bpm overview

The YTL Corporate Performance Management- preliminary proposal

If you dont know where youre going, youre probably not gonna get there.

Forrest Gump

QUOTE

The Project Team

Masilamani R- Project LeaderDatuk Dr Rosti Saruwono-ConsultantVasudevan-ConsultantKumar NagalingamTahna -project managerSham-project Assistant, and Two in-house Team Members

Business performance management is a set of management and analytic processes that enable the management of an organization's performance to achieve one or more pre-selected goals.

Synonyms for "business performance management" include "corporate performance management" and "enterprise performance management

Business performance management

QUOTE

'Organisations should manage performance with applications designed for business in a simple and easy to use manner that should not be hampered by IT resources or priorities' -Mark Smith, CEO/EVP,Ventara Reserch

Definition

Business Performance Management icludes activities to ensure that goals are consistently being met in an effective and efficient manner

BPM Flagsheet

Transform Business Objectives into KPI's

Link Employee Performance to Business Strategies

Execute Performance and Monitor

Excell in Higher productivity

Reduce Response Time

Prerequisites of KPI

Before identifying the KPI's, the following requirements must be met:A predetermined organisational process

Clear business objectives for the process

Quantitative and qualitative measurements

An active approach to finding and remodifying enterprise variances

Possible corrective and enhancement actions, and

Possible reporting and rewarding criteria

Balanced Scorecard

Business Performance Management

Business performance management has three main activities: 1. selection of goals(this may be done throgh a 'GAP ANALYSIS' i.e. comparing the envisaged future state of the organisation to the current state) 2. consolidation of measurement information relevant to an organizations progress against these goals, and 3. interventions made by managers in light of this information with a view to improving future performance against these goals

Business Performance Management

The biggest growth area in operational Business Intelligence analysis is in the area of business performance management

Because business performance management activities in large organizations often involve the collation and reporting of large volumes of data, many software vendors, particularly those offering business intelligence tools, market products intended to assist in this process

History of BPM

Since 1992, business performance management has been strongly influenced by the rise of the balanced scorecard framework

to clarify the goals of an organization, to identify how to track them, and to structure the mechanisms by which interventions will be triggered

as a result, balanced scorecard is often used as the basis for business performance management activity with organizations

Tool categories commonly used for business performance management

* OLAP online analytical processing, sometimes simply called "analytics" (based on dimensional analysis and the so-called "hypercube" or "cube") * scorecarding, dashboarding and data visualization * data warehouses * document warehouses * text mining * DM data mining * BPO business performance optimization * EPM enterprise performance management * EIS executive information systems * DSS decision support systems * MIS management information systems * SEMS strategic enterprise management software

Components of BPM

set of management and analytic processes, supported by technology, that enable businesses to define strategic goals and then measure and manage performance against those goal

Core business performance management processes include financial planning, operational planning, business modeling, consolidation and reporting, analysis, and monitoring of key performance indicators linked to strategy

Components of BPM

Various methodologies for implementing business performance management exist.The discipline gives companies a top-down framework by which to align planning and execution, strategy and tactics, and business-unit and enterprise objectivesReactions may include the Six Sigma strategy, balanced scorecard, activity-based costing (ABC), Total Quality Management, economic value-add, integrated strategic measurement and Theory of Constraints.

Components of BPM

The balanced scorecard is the most widely adopted performance management methodologyMethodologies on their own cannot deliver a full solution to an enterprise's CPM needs. Many pure-methodology implementations fail to deliver the anticipated benefits due to lack of integration with fundamental CPM processes

Metrics and key performance indicators

Some of the areas from which a financial service company management may gain knowledge by using business performance management include:

* customer-related numbers: o new customers acquired o status of existing customers o attrition of customers (including breakup by reason for attrition)


*profitability of customers by demographic segments and segmentation of customers by profitability * campaign management * real-time dashboard on key operational metrics o overall equipment effectiveness * clickstream analysis on a website * key product portfolio trackers * marketing-channel analysis * sales-data analysi by product segments * callcenter metrics

*


* turnover generated by segments of the customers - possibly using demographic filters

* outstanding balances held by segments of customers and terms of payment - possibly using demographic filters * collection of bad debts within customer relationships * demographic analysis of individuals (potential customers) applying to become customers, and the levels of approval, rejections and pending numbers * delinquency analysis of customers behind on payments

KPI Application

Though the above list describes what a financialservice company might monitor, it could refer to a tele company or to any similar service-sector company

.

Examples of KPI's

'Net Revenue is a typical enterprise KPI

'Unemployment Rate' is a typical government KPI

In the Scorecard KPI's are represented by icon's -e.g.

A VP of manufacturing may be interested in such items as :

The no. of units produced

The no. of items that fail quality control

The amount of by-product generated

Raw materials inventory levels

The current price of raw materials

KPI Display

1.each KPI is typically displayed as a symbol indicating the health of that particular number. e.g. the number of items that fail quality control might be 5o. If the company makes 2 million such items,then this % is acceptable. However, if the company were to make only 75 expensive items of the type,a failur of 50 items indicates a serious issue that must be addressed.

KPI Display

2. KPI may be coloured (cassified into green/yellow/red), simile faces, guages, dials etc.

3. a dashboard indicates the status of performance at a particular point of time

4. a scorecard indicates progress over time

Typical Implementation Steps of BPM

Step 1- Establish/Ascertain /Review-mission, vision and strategiesStep 2- Identify/Clarify-objectives,core provisionsStep 3- Design/Develop the ScorecardStep 4- Develop Strategy and Process MapsStep 5- Identify Business Performance Matrices(KPI's)

Typical Implementation Steps of BPM

Step 6- Assess RisksStep 7- Monitor and Report matricesStep 8- Evaluate performance against TargetsStep 9- Identify Mitigation/Enhancement ActionsStep 10- Perform on going Review and feedback

Application software types

People working in business intelligence have developed tools that ease the work of business performance management, especially when the business-intelligence task involves gathering and analyzing large amounts of unstructured data.

Items of generic importance include:

1. consistent and correct KPI-related data providing insights into operational aspects of a company 2. timely availability of KPI-related data 3. KPIs designed to directly reflect the efficiency and effectiveness of a business 4. information presented in a format which aids decision-making for management and decision-makers 5. ability to discern patterns or trends from organized information

Tool categories commonly used for business performance management include:

* OLAP online analytical processing, sometimes simply called "analytics" (based on dimensional analysis and the so-called "hypercube" or "cube") * scorecarding, dashboarding and data visualization * data warehouses * document warehouses * text mining * DM data mining * BPO business performance optimization * EPM enterprise performance management * EIS executive information systems * DSS decision support systems * MIS management information systems * SEMS strategic enterprise management software

BPM Customer Expectations

Goal-alignmentBaselineCost and risk

Customer and stakeholder

MetricsMeasurement methodologyResults

Enterprise Performance Mangement(EPM)

a)Places control in the hands of the business usersb)Enables organisational alignment, and c)Executes strategy

The organisation can clearly define and communicate strategy and goals across the enterprise

BPM Tools

a) Balanced Scorecards

Navigate through organised scorecards,andDrill through performanceb) Strategy and process Maps-create strategy and process maps-Communicate and visualise strategy and work processes-Link map to strategies, themes, matrices. Sub-processes or supporting resources

BPM Tools

c) Business Performance Matrices

Create detailed view of KPI's and business performance matrics, complete with status, trends, histotical data, supporting information and feature rich charts and graphs

Align with other business processes by linking to strategic initiatives, risk elements and quality and process activities

Large projects can easily be managed by creating KPI's and metrics in a central library to be reused throughout the organisation

Holistic View of BPM

Corporate direction-vision,mission & strategies

Balanced scorecards, dashboards and

Matrices managementEnterprise reporting

Initiatives, plans and Projects

Risk Management, and

Other Advanced Approaches

Alternative Strategies for BPM Consulting

A1. Use a versatile EPM software to facilitae and save time and costA2. Use a custom designed EPM process to address client needs directlyA3. Use a hybrid approach, incorporating both methods listed above

Highlights

proposed softwares may include,'Corporater'

-It has, scorcards,KPI dashboards,performance reports,Employee scorecards and more

Flexibility to include context sensitive information e.g. the CEO's messageMake the scorecard simple and easy to understand

Make it visually appealing

Review of Presentation on BPM

The BPM Suite:A) Balanced Scorecard-4 perspectives- financial- customer- internal processes- learning and growthBSC actions:. create strategy.create process maps.communicate.visualise strategy.visualise work processes.link maps to strategic themes.link maps to matrics.link maps to sub-processes or supporting resources

B) Performance Dash Board1. A rich mix of -initiatives-KPI's-numbers and inks for key performance information2. Performance dash board enables-superior visualisation of performance info., and-acts as the gateway to the score cards



3.Results:

- quick problem identification, throughuse of a combination of dynamic scorecards and strategic initiatives- thus it brings in more value for the time spent on analysing performance


KPI's, Matrices, Measures:

Use the KPI to,- design a simple and complex dashboard likeviews to,-create the flexibility or interchangeability-use standard models and adhoc models to enable the organisation to accurately measure business performance at different levels

D) Initiatives Management-to drive management through actions -mange tasks and milestones-link objectives to initiatives-link objectives to KPI's and measures-standardise the process-communicate the process in meeting goals and milestones-track and monitor the human and financial resources used by your initiatives-focus your resources on initiatives that deliver the most value-create initiatives dashboard and scorecards that summarise the status of sub-objectives and initiatives


E) Risk Management-manage factors that potentially stand in the way of meeting objectives, goals and targets by adjusting risks to your performance management for quick reference model-enhance the safety of your employees-protect property and environment-Stregthen your brand reputation-assign risks to users e.g. risk may appear on user's 'MY Page'


Business Plan Templatethe Why-What-Who-When-How model

KPI trend for Ageing Analysis

Identify and enumerate all KPIs

For each KPI, establish what is to be achieved by the use of this KPI#

For each KPI, define the method of measurement#

For each KPI, define what data will be used to measure and where that data is#

For each KPI, define the algorithm that converts data to KPI#

For each KPI, define the normalization or criteria#

For each KPI, identify the organisational units to which the KPI applies#

For each KPI, define the organisational reporting hierarchy

* For each KPI, define the reporting requirements (table output, graphical output etc) *

From the KPIs, identify and enumerate all data sources *

For each data source establish how live the data is and define its input *

For each data source establish the connection mechanism to its KPI object *

As appropriate set up a data connection mechanism for the data source *

Define an appropriate security model that will allow appropriate personnel access to appropriate data


each KPI, define the reporting requirements (table output, graphical output etc) *

From the KPIs, identify and enumerate all data sources *

For each data source establish how live the data is and define its input *

For each data source establish the connection mechanism to its KPI object *

As appropriate set up a data connection mechanism for the data source *

Define an appropriate security model that will allow appropriate personnel access to appropriate data


The BPM deployment waves touch upon all of the aspects of the organization that need to be dealt with to effectively change the culture. A sample scenario of waves is as follows:

1. Conduct general awareness sessions to explain what is coming and why. 2. Provide basic BPM project training focused on up-front definition and planning skills. 3. Introduce basic standard BPM project processes and templates. 4. Roll out BPM coaching services to help BPM project personnel utilize the training and templates effectively. 5. Align the rewards and recognition systems by tying a portion of the staffs performance review and bonus criteria to thesuccessful implementation and use of the BPM project methodology.

6.Implement a document repository to hold the common processes, templates, best practices, standards, etc. 7.Reinforce management governance processes to ensure that senior and middle management are implementing the new initiative within their organizations. 8.Introduce ongoing and random project audits and periodic organization assessments. 9.Teach advanced BPM management classes focused on more sophisticated processes such as quality management, metrics management, risk management, etc. Support the new training concepts with more sophisticated processes and templates. 10.Build a BPM support organization to handle the BPM project methodology in the long-term.(this may be placed under the corporate planning or other centralised monitoring group)

This work can be combined into three or four waves implemented over a period of time.

The BPM deployment waves touch upon all of the aspects of the organization that need to be dealt with to effectively change the culture. A sample scenario of waves is as follows:

Summary

Deploying Business Performance Management project processes and building capability in the organization requires much more than simply training the staff and then walking away. There is a process that must be followed to understand the work required to move the organization to your future vision. Once the work is understood, it should be divided into manageable project/phases to have a better chance of success. The smaller projects/phases are then implemented in successive waves on an ongoing basis throughout the organization.

Measure?

* To determine how effectively and efficiently the process or service satisfies the customer.

* To identify improvement opportunities.

* To make decisions based on FACT and DATA

Measurements Should:

* Translate customer expectations into goals.

* Evaluate the quality of processes.

* Track our improvement.

* Focus our efforts on our customers.

* Support our strategies.

Targets

* Targets need to be set for all measures * Should have a solid basis * Give personnel something for which to aim * If achieved will transform the organization * Careful not to develop measures/targets in

a fragmented approach: i.e. Asking people to increase customer satisfaction has to be backed up with the knowledge, tools, and means to achieve that target.

T

The Leadership Team

* Develops the divisions vision, strategy and goals * Develops organizational objectives and targets * Provides leadership, endorsement and vision for the project * Clears barriers to scorecard progress

The Core Team

* Drafts the strategy map and scorecard

* Works with employees to develop measures supporting strategic objectives

* Works with the Leadership Team to plan and implement the Balanced Scorecard in the FAS Division

The Balanced Scorecard and The Big Picture

* Activity Based Costing * Economic Value Added * Forecasting * Benchmarking * Market Research * Best Practices * Six Sigma * Statistical Process Control * Reengineering * ISO 9000 * Total Quality Management * Empowerment * Learning Organization * Self-Directed Work Teams * Change Management

FINANCIAL/REGULATORYTo satisfy our constituents, what financial & regulatoryobjectives must we accomplish?

CUSTOMERTo achieve our vision,what customer needs mustwe serve?

PERSPECTIVES

INTERNALTo satisfy our customers and stakeholders, in which businessProcesses must we excel?

LEARNING & GROWTHTo achieve our goals, howmust we learn, communicateand grow?

PERSPECTIVES

INTERNALTo satisfy our customers and stakeholders, in which businessprocesses must we excel?

LEARNING & GROWTHTo achieve our goals, howmust we learn, communicateand grow?

REFERENCES

Kaplan, Robert and Norton, Edward. The Balanced Scorecard.Harvard Business Publishing, 1998Kaplan, Robert and Norton, Edward. The Strategy-Focused Organization.Harvard Business Publishing, 2001Buckingham, Marcus and Coffman, Curt. First, Break All the RulesThe Gallup Organization, 1999Brown, Mark. Keeping Score. Mark Graham Brown, 1996http://www.afd.calpoly.edu/afd/Strategic_plan/ http://cqi.csusb.edu/