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Plan: How do we get there?
Monitor: how are we doing? Monitor: how are we doing?
Act & adjust: what do we need to do differently?
Performance management
BPM methodologies
potential opportunities, impending problems, and
threats, and then empowers them to react
through models and collaboration
through models and collaboration
enterprises to measure, monitor, and manage
business performance
of its technologies, applications, and techniques
BPM is an enterprisewide strategy that seeks to
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prevent organizations from optimizing local
business at the expense of overall corporate
performance
Business Performance Management (BPM)
Summary of BPM processes
BPM encompasses a closed-loop set of processes that link strategy to execution in order to optimize business performance, which is achieved by:
Setting goals and objectives
Taking corrective action
Strategic planning
1. Conduct a current situation analysis
2. Determine the planning horizon
Conduct an environment scan
8. Identify strategic objectives and goals
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Reviews the company’s current situation
Where are we?
establish a baseline for financial performance and establish a baseline for financial performance and
operational performance
yearly basis, with planning horizon running 3 to 5
years
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Identifies and prioritizes the key customer, market, Identifies and prioritizes the key customer, market,
competitor, government, demographic,
actually affecting the company
Identify critical success factors
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weaknesses in an organization’s processes,
structures, and technologies & app.structures, and technologies & app.
Gaps reflect what the strategy requires and what
organization actually provides
organization should look like
the strategy is internally consistent
The organizational culture is aligned with the The organizational culture is aligned with the
strategy
implement the strategy
Strategic planning
Strategic objective
prescribing targeted directions for an organization
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Strategic goal
period
strategies successfully
Focus
Resources
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Communication
the organization’s strategy
strategy often lacks clarity, so that no one is strategy often lacks clarity, so that no one is
quite sure whether their actions are in line or
at variance with the plan
Alignment of rewards and incentives
70% of org failed to link middle management
incentives to their strategy
rather than concentrating on the core
elementselements
Resources
and resources, their failure is virtually assured.
Operational planning
Operational plan
objectives and goals into a set of well-defined
Plan: How Do We Get There?
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tactics and initiatives, resources requirements,
and expected results
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established that sums to the targeted financial
values
metrics should serve as top-down drivers for the
allocation of an organization’s tangible and
intangible assets
intangible assets
with the organization’s strategic objectives and
tactics in order to achieve strategic success
Monitor: How Are We Doing?
A comprehensive framework for monitoring
performance should address two key issues:
What to monitor
How to monitor
It has
a standard benchmark against which to compare the outputs
Feedback channel to allow information on variances between the outputs and the standard
Business strategy
Critical performance
control system if it can
Set a goal in advance
Measure outputs Measure outputs
performance variances
inputs and/or processes to bring performance
back in line
Human resource system
Financial reporting system
management by exception.
on negative variances when functional groups or
departments fail to meet their targets
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variance patterns
Creating new products
entering new markets
Acquiring new customers
Act and Adjust:
Acquiring new customers
streamlining some process
Considering too few options or scenarios,
Failing to anticipate a competitor’s move
Ignoring changes in the economic or social
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environment
succeed
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and business strategy by comparing actual results
against strategic goals and objectives.against strategic goals and objectives.
Comprises systematic methods of setting business
goals together with periodic feedback reports that
indicate progress against goals
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Strategy – embody a strategic objectiveStrategy – embody a strategic objective
Targets – measure performance against specific
targets
below target)
(green, yellow, red)
often divided into smaller intervals
Benchmark – target is measure against
benchmark
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issue resolution, and customer retentionissue resolution, and customer retention
Service performance
rate, SLA compliance, delivery performance, and
return rates
performance measures
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Measures should be a mix of past, present, and future
Measures should balance the needs of shareholders,
employees, partners, suppliers, and other stakeholders.
Measures should start at the top and flow down to the
bottom
research and reality rather than be arbitrary
BPM Methodologies
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Determine priorities and allocate resources based on those priorities.
Change measurements when the underlying processes and strategies change
Delineate responsibilities, understand actual
and recognize accomplishments.
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when the data warrant it.
Plan and forecast in a more reliable and timely
fashion
methodology that helps translate an organization’s
financial, customer, internal process, and learning
and growth objectives and targets into a set of
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and growth objectives and targets into a set of
actionable initiatives
systems that are financially focused
Nonfinancial objectives fall into one of three
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perspectives:
Customer
Internal business process
Specify the processes the organization must excel Specify the processes the organization must excel
at in order to satisfy its shareholders and
customers
ability to change and improve
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combined set of measures are supposed to
encompass indicators that are:
Aligning strategies and actions
Planning the strategy
Aligning the organization
Strategy map
among the key organizational objectives for all four
BSC perspectives
at reducing the number of defects in a business
process to as close to zero defects per million
opportunities (DPMO) as possible
In Six Sigma, a business process is a set of
activities that transform a set of inputs, including
suppliers, assets, resources, and information into
a set of outputs for another person or process.
Six Sigma
that encompasses the steps of defining,
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measuring, analyzing, improving, and
Define the goals, objectives, and boundaries of the improvement activity
Measure the existing system
Analyze the system to identify ways to eliminate the gap Analyze the system to identify ways to eliminate the gap between the current performance of the system or process and the desired goal
Initiate actions to eliminate the gap by finding ways to do things better, cheaper, or faster.
Control by modifying compensation and incentive systems, policies, procedures, MRP, budgets, operation instructions, or other management systems.
BPM Architecture and Applications
A BPM system needs three components in
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order to contribute to the successful
implementation of strategy:
1. Database tier
2. Application tier
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Performance Dashboards
consolidated and arranged on a single screen so that
information can be digested at a single glance and
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easily explored
performance
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performance
strategic and tactical goals and targets
What to look for in a dashboard
Use of visual components (e.g., charts,
performance bars, sparklines, gauges, meters,
stoplights) to highlight, at a glance, the data and
exceptions that require action.
exceptions that require action.
to use
single, summarized, unified view of the business
What to look for in a dashboard (cont)
Enable drill-down or drill-through to underlying
data sources or reports
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data refreshes, enabling the end user to stay up-
to-date with any recent changes in the business.
Require little, if any, customized coding to
implement, deploy, and maintain