ll have the vote of your team.
  • If BSC tool generates only a basic strategy map, then your team will finally switch to PowerPoint.

Make sure that the software you going to use can support and direct the strategy discussion on all levels, otherwise it will be just another diagram that top managers include in yearly performance reviews. This short video explains what kind of strategy maps BSC Designer supports.

KPIs need to be flexible

Another important part of the balanced scorecard automation are KPIs. KPIs in BSC Designer can be fine-tuned according to the various needs: specifying baseline and target, stop lights, choosing an optimization formula, measurement units, calculating performance and progress, defining indicator’s weight.

BSC Designer supports various approaches to KPIs:

  • The basic one: you have a performance number, and you want to see it on your scorecard
  • The KPI with baseline and target: we started at 8 hours average response time and our target is 4 hours average response time, we are now at 5 hours – what is our performance so far?
  • KPIs that are based on the expert’s opinion, complex performance functions, and much more.

Another short video explains how BSC Designer supports KPIs.

It goes without saying that web-based application are not that powerful and fast as are the native desktop applications. 

The lag between BSC desktop and a web-based solution

Desktop software products have a longer history and they are supported by far more powerful technologies. Web-based solutions are growing rapidly, but in the nearest future, there will still be a lag between the functionality of the desktop products and their web-based versions.

Compare for example, MS Word (its desktop edition) and the functionality that is provided by Google Drive, where you can create and edit Word documents online. For some simple document one would prefer the online editor, but when it comes to a more detailed job with a lot of formatting and other nuances, then the desktop edition is irreplaceable.

Most competing products are either desktop or web-based products.  BSC Designer gives two options to choose from.

 

The same lag exists between BSC desktop software and the web-based solutions. In the case of BSC Designer you don’t need to choose. The product is available as a desktop edition (BSC Designer PRO), as well as a web-based service (BSC Designer Online). All the editions of BSC Designer use the same file format (.BSC file), so you can switch between editions at any time.

Desktop software might be hard to install and maintain, but BSC Designer is not

Web-based software is promoted as easy to get started. You don’t need to install anything, you sign up with an account and that’s it, while desktop software for business has a reputation as being something that a technical guru with a master in computer science can install and configure.

BSC Designer is extremely easy to installSimple installation of BSC Designer

Fortunately, with BSC Designer you can start easily:

  • Installation is painless, as you don’t need to install any database
  • All of the parts are included, and you don’t need to search some 3rd parties over the Internet
  • It is a native Windows application, so it works fast and uses standard controls

We are not competing with MS Excel

MS Excel is a wonderful tool (including using it for this article, for which I’ve prepared total ownership costs in Excel spreadsheet), but it is not for the balanced scorecard. Yes, you can track some KPIs there; yes, you can even add some conditional coloring, but it simply was not designed for the balanced scorecard.

Avoid using Excel spreadsheets for the Balanced ScorecardBalanced Scorecard is difficult to build with ExcelBalanced Scorecard in Excel is hard to update

As we discussed before, running a business scorecard project in a spreadsheet is one of the reasons why scorecards fail. I just want to repeat – Excel is good for a prototyping stage, but not for the real business scorecard project.

2. Data Security is an Issue for Web-Based BSC Solutions

Don’t take me wrong, vendors of SaaS Balanced Scorecard solutions ensure that your data is protected and kept safe. If your company is not a top secret organization, then you have nothing to worry about. But, some companies still prefer to keep and process their data on the local servers:

  • Information security policy in the company might not allow keeping business-critical data on external servers;
  • Governmental regulations might apply certain restrictions on where the data is kept (like in the case with personal data protection laws in the most European countries).

Does it mean that one cannot use web-based Balanced Scorecard software? For sure, not! The solution to this is to host the SaaS locally. It means that you will need to organize your own infrastructure (server, software installation and configuration, regular maintenance) to run the software and obtain a special license.

  • This is not an option, if you want to implement your business scorecard on a small scale
  • Your maintenance and licensing costs will increase dramatically

Use existing company's IT infrastructure to run a balanced scorecard project

This is one of the reasons why people buy BSC Designer (for Windows desktop) and use their existing company’s IT infrastructure to run a balanced scorecard project. For example, it is possible to keep .BSC projects locally on a company’s FTP server or run it in the local network.

3. The Total Cost of Ownership is 30%-200% Higher for SaaS

Making a decision based on the monthly fees that are promoted by vendors of SaaS products might be tricky. It is a good idea to calculate the total cost of ownership for 1-2 years and make the decisions accordingly. Let me show some examples to demonstrate the actual difference in the costs.

The calculations that I explain below actually showed that running web-based BSC solution is at least 30%-50% (depending on the type and number of users) more expensive the first year and at least 150%-200% more expensive the following years compared to the BSC Designer package.

Initial cost conditions

For the calculations below I’m assuming for SaaS:

  • Power User costs $99/month
  • Input User costs $30/month

And for BSC Designer:

  • PRO license costs $856 (to keep things simple, I’m not taking into account any volume discounts that are available)
  • After the 1st year there are optional updates that will cost 30% of the retail price = $256,8

If you need to provide a web based access to your project you will need an account in BSC Designer Online:

  • BSC Designer Online costs $30 per project (not per user) per month

Project scale

Let’s check how much the total ownership costs will be for the different projects. For this example I’ll check these project profiles:

  • 1 Business Professional (1 power user; no input users)
  • 1 Business Units (1 power user; 2 input users)
  • 5 Business Units – Option 1 (5 power users; 5 input users)
  • 5 Business Units – Option 2 (5 power users; 10 input users)

Ownership cost calculation

Now, let’s do some simple math to calculate the total costs of ownership.

1 Business Professional

Balanced Scorecard Software Ownership Costs - 1 Business Professional

First year:

  • SaaS = 1 power user * $99 * 12 months = $1,188 / year
  • BSC Designer = 1 power user * $856 = $856/year

Second and the following years:

  • SaaS = 1 power user * $99 * 12 months = $1,188/year; SaaS price doesn’t change.
  • BSC Designer = 1 power user (optional update) * $256,8 = $256,8/ year;

If you would hypothetically use SaaS you would overpay $332 the first year, and $931/year all of the following years.

In the case of BSC Designer you need to buy a license and then you can buy optional updates each year, or keep using the purchased version without buying any updates.

1 Business Unit (1 power user; 2 input users)

So, now we are dealing with 1 power user and 2 input users.

Balanced Scorecard Software Ownership Costs - 1 Business Unit

First year:

  • SaaS = (1 power user * $99  + 2 input users * $30) * 12 months=$1,908 / year
  • BSC Designer = 1 power user * $856 + 1 project * $30 * 12 months = $1,216/ year

Second and the following years:

  • SaaS price doesn’t change = $1,908 / year
  • BSC Designer = 1 power user (optional update) * $256,8  + 1 project * $30 * 12 months = $616,8 / year;

If you would hypothetically use SaaS you would overpay $692 the first year, and $1,291/year all the following years.

5 Business Units Option 1 (5 power users + 5 input users)

Let’s review the situation with 5 business units. The minimalistic approach is to have 5 power users and 5 input users.

Balanced Scorecard Software Ownership Costs - 5 Business Units. Option 1: 5 power users + 5 input users.

First year:

  • SaaS = (5 power users * $99  + 5 input users * $30) * 12 months=$7,740 / year
  • BSC Designer = 5 power users * $856 + 5 projects * $30 * 12 months = $6,080/ year

Second and the following years:

  • SaaS price doesn’t change =$7,740 / year
  • BSC Designer = 5 power user (optional update) * $256,8  + 5 projects * $30 * 12 months = $3,084 / year;

If you would hypothetically use SaaS you would overpay $1,660 the first year, and $4,656/year all of the following years.

5 Business Unit Option 2 – 5 power users + 10 input users

What will happen with the total cost if there were 10 input users, not just 5?

Balanced Scorecard Software Ownership Costs - 5 Business Units. Option 2: 5 power users + 10 input users.

First year:

  • SaaS = (5 power users * $99  + 10 input users * $30) * 12 months=$9540 / year
  • BSC Designer = 5 power users * $856 + 5 projects * $30 * 12 months = $6,080/ year

As you can see the cost of BSC Designer is still the same as BSC Designer Online pricing is per project, not per user, while most SaaS products are priced per user, so the total price will increase dramatically.

Second and the following years:

  • SaaS price doesn’t change =$9,540 / year
  • BSC Designer = 5 power users (optional update) * $256,8  + 5 projects * $30 * 12 months = $3084 / year;

If you would hypothetically use SaaS you would overpay $3,460 the first year, and $6,456/year all of the following years.

Price conclusion

For a longer period (1 year and more) companies are overpaying if using web-based BSC software

In the short term (a few months) SaaS pricing looks more interesting, but if we plan for a longer period (1 year), we see that we are overpaying if using SaaS.

  • SaaS forces users pay to keep using it, while with BSC Designer updates are optional, and if you are fine with the software you have now, you can continue using it without buying updates.

If you are interested, you can download an Excel file that I’ve used for calculations and play with it using your own data.

Conclusion

In theory, web-based products are supposed to give a company a flexible and scalable architecture for their strategy execution. In real practice the picture is a little bit more complicated:

  • Web-based BSC products are not as powerful (yet) as native Windows applications, especially when we check strategy map functionality;
  • Data security concerns and legal regulations might push a company towards hosted solutions that significantly increases maintenance costs;
  • The total cost of ownership of the SaaS solution is more than 30% higher the first year and more than 150%-200% higher during the following years.

Feel free to share your thoughts and examples below. Vendors of BSC solutions, you are welcome to join the discussion.

Download the Excel project that was used for the calculations.
Download .BSC Project

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Aleksey Savkin is a business performance expert at BSC Designer. His areas of expertise are Balanced Scorecard, KPIs, Business Performance Management. Aleksey is the author of a number of articles and books on Balanced Scorecard.

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