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Foreign Connections

Plus, options software; Web sites in a box; automating the balanced scorecard.

1Aug


Foreign Connections

Notebook computer users trying to use their modems from hotel rooms in foreign countries find myriad sockets to plug into, and rules that vary from country to country. But users can get connected from anywhere fast if they know how.


Texas Instruments Inc. teaches how, in a one- day "road warrior" course it offers its employees. "We make sure our people, before they leave their offices on a trip, take the right telephone adapter and the right power adapter, and that they know the number of the internal service they're going to have to dial into," says Ken Rempert, executive support services manager for the Dallas-based company. "We recommend that you dial into the service long distance from your office before you leave," adds Rempert. "That way, you know you're going to be able to connect when you get over there."


Each employee taking the course receives the Executive TeleKit, a collection of gadgets, testers, adapters, and tools that can get your laptop connected to the Internet from anywhere. The kit is available for $105 from TeleAdapt Inc., in San Jose, Calif. (www.teleadapt.com). Similar kinds of products are also available from Road Warrior International (www. warrior.com).


----------------------------------------------- --------------------------------- Options Made Easy
With companies offering stock options to more and more employees, and with options receiving increasing regulatory scrutiny, plan administrators are seeking help from specialized software.


Minneapolis-based Medtronic Inc., a medical device manufacturer, is using Express Options for Windows from Corporate Management Solutions Inc. (based in Shelton, Conn.; www.cmsoptions.com) to track stock options that have been granted to 2,500 employees. "We use it for all the record keeping," says shareholder relations supervisor Charlene Anderson. "We have three people using the software, and it provides information to about 80 payroll departments around the world, as well as to finance people, tax departments, and other finance areas."


The software, which costs $14,995 for an unlimited user license, automates record- keeping functions and processes a variety of exercises, including cash, cashless, stock appreciation rights, and stock swaps. It enforces compliance with all SEC, IRS, and FASB regulations. A new version of the software permits employees to access their stock-option portfolios over the Internet.


The major competitor is ShareData Inc. (www.sharedata.com), which offers Equity Edge for a starting price of $8,000. The two vendors leapfrog each other in adding features to their software; shoppers should seek quotes from both.


----------------------------------------------- --------------------------------- Your Own Web Stand
More and more research is confirming the value of a Web site in boosting sales. Even consumers who don't buy anything on a site may use it to get product information before they make a purchase at the local mall.


If you'd like to put up an E-commerce site on the Web but are frightened off by $100,000- plus prices of E-commerce software and related services from giants like Netscape, Microsoft, and IBM, then consider low-cost ($1,000 to $5,000) packages from companies like iCat Corp. (www.icat.com) or Intershop Communications Inc. (www.intershop.com). The low-cost packages don't have the enterprise scalability or the dynamic integration with accounting, manufacturing, and inventory systems that the high-end packages have, but they do let you display your product catalog on the Internet and allow customers to place orders.


Blooming Cookies Catalog Co., a cookie and gift supplier in Atlanta, has set up a Web site using Inex Commerce, a $1,000 E-commerce software package from Inex Corp. (www.inex.com). With consulting and marketing fees, the total implementation cost was close to $50,000. "Our average Internet order is $45, a little higher than an average phone order," says CEO Ann King. "Within five years, the Internet will be our major source of revenue."


In fact, a major cost of implementing an E- commerce Web site is the marketing effort to tell people about it, according to Erica Rugullies, analyst at Giga Information Group. "It can be inexpensive to put up a store," she says, "but it costs a lot to drive traffic to the site."


----------------------------------------------- --------------------------------- Who's Keeping Score?
Software vendors are hopping on a management bandwagon


Six years ago, Robert Kaplan and David Norton introduced the balanced scorecard, a management system for linking the strategic objectives of a firm to four flavors of performance metric: financial, process, customer, and learning (see "Closing the Strategy Gap," CFO, October 1996). Companies soon discovered it was no little task to keep score. Most still rely on labor-intensive ways of collecting and analyzing the necessary data, much of which resides in numerous separate computer systems. (One Canadian bank reportedly has more than 4,000 users on a paper-based scorecard system.)


But also in the early 1990s, several trends were starting that would make automating the scorecard feasible. One was the advent of data warehouses; another was the spread of enterprise resource planning (ERP) systems. Decision-support and OLAP (online analytic processing) tools became more powerful and user friendly. Groupware, such as Lotus Notes, and Internet technologies emerged to enable the rapid distribution of scorecards to the desktop.


Building on these trends, a handful of companies now offer balanced scorecard software in a box. Two front-runners are CorVu Corp. and Gentia Software Inc., the first of the OLAP "plumbing" vendors to offer packaged scorecard applications based on the principles expounded in Kaplan and Norton's book, The Balanced Scorecard.


Both vendors package their scorecards as part of their decision-support suites. The application front ends are simple and easy to use. Users call up screens displaying performance measures a company has chosen to monitor, each measure graded with a green, yellow, or red button (CorVu) or icon (Gentia)- - green meaning OK, yellow caution, red off- track.



To fudge, or not?

But there are significant differences between the products. CorVu's scorecard, which was introduced in August 1997, is data-driven, directly integrated with its decision-support software. A metadata software layer automatically pulls internal data out of corporate databases to create a "knowledge library," says Alan M. Missroon Jr., vice president of marketing. (External data can often be downloaded into an ASCII file and queried by the software, he adds.)


Using that data, CorVu's balanced scorecard automatically computes and updates performance grades according to company-determined formulas. This is an advantage, asserts Missroon, because "you can't fudge [the numbers]. We give everything an indexed score set up on what your targets are. CorVu tells how you did automatically. There's no subjective piece to it." What's more, the software en-ables users to drill down into the grades displayed and analyze the weighted drivers of a given score.


Gentia's Renaissance Balanced Scorecard, which became available in April, has something CorVu's doesn't: the imprimatur of Kaplan and Norton. The scorecard was developed jointly by Gentia and Norton's consulting firm, Renaissance Worldwide Inc. It comes as a stand- alone application or as part of Gentia's Business Intelligence Environment, which includes development tools, an OLAP database, and middleware that synchronizes data updates. "We offer the ability to build a high- end analytic engine and put [the scorecard] out to thousands of users," says Michael Gaiss, vice president of corporate marketing at Gentia.


Like CorVu's scorecard, Gentia's is Web- enabled. Unlike CorVu's, Gentia's does not automatically determine whether a given measure receives a green, yellow, or red grade; grades must be entered by scorecard owners, who supplement historical data with forward-looking judgment. "A balanced scorecard is not data driven," insists Gaiss. "It is driven by people within organizational structures looking at key objectives and providing forward-looking assessments. There's a big difference."


If, says Gaiss, a sales manager has the goal of growing gross sales by 35 percent, data feeding in from the order-entry system may indicate he's on track. In an EIS-type system, he says, "I'd get the green light." But a balanced scorecard considers leading as well as lagging indicators, points out Gaiss. "If I realize I've got sales rep turnover, people going on maternity leave, and so on, I'm going to give it a red [grade]." (Gentia's system has an alarm feature to remind users to update their scorecards.)



Who's right?

Missroon of CorVu derides the nonautomated part of Gentia's scorecard. "Say your compensation depends on scorecard measures-- suddenly you'll see [a lot of] green checks," he scoffs. (CorVu allows scorecard owners to enter notes in a commentary field, but these do not affect the generation of scores.)


Gaiss replies that a balanced scorecard whose grades do not reflect a qualitative assessment of business conditions is not a balanced scorecard. "We think [Corvu doesn't] understand the balanced scorecard," he declares.


So who's right, CorVu or Gentia? They both are, says Elizabeth Shahnam, senior research analyst at Meta Group Inc.


"The textbooks will tell you that the domain expert is the only one who can say what's red, yellow, and green," she notes. "A data-driven application doesn't take the qualitative element into consideration. [It's] retrospective." Nevertheless, Shahnam says the choice of application depends on the customer's culture and objectives.


One customer using CorVu's data-driven scorecard is the post-issue transaction processing group of Prudential Life Insurance, based in Minneapolis. This group handles customer requests that cannot be satisfied on first contact with the insurer, says Donald Metz, vice president of operations. "We do a lot of these transactions, so everything that gets handed off to us, we track through a case management system that captures data about the volume and type of work being done, who touches the case," and so on, says Metz. "We take that data and put it into CorVu."


The result is a balanced scorecard that will eventually comprise 14 performance measures. It currently has 4: cycle times, expenses, service standards, and quality rates. "The model is exactly Kaplan," says Metz. In addition to the scorecard at the organizational level, each of the 500 processors in the group's four service centers receives an individual scorecard, which is sent weekly via Lotus Notes. "We have linked compensation and performance to the scorecard for our individual processors," says Metz, adding that the group has already seen a boost in productivity since the system came online, in December 1997.


Metz lauds the software's drill-down capabilities. "I can drill all the way to actual cases," he says. (Gentia's balanced scorecard was not available when Prudential made its choice.) The entire implementation process took about nine months, beginning with discussions about strategy drivers and performance measures; the software itself was rolled out in three months.



Trump Card

CorVu provides initial consulting to help customers plot their scorecard strategies, while Gentia's management consulting comes from Renaissance Worldwide and Big Five firms. Both scorecards can be purchased independently of the vendors' decision-support environments, although CorVu doesn't encourage this. The prices (see box above) may seem steep to a midsized firm, but they are not too high for the banks, insurers, oil companies, and other large organizations that currently have paper- or spreadsheet-based scorecard systems.


A third vendor, Toronto-based Panorama Business Views Inc., has "50 to 60" customers for its scorecard application, called pb views, says CEO Michael Tipping. For all three vendors, the balanced scorecard could be a trump card in the OLAP market, which is dominated by companies like Oracle, Hyperion Software, and Cognos. Don't expect that advantage to last too long, though. The scorecard space could get crowded within a year to 18 months. All major ERP vendors are "working on or delivering" scorecard functionality, reports Meta's Shahnam, but several may decide to add that functionality through a third party like CorVu or Gentia.


David Caruso, director of enterprise applications research at AMR Research Inc. in Boston, says it's high time ERP vendors added scorecarding functionality to their systems. "If scorecarding drives a company to profitability and performance, why isn't that represented in these apps?" he asks. "If I can't drive that performance through [an ERP system], I haven't bought anything worthwhile."


Although all major OLAP vendors are developing performance-measurement applications, not all are sold on the balanced scorecard. Some vendors say they can rig one up if a customer requests it. Caruso, however, advises companies to be skeptical of such claims: "Could and did are different things."

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