The concept of Balance Scorecard has been utilized by businesses and organizations since the early 1990's Over the years, it has gone through many iterations, with some sometimes significant changes in character by users. Initially the concept was intended to measure the activities of the company in terms of its vision and strategies rather than solely on a financial basis. The comprehensive view of the performance of the business forces managers to target the performance markers which measure success. Because it balances financial objectives with customer viewpoints, employee perspective and process planning, these measurements become the framework of future success.



Software which assists in the formalization of the balanced scorecard principles helps managers focus on the questions at hand and how to develop successful strategies and measurements for the future.

Early versions of the Balanced Scorecard consisted of simple tables usually labeled Financial, Customer, Learning and Grown and Processes. The preparation of the Balanced Scorecard merely required finding five or six good measurements for each of the perspective. From a strictly design based approach, there was little attempt to decide why each of the measures were important or why they would be more likely to bring about success than any other measure. Since managers didn't always agree with the importance of a particular measure, there was often only a half-hearted effort toward successful implementation.

The next type of Balanced Scorecard model developed in the mid 1990's. The same perspectives are typically used, but in this model, managers select objectives which they have within each of the perspectives and plot these objectives on a strategy map. By complete this part of the process, managers come to some agreement as to how the objectives affect each of the perspectives, or conversely, how different perspectives affect each of the objectives. Once the objectives are identified, the managers can then move on to the task of identifying and defining how the success of the objectives can be measured. This model has been more successful than the original scorecard.

The third generation of Balanced Scorecard software has now emerged. The most popular versions are the Performance Prism, Results Based Management, and Third Generation Balanced Scorecard. The goal of these versions is to perfect the use of the scorecards across larger organizations and in smoothing the target setting facets of the process.

Contrary to common belief, the Balanced Scorecard is not the system which was intended by the original developers of the strategy, it is merely a way to record the system. That's a concept which is poorly understood, but critically important. The cards, no matter what form they take are simply a performance management tool.

Managers typically used the Balanced Scorecard to update and explain budgets, to determine and organize strategic initiatives and to conduct performance reviews. The concept has been embraced by many governmental agencies. military units, corporations, non profits and schools.