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Balanced Scorecard Implementation at UniCredit Tiriac Bank

Jann Tadorian Contact:

Managing Partner e-mail: [email protected]

Inplenion Business Consulting International mobile: +41763915015

3


Agenda

• What is the Balanced Scorecard ?

• How to implement a Balanced Scorecard Project?

• Unicredit Tiriac Bank Example

• Overview Oracle Strategy and Scorecard Solution

• Q&A

4


Agenda





• Q&A

5

A Report ?

A Fashion ?

A KPI

System

? It’s a

Management System !

What is the Balanced Scorecard ?

6

• Do you have a clear formulated mission, vision and strategy in your company ?

• Are the BU strategies aligned with the company strategy ?

• Is there a discussion on strategy implementation within your management meetings? How much time do you spend on it ?

• Are your personal goals (MBO) aligned with the company strategy ?

• ...are the projects clearly approved and prioritized according to their strategy contribution ?

• Are you sure that your management reporting reflects the status of your key success factors or the strategy implementation ?

Honestly…

7

Company Challenges : Strategy Execution

The Vision Barrier

Only 5% of the work force understands the strategy

The People Barrier

Only 25% of managers have incentives linked to strategy

The Management Barrier

85% of executive teams spend less than one hour per month

discussing strategy

The Resource Barrier

60 % of organizations don’t link budgets to the strategy

9 of 10 companies fail

to execute strategy

Today’s management Systems Were Designed to Meet the Needs of Stable Industrial Organizations That Were Changing Incrementally

You Can’t Manage Strategy With a System Designed for Tactics

8

= + + + + Objectives Competencies Actions Resources Motivation Information + Intendent

Change

= Confusion + + + + Objectives Competencies Actions Resources Motivation Information +

= Anxiety + + + + Objectives Competencies Actions Resources Motivation Information +

= Frustration + + + + Objectives Competencies Actions Resources Motivation Information +

= Chaos + + + + Objectives Competencies Actions Resources Motivation Information +

+ + + + Objectives Competencies Actions Resources Motivation Information + = Little Change

+ + + + Objectives Competencies Actions Resources Motivation Information + = unsuccessful

Implementation

What is needed for a successful Strategy Execution?

9

Vision/ Strategy

Finanzielle Perspektive Finanzielle Perspektive

“Was leisten wir für unsere Kapitalgeber, um den

finanziellen Erfolg zu erhöhen?



Finanzielle Perspektive Financial



“If we succeed, how will we

look to our Shareholders ?“

Struktur - und Prozessperspektive


optimiert werden, um

zufrieden zu stellen?”




Processes



“To satisfy our customers,

at which processes

must we excel ?“

Mitarbeiter/Lern - und Entwicklungsperspektive Mitarbeiter/Lern - und

Entwicklungsperspektive

“Wie können wir durch Innovation und Lernen

unseren Beitrag zur Wert - schöpfung verbessern?"



Mitarbeiter/Lern - und Entwicklungsperspektive

Learning & Growth



“To achieve process excellence

how must our organization

learn and improve ?“

Kundenperspektive Kundenperspektive

wir für unsere Kunden

zu verwirklichen?"


zu verwirklichen?"

Kundenperspektive Customer / Market


zu verwirklichen?"

“To achieve our vision, how

must we look to our

customers ?“

Increased Clarity

Better Committment Implementation is

controllable

Better Balance

The Balanced Scorecard!

10

The Balanced Scorecard Story!

Source: Kaplan/Norton 2009

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Source: Study “100 x BSC”, Horváth & Partners

Support of a successful Strategy Implementation

Put in place of a common Strategy Understanding

Better Communication of the Strategy

Improvement of the Organization Learning

Enhancement in « Cause & Effect Relations » Thinking

Better Objective Accountability

Very important

Relatively important

Little importance

Not important

20%

43%

61%

43%

59%

69%

42%

35%

24%

43%

33%

24%

28%

18%

13%

10%

6%

6%

10%

4%

2%

4%

2%

1%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

The Reasons for BSC implementation?

12


Agenda





• Q&A

13

BSC

Change Management (F)

Project Management (A)

BSC

Model

(C)

Business Content Information Technology

SW

Solution

(D)

Data

Management

(E)

The Balanced Scorecard House

Strategic

Foundation

(B)

14

• Project Initialisation

Clarify Starting Point

Buy in Top Management

Clarify Objectives

• Project Execution

Project Plan

Project Organisation

Project Documentation

Steering Commitee

Sponsor

(CFO)

Projectsteering

Work Group

(Content)

Work Group

(Technical)

Core Team

Project Organisation

Jan

Project Plan

AprMarFeb Mai

2 3 4 5

Modul A

Modul B

Modul D/E

Modul C

Modul E

ProjectManagement

ChangeManagement

StrategicFoundation

BSCArchitecture

SW/DataManagement

6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21Woche

Projektstart

Workshop1

Workshop2

Workshop 2: (11.2.03, 1/2 Tag)

•Ausarbeitung strategische Ziele•Entwicklung Ursache-/

Wirkungsbeziehung

Teilnehmer:

Core team/alle

Kick Off

Workshops

Meeting Steering Comitee

Kick Off: 13.1.03, (1/4 Tag)

•Klärung Ausgangslage•Klärung Zielsetzung

Teilnehmer:

alle

Sitzung 1: (18.2,1/4 Tag)

•Verabschiedung Ziele u.•Ursache-/Wirkungsbeziehungen

Workshop 3: (26.2.03, 1 Tag)

•Definition Messgrössen•Definition Aktionen

Teilnehmer:Core team/alle

Sitzung 2: (11.3,1/4 Tag)

•Verabschiedung Messgrössen u.•Aktionen

Workshop 4: (18.3.03, 1/2 Tag)•Definition Zielwerte u.

•Verantwortlichkeiten

Teilnehmer:alle

Workshop3

Sitzung 3: (20.3,1/2 Tag)•Verabschiedung Zielwerte u.•Verantwortlichkeiten u.

•BSC Konzept

Workshop3

Workshop 1: (4.2.03, 1/2 Tag)

•Klärung und ErläuterungLeitbild

•Stakeholderanalyse

Teilnehmeralle

Project Management (Module A)

15

Vision - Strategy - Check

Strategy:

Strategic Priorities

Common Strategy Understanding

External View

Internal View

Opportunities

Threats

Strengths

Weaknesses

SWOT

Actual/ Future

Markets/Products

Gaps Deficits

Competitors

Vision

Strategic Foundation (Module B)

16

• Strategic Objectives

• Cause and Effect Chain

(Strategy MAP)

• KPI‘s

• Owners

• Targets

• Initiatives

Sustainable Growth Operational Excellence

Increase Revenue

Financial

Customer

Processes

Potential

Acquire New

Customers

Improve Employee

Competencies and

Motivation

Develop further the

Customer Focussed

Attitude

Enhance Accessibility of

Relevant Customer

Information

Improve

Profitability

Improve Asset

Utilization

Strategy Map Shop

Offer an Optimal Customer

Value Proposition

Improve Customer

Profitability

Retain Existing

Customers

A Class Supplier

Quality of Product

Presentation

Improve Cost

Structure

Optimize Product

Availability

Optimize Supply

Management

Enhance Advertising

Effectivity

Balanced Scorecard

Balanced Scorecard

Strategic Objectives KPI‘s Targets2003

Initiatives

Improve Profitability

Improve

Cost structure

Force

Growth

EBITDA

% Gesamtkosten vom Umsatz

% Vertriebs- und Verwaltungskosten

Gesamtumsatz

Improve

Capital Expenditures

Acquisition New Customers

Bind Customers

Optimal Value Proposition

Focus on

A Classe Supplier

Improve Product

Presentation

Use new Medias

Improve employee Motivation

and Competencies

Anzahl Neukunden

Churn Rate

CSI

% Anteil der Produkte von A Klasse

Lieferanten

Produkt-Visualisierungsindex

Bestellvorgänge über Internet

Austritte von Key Employees

Mitarbeiterbefragungswerte

18%

80 %

7 %

900 Millionen Euro

12%

+ 5 %

2%

80 Indexpunkte

80 %

85 Indexpunkte

+ 125 %

3%

85 % Indexwerte

Shop UP- Projekt

Einführung eines Lieferanten-

bewertungssystems

Einführung Mitarbeiterbefragung

Feedbacksysteme überarbeiten

PR- Projekt

ROI

Perspectives

Financials

Customer/Market

Processes

Potentials

Balanced Scorecard Model (Module C)

17

Strategic Objectives + Explanations

Strategic Initiatives

KPI´s and

Target Values

BSC

Documents

Strategic Priorities

Cause and Effect Chains+ Explanations

•

•

•

•

1

2

3

4

Financial Perspective

Improve W.C.-ratio

. . .

. . .

. . .

Process Perspective Improve strategic akquisition process

. . .

. . .

. . .

. . .

Customer Perspective Establish innovator image

. . .

. . .

. . .

. . .

Learning & Growth Perspective Create global group thinking of local

management

. . .

. . .

. . .

. . .

Po

ten

cia

l P

rocess

Cu

sto

mer

Fin

an

ce

Documentation of strategic goals and corresponding KPI´s

Goal-No.: P 3 Upper level strategic goal: none

Measurement No.: P 3.1 Corporate level: 1

Person responsible for data: Frequence:

FORMULA:

Definition by negative separation (What does the strategic goal not mean?):

Person responsible for reporting:

Frequence of reports:

DEFINITION:

Person responsible for strategic goal:

Data source:

Strategic goal definition (What shall be reached?):

Story of Strategy

Strategic goal:

Definition/Formula:

Measurement:

Person responsible for result:

Balanced Scorecard Model (Module C)

18

18

BSC Model: Translate Strategy into Action (Module C)

19

• BSC Logic

• Presentation Content

• Navigation

• Different Data Inputs

• Easy Maintenance

• Company-wide Distribution

Balanced Scorecard Solution (Module D)

20

• Datasources

• Data Transformation

• Data Quality Assurance

• Interfaces

• Loading Data

Slide 9

ERP

KPI Data Mart Data Input

SW - Datatransfer

Quality Assurance

BSC Application

DWH

Business

Divisions

Scorecard User

Data Management Architecture

Administration & Support

KPI Interface Manual

Interface (Web Application )

Application Web Interface

Cubes Excel

Data Management (Module E)

21

• Communication

Mobilisation

Information

Training

• Integration in Management System

BSC Review Process

MBO

Incentive System

Change Management (Module F)

22


Agenda





• Q&A

23

Employees: ~162,000

Customers: ~ 40 million

Branches: ~ 10,000

Total assets: ~ EUR 1tn

Banking operations in 22 countries

International network spanning ~50 countries

Global player in asset management: ~ € 86 bn in managed assets

Market leader in Central and Eastern Europe leveraging on the region’s structural strengths

UniCredit Group – at a glance*

*Data as of June 2010, UniCredit Group site

A Major Banking Group

24

UNICREDIT TIRIAC BANK AT A GLANCE*

• ~ 3,000 employees

• Over 500,000 clients

• 234 branches

• 20.5 bn RON total assets

*at 30 June 2010

25

OUR GROUP MISSION

We UniCredit people are committed to generating value for our customers.

As a leading European bank, we are dedicated to the development of the communities in which we live, and to being a great place to work.

We aim for excellence and we consistently strive to be easy to deal with.

These commitments will allow us to create sustainable value for our shareholders.

25

26

March April May June July August February January

Post Production Support

18.01

March April May June July August February January

Project Initialization

Workshops round 1

Workshops round 2

Consistency Check

Project Initialization

Test & Training

Design

Migr. PROD

30.03 WS round 1 ready

28.05 WS round 2 ready

Installation

Start

Start

Build

07.06

BSC Concept Ready

07.06 Design ready

25.06 Build ready

16.07 T&T ready

26. 07 Go Live

Inplenion Support and coach implementation BALANCED SCORECARD CONCEPT

01.03

SCORECARD IMPLEMENTATION

Balanced Scorecard Project

27

Definition of Strategic Initiatives

Definition and Linkage of Strategic

Objectives

Finance

Customers

Processes

Potentials

Priorisation and Budgeting of

Strategic Initiatives

3 2 1 4 5

WS 1:

Strat.Objectives , Cause-and-effect-

chain

WS 2:

KPI´s, Target Values and Strat. Initiatives

WS 3:

Initiative Priorization and Budgeting

Definition of Strategic Measures

Definition of Target Values

Str

ate

gic

Check

0

BSC Content Elaboration

28

Criterias for Rollout Type Type A Type F

External Customer Relation (E) vs. Internal Customer (I) E I

Revenue Center (R) vs. Cost Center (C) R C

Strategic Importance H L

Contribution to Business Value H L

Independency related to other units H L

Size of the Unit H L

Diversification of unit H L

Complexity of Unit L H

Rollout Type

OWN A Entity has an own strategy as starting point for the BSC elaboration

DERIVED BSC B BSC elaboration is derived from Superior BSC and some own strategic input

MIX C Financial and L&G perspectives use objectives from superior BSC; individual objectives for customer and process perspective are included.

STANDARD D Same strategic objectives and KPI's as superior BSC but with own target values (e.g. Branch)

STRATIGIC INITIATIVES E No BSC is elaborated. Only strategic initiatives are defined as contribution to the BSC objectives of superior entities.

BSC Communication F No BSC is elaborated but the company and department BSC is communicated and explained.

Legend

High (H)

Little (L)

OWN

1. Company

DERIVED DERIVED DERIVED DERIVED DERIVED DERIVED

2. Retail 3. CIB&PB 4. CFO 5. GBS 6. CRO 7. HR

Mix DERIVED

8.Large Corp 14. IT Phase 1 (2010)

Mix SI

9. Intl Cl/CBBM Operations Phase 2 (2011)

Mix SI

10. Mid Corporate Org Phase 2 (2011)

Mix SI

11. PB Fac. Man. Phase 2 (2011)

Mix

12. Markets

Mix

13. Real Estate

SI

Fin Adv & Prod

SI

GTB

BSC Architecture - 13 scorecards

BSC Rollout Structure

29

The above described integrated and comprehensive closed-loop system links strategic planning with operational planning, execution,

feedback, and learning. The system has many moving parts and interrelationships, and it requires simultaneous coordination among all

line and staff units.

Stage: Adapt/Translate the Strategy

5Y Financial Plan

Bank Strategy Map

Bank KPIs

Bank targets

Bank Initiatives Portfolio

Identyfy the Stratex portfolio

Stage: Align the organization

BL/CL strategic maps

BL/CL KPI's

BL/CL targets

BL/CL Initiatives

Stage: Plan Operation/ Budgeting

Projects prioritization and CAPEX budgeting

Operational budget

Personal MBO

Stage: Monitor & Learn

Data collection & validation process in BSC

Monthly Operational Review Meetings

Quarterly Strategy Review Meetings**

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Strategy- and Operational Management Cycle

30


Agenda

• Introduction





• Q&A

31

OSSM Offers Strategy Management • Graphic Visualizations of

Strategy:

– Strategy Maps

– Strategy Trees

– Cause and Effect Maps

– Custom Visualizations

• Scorecards

• Collaboration

– Initiatives

– Threaded Discussions

– Related Documents

– Action Links

– Agents

32

OSSM Offers KPI Management

• Performance Tracking

– Against Target / Trending

– Threshold Assessment

• Ownership Definition

• Collaboration

– Threaded Discussions

– Related Documents

– Action Links

– Agents

– Drill to Analysis

– Watch Lists

33

OSSM Offers An Interactive, Collaborative Environment

• Dashboard integration

– Embed scorecard visualizations into dashboards to foster broad interactive analyses

• KPI Agents

– To monitor performance even when you can’t

• KPI & Scorecard Actions

– Align day-to-day decisions with your corporate strategy

• Annotations & Overrides

– Collaborate and document exceptions to prevent future recurrences

34


Agenda

• Introduction





• Q&A