Enhancing Organizational Performance Through Integrated ERP-Based Balanced Scorecard Systems: A Case Study

Abstract

Organizations must continuously thrive to remain successful in the highly competitive business landscape. An integral aspect of achieving this success is implementing an efficient performance management system (PMS) that regularly monitors organizational performance. Large companies often employ Enterprise Resource Planning (ERP) systems to integrate data and information across various departments and business units within the company group, providing easy, comprehensive, and structured data collection. However, despite the advantages of ERP systems, a considerable amount of valuable data goes to waste as it is not integrated with the company’s PMS. This study aims to develop a balanced scorecard-based performance management system that utilizes the existing ERP system in a furniture company. In-depth interviews with the board of directors and general managers were conducted to assess the need for the PMS, formulate a strategic map and scorecard, determine scorecard weights, and establish targets for each category. During the implementation phase, it was observed that the financial indicators consistently fell below the baseline values, signaling an urgent need for management intervention. However, indicators from three other perspectives demonstrated relatively better performance than those from the financial perspective. This discrepancy emphasized the need to revise the strategic map, as solid performance in the other perspectives should translate into positive financial indicators. The management of the company validated the initial implementation results of the performance management system by noting a concerning decline in the company’s liquidity. This study argues for the importance of integration between the ERP system and the BSC performance management system, where the implementation of the ERP system alone cannot indicate the critical conditions experienced by the company. Keywords: Enterprise Resource Planning (ERP), performance management systems, balanced scorecard, case study