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Shelley Sweet

Do Your Business Process Metrics Measure Up?

  1. Are we doing things right?
  2. Are we doing the right things?

Peter Fingar, co-author of Business Process Management: The Third Wave, then asks these measurement corollaries in his 2013 article “How Do Your BPM Metrics Measure Up?”

  1. Are we measuring things right?
  2. Are we measuring the right things?

But what are these right measurements? John Dixon, Gartner analyst, articulates seven best practices:

  1. Focus on Outcomes – Measure the results, not the completion of steps or milestones to get there.
  2. Limit the Number of Measures – Not fifteen, but just a few.
  3. Set Clear, Specific Goals – The leaders must have clear goals and they need to articulate them.
  4. Link Metrics to Strategy – The metrics need to show how work impacts the company’s strategy.
  5. Measure Current Performance – Know how you are doing today, so you can see if anything changes in the future.
  6. Look Ahead, Not Just Back – Metrics are not just to see what happened historically. Metrics should cause action today.
  7. Make Metrics Visible and Accessible – Having workers, managers, supervisors, and executives see metrics helps employees make decisions and take action. If only executives see them on a monthly dashboard, it is too infrequent, too late, and too inaccessible.

And the next question is – How do you really do all this? Below are examples of TIPS from my 20 years of practice to select measurements that are meaningful and have an impact on results:

  1. Focus on Outcomes – Select measures that track the outcomes of the process from a product standpoint and customer standpoint. These should be results that provide value to the customer.
  2. Limit the Number of Measures – I say limit it to two or three. Start with that number and use them.
  3. Set Clear, Specific Goals – Starting a BPM Project successfully means creating a Project Charter with the Process Owner, Executive Sponsor, Project Lead and Team Facilitator. And in that charter are specific Improvement Targets; for each Improvement Target there needs to be one metric.
  4. Link Metrics to Strategy – It’s not only the metrics that should link to the strategy. The Improvement Targets need to be aligned with the strategy. So you need to discuss that with the Process Owner and Executive Sponsor.
  5. Measure Current Performance – This starts with gathering baseline data for the metrics designated for each Improvement Target.
  6. Look Ahead, Not Just Back – All metrics must drive decisions and action. If you measure something and don’t do anything with the measure, it’s no good. So think carefully about what action you will take with any metric, and discard it if no action is identified.
  7. Make Metrics Visible and Accessible – Metrics should be visible on the shop floor, or on the wall, or if on the desktop with mechanisms to have alerts about changes or concerns. A file on the desktop is not visible enough unless it is naturally accessed frequently.

About the Author

Shelley SweetShelley Sweet, the Founder and President of I4 Process, and author of The BPI Blueprint, is a highly respected BPM Practitioner. She provides consultation, workshops and training programs for clients ranging from start-ups to Fortune 500 companies, educational institutions, and government organizations. Her programs are based on a unique 3-PEAT method of modeling processes and analyzing data that accelerates operational improvements, and builds leaders and employees who sustain operational excellence. Want to learn more about BPM metrics? Email Shelley at: [email protected]

StrategyDriven Organizational Performance Measures Best Practice Article

Organizational Performance Measures Best Practice 27 – Performance Measures and Thresholds Aligned with Regulatory Standards

StrategyDriven Organizational Performance Measures Best Practice ArticleFederal, state, and local governments regulate almost every aspect of the business environment. While many requirements necessitate one-time actions, others govern ongoing business operations.


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StrategyDriven Organizational Performance Measures Best Practice Article

Organizational Performance Measures Best Practice 22 – Use a Multidiscipline Team to Develop the Performance Measurement System

StrategyDriven Organizational Performance Measures Best Practice ArticleOrganizational performance measurement systems are complex structures cascading vertically from the executive suite to the shop floor and stretching horizontally though many different functional workgroups. Consequently, the design of a performance measurement system takes on a high degree of complexity because of the numerous interrelationships between various organizational levels and workgroups and the cross-functional sharing of common metrics.


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Eight Levels of Analytics

Not all analytics are created equal. Like most software solutions, you’ll find a range of capabilities with analytics, from the simplest to the most advanced. In the spectrum shown here, your competitive advantage increases with the degree of intelligence.
 

1. STANDARD REPORTS
Answer the questions: What happened? When did it happen?
Example: Monthly or quarterly financial reports.

 
We all know about these. They’re generated on a regular basis and describe just “what happened” in a particular area. They’re useful to some extent, but not for making long-term decisions.


2. AD HOC REPORTS
Answer the questions: How many? How often? Where?
Example: Custom reports that describe the number of hospital patients for every diagnosis code for each day of the week.

 
At their best, ad hoc reports let you ask the questions and request a couple of custom reports to find the answers.


3. QUERY DRILLDOWN (OR OLAP)
Answers the questions: Where exactly is the problem? How do I find the answers?
Example: Sort and explore data about different types of cell phone users and their calling behaviors.

 
Query drilldown allows for a little bit of discovery. OLAP lets you manipulate the data yourself to find out how many, what color and where.


4. ALERTS
Answer the questions: When should I react? What actions are needed now?
Example: Sales executives receive alerts when sales targets are falling behind.

 
With alerts, you can learn when you have a problem and be notified when something similar happens again in the future. Alerts can appear via e-mail, RSS feeds or as red dials on a scorecard or dashboard.


5. STATISTICAL ANALYSIS
Answers the questions: Why is this happening? What opportunities am I missing?
Example: Banks can discover why an increasing number of customers are refinancing their homes.

 
Here we can begin to run some complex analytics, like frequency models and regression analysis. We can begin to look at why things are happening using the stored data and then begin to answer questions based on the data.


6. FORECASTING
Answers the questions: What if these trends continue? How much is needed? When will it be needed?
Example: Retailers can predict how demand for individual products will vary from store to store.

 
Forecasting is one of the hottest markets – and hottest analytical applications – right now. It applies everywhere. In particular, forecasting demand helps supply just enough inventory, so you don’t run out or have too much.


7. PREDICTIVE MODELING
Answers the questions: What will happen next? How will it affect my business?
Example: Hotels and casinos can predict which VIP customers will be more interested in particular vacation packages.

 
If you have 10 million customers and want to do a marketing campaign, who’s most likely to respond? How do you segment that group? And how do you determine who’s most likely to leave your organization? Predictive modeling provides the answers.


8. OPTIMIZATION
Answers the question: How do we do things better? What is the best decision for a complex problem?
Example: Given business priorities, resource constraints and available technology, determine the best way to optimize your IT platform to satisfy the needs of every user.

 
Optimization supports innovation. It takes your resources and needs into consideration and helps you find the best possible way to accomplish your goals.


 
The best analytics for your business problem
The majority of analytic offerings available today fall into one of the first four areas, which report historical data on what happened in the past but no insight about the future. For simple business problems, these analytic solutions will be all you need. But if you’re asking more complex questions or looking for predictive insight, you need to look at the second half of the spectrum. Even better, if you can learn to use these technologies together and identify what type of analytics to use for every individual situation, you’ll really be increasing your chances for true business intelligence.
 
This article was republished with the permission of sascom Magazine.


About SAS – Providing organizations with THE POWER TO KNOW® since 1976.
 
SAS is the leader in business analytics software and services, and the largest independent vendor in the business intelligence market. Through innovative solutions delivered within an integrated framework, SAS helps customers at more than 45,000 sites improve performance and deliver value by making better decisions faster. Since 1976, SAS has been giving customers around the world THE POWER TO KNOW®. To learn more about SAS, its products and services, visit www.sas.com.
 
About sascom Magazine
 
sascom Magazine is the quarterly publication of the SAS Institute, Inc. Each issue is packed with thought-provoking content and insight into the business issues that affect all companies competing in today’s technology-driven marketplace with recent contributions by best-selling author and researcher Tom Davenport; social media guru Chris Brogan; and Myron Scholes, world renowned economist and Nobel Prize winner. Subscribe now to get your subscription to this award-winning quarterly magazine. sascom Magazine can also be accessed online at www.sas.com/sascom.

StrategyDriven Podcast Special Edition 44b – An Interview with David Parmenter, author of Key Performance Indicators, part 2 of 2

StrategyDriven Podcasts focus on the tools and techniques executives and managers can use to improve their organization’s alignment and accountability to ultimately achieve superior results. These podcasts elaborate on the best practice and warning flag articles on the StrategyDriven website.

Special Edition 44b – An Interview with David Parmenter, author of Key Performance Indicators, part 2 of 2 explores how to create a winning key performance indicator system that transforms these reports into decision-making tools supporting achievement of superior bottom line results. During our discussion, David Parmenter, author of Key Performance Indicators: Developing, Implementing, and Using Winning KPIs shares with us his insights and illustrative examples regarding:

  • Critical Success Factors, their role in connecting business strategy to performance measurement, and how to identify them
  • key steps to developing a performance measurement system
  • benefits of using a database to catalog the organization’s performance measures and the type of data this database should contain

Additional Information

In addition to the outstanding insights David shares in Key Performance Indicators and this special edition podcast are the resources accessible from his website, www.DavidParmenter.com.   David’s book, Key Performance Indicators, can be purchased by clicking here.

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About the Author

David Parmenter is author of Key Performance Indicators: Developing, Implementing, and Using Winning KPIs. David is an internationally renowned speaker, author, and advisor known for his work in the development of performance measurement systems that transforms these reports into a decision-making tool. He is a Fellow of the Institute of Chartered Accountants in England and has delivered workshops to thousands of executives and managers around the world. To read David’s complete biography, click here.