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VACO CPE SERIES,August 19 2009

enefiting From BusinessProcess&anagement Business Intelligence( )erformance Management = usiness Enterprise

Lawrence E. LackeyProcess Guidance, inc.Raleigh, North Carolina

1 (919) 606-4988lackey@bellsouth.net

mailto:lackey@bellsouth.netmailto:lackey@bellsouth.net

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BUSINESS INTELLIGENCE (BI)/ PERFORMANCE MANAGEMENT

SESSION TWO AGENDAFOUNDATIONoDEFINITIONSoWHY USE BUSINESS INTELLIGENCE?

o

PERFORMANCE MANAGEMENT METHODOLOGYoPERFORMANCE DATAoBI TOOLSoOBJECTIVES ALIGNMENToOUTPUT METHODOLOGIESoBALANCED SCORECARDS --- THE CRITICAL FEW

BI APPLICATION & ISSUES/ CASES FROM CURRENT EVENTSDESIRED BI INTERVENTION RESULTS

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I FOUNDATION

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o

o Performance Management --- refers to a systematic, integrated approach that links enterprise strategyto 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 tothe right place at the right time to support decision making.

oKey Business indicators (KBIs) ---The critical few pieces of information that allows users to seebusiness 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 glanceo

oData Warehouse --- Database that contains information from which KBIs are extracted --- generallyassociated with an ERP (enterprise wide business system)o

oData Mining --- Extracting KBIs from the data warehouse in a usable form --- generally with reportingtools associated with the ERP.o

oData Cubes are the building blocks of a data warehouse which holds the information used in BusinessIntelligence & Performance management. Current forms are Online Analytic Processing (OLAP) databases that provide speedy response to querieso

DEFINITIONS

http://en.wikipedia.org/wiki/Performance_managementhttp://en.wikipedia.org/wiki/Performance_managementhttp://en.wikipedia.org/wiki/Performance_managementhttp://en.wikipedia.org/wiki/Performance_management

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hy Do We Need Business Intelligence?

. , .Edward Deming In God We Trust others bring dataUnknown 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

MEASURE:EFFECTIVENESS

INDIVIDUAL PROCESSES

AFFECTS ON OTHERS

COMPARED TO PLAN

PM SYSTEMATICAPPROACH

To ensure that process improvements are effectiveindelivering actionable business information to

management as well as to measure unit and individualperformance

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ERFORMANCE MANAGEMENTDATA

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Performance Data is data for company Z s operations for 2008 hat data do we need & owy 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 eeds actionable data ------volume of data available can be an issue need to select

the ritical few data points that are aligned toenterprise objectives.

Management needs access to actionable dataon a imely ,basis in a form that is

.flexible and easy to use

We used to manually ,dig out the data butnow can utilize ata warehouses and

reporting tools that provide automatedresults.

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ATA WAREHOUSESTRUCTURE--- ---CUBE OF DATA CUBES

SALES DATA CUBE

LOCATIONDIMENSION

TIMEDIMENSION

PRODUCTDIMENSION

USERINTERFACE

DATA WAREHOUSE

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ligning PerformanceetricsCEO

JOE BLOW 1

JOEBLOW 2

Improve CSAT by 5 points over 2008

- Increase on time deliveries by 5 pointsover 2008

%Reduce product packaging time by 15

tory floor staff objectives need to be aligned with corporate objectiveto complement each other

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BI/ Performance Management Tools

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- Sales

- Products

- Marketing

- Order

- Financial

- Production/ Operations- Quality

- Human Resources

- Customer Complaints

- Survey Results

- Budget

- Prior Period

- Benchmarking

- Other

DATA

CATEGORIES

Reporting

Tool

User requests YTDsales by month by

product for the SW

region compared to

same period last year

QUERY

Report Parameters &

Format Have Been Set

HYPERION .BUS OBJECTSCOGNOSEXCEL

YPICAL FLOWF BUSINESSERFORMANCEEPORTINGCYCLE

DATAWAREHOUSE

BALANCEDSCORECARD

/DIMENSIONSATTRIBUTES

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OUTPUT DELIVERY OPTIONS

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OUTPUT OPTIONS

v &Report contents formats within various reporting tools may bestandard or ustomized to suit the user during the installprocessv

v Users may request reports as needed or an be set in production/to print at specific times intervals

vv d Hoc reporting is available in most tools so users can create

one off queriesvv

Power users are generally trained o create their own reportsrather than using IT support

vv ,Depending on the tool applications may o beyond reporting

/to include other functions such as consolidation eliminationvv

v

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ALANCEDSCORECARDSBENEFITS REPORTED BY USERS:

Increase focus on strategy and resultsAvoid surprises --- issue creepConsiders a total organization view including Customer, Employee &Operations metrics in addition to financial resultsImprove 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 performanceImprove communication of the organizations Vision and Strategy

Balanced Scorecards are one of the most prevalent methods ofcapturingand presenting Business Intelligence to achieve

improved Business Performance

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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BI Applications

/Business Intelligence Performance Managementmethodology is applicable for all enterprises that

:can benefit from improved information

o Commercialo -Non ProfitoMedicalo Governmento Educationo MilitaryoReligious

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/Current Process Bus Intel IssueExamples

One of the benefits of BI is to pare management fromurprises 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 nterprises 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 ascommercial organizations

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SUPRISE,In late 2008 early 2009 it was reported that the Sate Employee Insurance

programwas 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 projectionsSURPRISE

, & 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 followProcess 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 forimprovement

:BUS INTEL Recommendation # / , ,Metrics such as parolees PO PO turnover PO

, # ------------------------------headcount Vs plan contact reports by PO by month

ProcessRecommendations

Are after thefact but BIdata was

available for

tracking beforethe fact

ule of:humbImagine the

worst eventsthat couldhappen in your

,organizationassess the

probability ofoccurrence and

track keyindicators of

occurrence

XAMPLES FROM THE NEWSPAPERS

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/HAT BI PERFORMANCE MANAGEMENT LOOKS LIKEo Surprises under controlo ,Improved objectives alignment all on same pageo Focus on critical business driverso Customer Satisfaction Enhancedo Employee Morale Improved

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SOME CLOSING CONSIDERATIONS

Performance management requires tops downsupport to be successful+ All levels measured+ /Influence process owners add to

objectives+ Visible management priority+ Provide resources

Processes are owned and managed by people but many,times employees .esist being measured On the other,hand employees now who is not performing and are

.generally upset by inaction

The BI advisor must be prepared to add changemanagement .elements to the BI project plan

CHANGE MANAGEMENT

REQUIRED FOR SUCCESS

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ND OF SESSION TWO