Vaco Cpe Session Ii

VACO CPE SERIES August 19, 2009

Benefiting From Business Process Management & Business Intelligence ( Performance Management ) “ Business = Enterprise ” Lawrence E. Lackey Process Guidance, inc. Raleigh, North Carolina 1 (919) 606-4988 [email protected] 10/22/09

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BUSINESS INTELLIGENCE (BI)/ PERFORMANCE MANAGEMENT SESSION TWO AGENDA •FOUNDATION

oDEFINITIONS oWHY USE BUSINESS INTELLIGENCE?

o • PERFORMANCE MANAGEMENT METHODOLOGY oPERFORMANCE DATA oBI TOOLS oOBJECTIVES ALIGNMENT oOUTPUT METHODOLOGIES oBALANCED SCORECARDS --- THE CRITICAL FEW

• •BI APPLICATION & ISSUES/ CASES FROM CURRENT EVENTS • •DESIRED BI INTERVENTION RESULTS •

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BI FOUNDATION

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DEFINITIONS

o o Performance Management --- refers to a systematic, integrated approach that links enterprise strategy

to core processes and activities. Managing by Facts is another way to define this: as planning, budgeting, analysis and reporting can give the measurements that empower management decisions. oBI --- enables an enterprise to convert data into actionable information and then get this information to

the right place at the right time to support decision making. oKey Business indicators (KBIs) --- The “critical few” pieces of information that allows users to see

business trends or sudden departures from a standard. o oBalanced Scorecard/ Dashboard --- A collection of KBIs grouped by “critical few” organization objectives

--- health of the business at a glance o oData Warehouse --- Database that contains information from which KBI’s are extracted --- generally

associated with an ERP (enterprise wide business system) o oData Mining --- Extracting KBI’s from the data warehouse in a usable form --- generally with reporting

tools associated with the ERP. o oData Cubes are the building blocks of a data warehouse which holds the information used in Business

Intelligence & Performance management. Current forms are Online Analytic Processing (OLAP) data bases that provide speedy response to queries o

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Why Do We Need Business Intelligence? To ensure that process improvements are effective in delivering actionable business information to management as well as to measure unit and individual performance

BPM SYSTEMATIC APPROACH MEASURE EFFECTIVENESS: •INDIVIDUAL PROCESSES •AFFECTS ON OTHERS •COMPARED TO PLAN

Edward Deming …. “In God We Trust, others bring data.” Unknown …”Do we know or do we think we know? Unknown… “What is not Measured is not managed.” Unknown… “What does not get Measured does not get done 10/22/09

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PERFORMANCE MANAGEMENT DATA

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Performance Data

is data for company Z’s operations for 2008 … What data do we need & how d ily access that data and manipulate it to meet management’s requirements?

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WHAT DATA DO WE NEED AND HOW DO WE ACCESS IT? Management at all levels needs “ actionable data ” --volume of data available can be an issue --- need to select the “ critical few ” data points that are aligned to enterprise objectives.

Management needs access to actionable data on a timely basis, in a form that is flexible and easy to use . We used to manually “dig” out the data, but now can utilize “ data warehouses ” and reporting tools that provide automated results. 10/22/09

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DATA WAREHOUSE STRUCTURE

--- A DATA WAREHOUSE

CUBE OF DATA CUBES ---

SALES DATA CUBE USER INTERFACE

LOCATION DIMENSION

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PRODUCT DIMENSION

TIME DIMENSION

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Aligning Performance Metrics CEO

Improve CSAT by “5” points over 2008

JOE BLOW 1

JOE BLOW 2

Increase on-time deliveries by “5” points over 2008 Reduce product packaging time by 15%

ctory floor staff objectives need to be aligned with corporate objectives to complement each other 10/22/09

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BI/ Performance Management Tools

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TYPICAL FLOW OF BUSINESS PERFORMANCE REPORTING CYCLE DATA CATEGORIES -

Sales Products Marketing Order Financial Production / Operations Quality Human Resources Customer Complaints Survey Results Budget Prior Period Benchmarking Other

User requests YTD sales by month by product for the SW region compared to same period last year

DIMENSIONS/ ATTRIBUTES

QUERY

Reporting Tool

•HYPERION

Report Parameters & •BUS. OBJECTS Format Have Been Set•COGNOS

BALANCED SCORECARD

•EXCEL

DATA WAREHOUSE

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DATA MINING/ REPORTING TOOLS SAP (Business Objects/ Crystal Reports)

W A FE T S U J

Oracle (Ent. Whse/ (Hyperion) IBM (COGNOS)

Lawson (M3 Analytics) MicroSoft (eConnect)

Sagent (BI Life Cycle)

If you have an ERP system, you have BI Components that include data warehousing reporting tools

+/- for each set of tools, part of total ERP investment --- Key is to Select One and Utilize it. 10/22/09

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OUTPUT DELIVERY OPTIONS

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OUTPUT OPTIONS vReport contents & formats within various reporting tools may be

standard process

or customized to suit the user during the install

v vUsers may request reports as needed or can be set in production

to print at specific times/ intervals

v vAd Hoc reporting is available in most tools so users can create

one off queries

v vPower users are generally trained to create their own reports

rather than using IT support v v

Depending on the tool, applications may go beyond reporting to include other functions such as consolidation/ elimination v v v

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BALANCED Balanced SCORECARDS Scorecards are one of the most prevalent methods of capturing and presenting Business Intelligence to achieve improved Business Performance BENEFITS REPORTED BY USERS: •Increase focus on strategy and results •Avoid surprises --- issue creep •Considers a total organization view including Customer, Employee & Operations metrics in addition to financial results •Improve organizational performance by measuring what matters (Critical Few) • Align organization strategy with the work people do on a day-to-day basis •Focus on the drivers of future performance •Improve communication of the organization’s Vision and Strategy

What data would you like to see on your desk top every Monday AM to gauge the direction of your enterprise --- the Critical Few 10/22/09

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SAMPLE BALANCED SCORECARD FOR THE NO JOY CORPORATIO YTD Results 32

B/(W) Than Plan (10)

July Results 8

YTD Results 130

B/(W) Than Plan (22)

Skip Level Sessions 12

101

7

4

7

(3)

110

Avg. Response Time (Hours) Product Returns

Training hours

130

1259

33

123

(15)

ESAT/ Survey

62%

65%

---

Csat/ Survey

72%

75%

(10) Points

#Process/ Orders Opns

July Results 66

YTD Results 4500

B/(W) Than Plan 22

Product Defects

5%

9%

On-Time Delivery

92%

Cost/ Unit Produced $.83

People (T/O) Retention

July Results 5

#Customer Complaints

Financial Sales (K$)

July Results $1145

YTD ResultsB/(W) Than Plan $13219 ($2300)

(6) Points

EBITDA

$210

$2500

($450)

89%

(10) Points

DSO

72

86

(26)

$.78

($.15)

Inventory(K$)

$3290

$3290

($750)

Most BSC tools have drill down capability to see more detail as well as trended data by mon 10/22/09

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BI Applications Business Intelligence/ Performance Management methodology is applicable for all enterprises that can benefit from improved information: oCommercial oNon-Profit oMedical oGovernment oEducation oMilitary oReligious

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Current Process/ Bus Intel Issue Examples One of the benefits of BI is to spare management from surprises … reading their names in the Wall Street Journal or Sunday N&O Commercial enterprise BI examples abound especially over the past several years, however all enterprises are subject to performance “surprises” Following examples are within our State Government, just to show how simple BI measures can be effective across public as well as commercial organizations

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EXAMPLES FROM THE NEWSPAPERS

Process Recommendations Are “after the fact” but BI data was available for tracking before the fact Rule of Thumb : Imagine the worst events that could happen in your organization, assess the probability of occurrence and track key indicators of occurrence 10/22/09

SUPRISE In late 2008, early 2009 it was reported that the Sate Employee Insurance program was significantly underfunded shortly after program officials had recently stated that it was in good shape. Process Recommendation: Perform risk assessments for all material fund balances BUS INTEL Recommendation: Weekly/ Monthly trend of fund balances compared to usage/ consumption including forward projections

SURPRISE In July, 2009 the N&O reported that a state Medicaid fund was “flush with $$ $” as result of an accounting error that led to overcharging the federal government by $300M --- disciplinary actions to follow. Process Recommendation: Do not allow material “accounting errors ” to occur. Checks & balances/ control on data entry variations BUS INTEL Recommendation: o Flag variations outside a set tolerance, + & SUPRISE In 2008 and continuing, it was reported that the State Parole system had lost contact with hundreds & > of parolees due to process breakdowns & understaffing. Process Recommendation: Perform risk assessment and audit processes for improvement BUS INTEL Recommendation: Metrics such as # parolees/ PO, PO turnover, PO headcount Vs plan, # contact reports by PO by month -----------------------------PROCESS WITH A PURPOSE

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WHAT BI / PERFORMANCE MANAGEMENT LOOKS LIKE oSurprises under control oImproved objectives alignment, all on same page oFocus on critical business drivers oCustomer Satisfaction Enhanced oEmployee Morale Improved

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SOME CLOSING CONSIDERATIONS CHANGE MANAGEMENT

ØProcesses are owned and managed by people but many times, employees resist being measured . On the other hand, employees know who is not performing and are generally upset by inaction. Ø ØThe BI advisor must be prepared to add change management elements to the BI project plan.

REQUIRED FOR SUCCESS

ØPerformance management requires “tops down”

support to be successful + All levels measured + Influence process owners/ add to objectives + Visible management priority + Provide resources 2 2 /1 0 /2 0 0 9 10/22/09

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END OF SESSION TWO