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
lackey@bellsouth.net

10/22/09 PROCESS WITH A PURPOSE 1

 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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o
DEFINITIONS
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
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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.

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 DATA WAREHOUSE
STRUCTURE
--- A
DATA WAREHOUSE CUBE OF DATA CUBES ---

SALES DATA CUBE

USER
INTERFACE

LOCATION PRODUCT
DIMENSION DIMENSION

TIME
10/22/09 DIMENSION PROCESS WITH A PURPOSE 9
 Aligning Performance
Metrics
CEO Improve CSAT by “5” points over 2008

JOE BLOW 1 Increase on-time deliveries by “5” points

over 2008

JOE
BLOW 2
Reduce product packaging time by 15%

ctory floor staff objectives need to be aligned with corporate objectives

to complement each other
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BI/ Performance Management Tools

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TYPICAL FLOW User requests YTD

OF BUSINESS
sales by month by
DIMENSIONS/
product for the SW
region compared to
ATTRIBUTES
PERFORMANCE
same period last year

REPORTING
QUERY

CYCLE
DATA
Reporting
Tool

CATEGORIES
•HYPERION
- Sales Report Parameters & •BUS. OBJECTS
- Products Format Have Been Set•COGNOS
- Marketing
- Order
•EXCEL BALANCED
- Financial SCORECARD
- Production / Operations
- Quality
- Human Resources
- Customer Complaints
- Survey Results
- Budget
- Prior Period
- Benchmarking
- Other

DATA
WAREHOUSE

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 DATA MINING/ REPORTING TOOLS
Oracle
SAP (Ent. Whse/
(Business Objects/ Lawson
(Hyperion) (M3 Analytics)
Crystal Reports)
IBM
(COGNOS)
MicroSoft
(eConnect)
W
ST A FE
J U

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.
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 OUTPUT DELIVERY OPTIONS

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 OUTPUT OPTIONS
vReport contents & formats within various reporting tools may be
standard or customized to suit the user during the install
process
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
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 SAMPLE BALANCED SCORECARD FOR THE NO JOY CORPORATIO
July YTD B/(W) Than July YTD B/(W) Than
People (T/O)
Retention Results
5 Results
32 Plan
(10) #Customer
Complaints Results
8 Results
130 Plan
(22)
Skip Level Sessions 12 101 7 Avg. Response 4 7 (3)
Training hours 130 1259 110 Time (Hours)
Product Returns 33 123 (15)
ESAT/ Survey 62% 65% --- Csat/ Survey 72% 75% (10) Points

July YTD B/(W) Than July YTD ResultsB/(W) Than

#Process/
Orders Opns Results
66 Results
4500 Plan
22 Financial
Sales (K$) Results
$1145 $13219 Plan
($2300)
Product Defects 5% 9% (6) Points EBITDA $210 $2500 ($450)
On-Time Delivery 92% 89% (10) Points DSO 72 86 (26)
Cost/ Unit Produced $.83 $.78 ($.15) Inventory(K$) $3290 $3290 ($750)

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

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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
SUPRISE
In late 2008, early 2009 it was reported that the Sate Employee Insurance
Process program
Recommendations was significantly underfunded shortly after program officials had recently
Are “after the stated that it was in good shape.
fact” but BI Process Recommendation: Perform risk assessments for all material fund
data was balances
available for BUS INTEL Recommendation: Weekly/ Monthly trend of fund balances compared to usage/
consumption including forward projections
tracking before SURPRISE
the fact 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.
Rule of Process Recommendation: Do not allow material “accounting errors ” to occur.
Thumb : Checks & balances/ control on data entry variations
Imagine the BUS INTEL Recommendation:
worst events o Flag variations outside a set tolerance, + & -
that could
happen in your
organization, SUPRISE
assess the In 2008 and continuing, it was reported that the State Parole system had
probability of lost contact with hundreds & > of parolees due to process breakdowns &
occurrence and understaffing.
track key Process Recommendation: Perform risk assessment and audit processes for
indicators of improvement
occurrence BUS INTEL Recommendation: Metrics such as # parolees/ PO, PO turnover, PO
headcount Vs plan, # contact reports by PO by month ------------------------------
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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

2 2 /1 0 /2 0 0 9
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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
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END OF SESSION TWO