[PPT] - Seminars in Software and Services for the Information Society PowerPoint Presentation

SLIDE 1

Master of Science in Engineering in Computer Science (MSE-CS)

DIPARTIMENTO DI INGEGNERIA INFORMATICA AUTOMATICA E GESTIONALE ANTONIO RUBERTI

(MSE-CS)

Seminars in Software and Services for the Information Society

Umberto Nanni

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Key Performance Indicators – Design issues

SLIDE 2

Architecture for Business Intelligence

management

management system

goals results management system

reporting OLAP data mining

Datawarehouse

Datamart-1 Datamart-2 Datamart-3

KPI DSS MKT HR CRM

…

system

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perational

system

ETL systems

external data sources service systems ERP systems internet / extranet

perational system

SLIDE 3

Enterprise Management

(Robert) Anthony’s Pyramid (Triangle)

strategic decisions

– overall objectives of the enterprise – positioning, scenarios, ...

management decisions

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– economic objectives & BUDGET

operational decisions

– planning and control of operational activities

SLIDE 4

Strategic Management

“Strategic management is an ongoing process that evaluates and controls the business and the industries in which the company is involved; assesses its competitors and sets goals and company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly [i.e. regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment., or a new social,

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competitors, a new economic environment., or a new social, financial, or political environment.” (Lamb, 1984)

SLIDE 5

Critical Success Factors (CSF)

“Critical Success Factors (CSFs) - CSFs are the limited number of areas in which satisfactory results will ensure successful competitive performance for the individual, department or competitive performance for the individual, department or

rganization.

CSFs are “the few key areas where ‘things must go right’ for the business to flourish and for the manager's goals to be attained.” [Rockart, 1979] CSF = areas of excellence / attention

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CSF = areas of excellence / attention note:

corporate objectives: what to do (goals to be achieved)
CSF: how to achieve the objectives (second level goals, subject

to the previous ones)

SLIDE 6

Key Performance Indicators (KPI)

Performance measurement for business processes Review of: Review of:

effectiveness

– degree of compliance to a target

efficiency

– productivity, unit costs (analogous to audit)

quality
resources
input

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input

– evaluation of the service in this process is "customer"

output according to the expectations of the "customer" of the

process

level of service

– response times to the "customer", average delays, flexibility

SLIDE 7

KPI – methodological scheme

1. selection of the processes
2. identification of KPIs
3. CSF and“coverage” by KPI
4. refinement of the indicators

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5. dimensional analysis
6. completing requirements

SLIDE 8

KPI method: 1 – selection of processes

identification of business processes ...
selection process to be controlled
selection process to be controlled
for each process:

– name – description

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– description – motivation – priority

SLIDE 9

KPI method: 2 – identification of KPIs

Triangle of indicators efficiency KPI

...
...

Resources

...
...

quality

...
...
...

service

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...
...

Input & Output Volume

...
...
...

quality KPI

...
...
...

service KPI

...
...
...

SLIDE 10

KPI method: 3 – identification of CSFs

Product: Preliminary CFS
Source: experience / specific area of business

type of CSF description CSF samples sector common to all companies

consulting firm: quality of staff
company sales: prices

competitive factors competitive situation

f the company
competition on CRM: processing

regular customer

competition on price: agreements

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factors

f the company
competition on price: agreements

with companies environmental factors constraints outside the company

certified products
compliance with specific legislation

time factors contingent situation

promotion/recover of reputation

SLIDE 11

KPI method: 3 – CSF and levels – One Example

LEVEL CSF

Company

Press Relations
Dealer network
Dealer network
Security of vehicles
Product Reliability

Function: production

After-sales service
Costs of the process
Quality of Product
Environmental Concerns

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Environmental Concerns

Role: Responsible for certific.

Image quality to other business functions
Technical Skills
Certification of processes
Control Technology
Cost of certification

SLIDE 12

KPI method: 3 – CSF - interviews

Input: Candidate / Preliminary CFS
Source: company executives
Activities: interviews
Activities: interviews
Product: CFS + indicators + Details

for each CSF: for each KPI: – name – description

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– description – metrics – data sources – motivation

SLIDE 13

KPI method: 3 – KPI vs. CSF (“coverage”)

With the lists of KPI and CFS, verify the “coverage” of CSF by means of KPI

CSF KPI cost quality environment direct unit cost X

verhead unit

X defects in production X defects in service X

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defects in service X customer rating X comparison competition X X comparing the past X X waste products X recyclable material X energy consumption X X

SLIDE 14

KPI method: 4 – refinement of the indicators

metrics
notes on processing / aggregation
notes on processing / aggregation
source
final / budget

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SLIDE 15

KPI method: 4 – refinement of the indicators – Robustness

Subjective evaluation and qualitative of the identified indicators identified indicators metrics (1 = best, 5 = worst):

a. simplicity: otherwise not used
b. cost of information: resources used
c. significance: a contribution to the measure of

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c. significance: a contribution to the measure of

CSF

d. frequency: how many updates/time
e. determinedness: accuracy of measurement

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metrics (1 = best, 5 = worst)

KPI method: 4 – refinement of the indicators – Robustness An example

CSF indicator simplicity cost significa nce frequency determinedn ess AVG (robustnes (robustnes s) cost direct unit cost 1 2 2 1 1 1,4

verhead unit

2 1 2 2 2 1,8 quality defects in production 1 1 2 1 1 1,2 defects in service 1 2 2 1 1 1,4 customer rating 1 4 1 3 3 2,4

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customer rating 1 4 1 3 3 2,4 comparison competition 2 4 2 4 3 3 comparing the past 3 2 3 4 3 3 environme nt waste products 2 1 2 2 2 1,8 recyclable material 3 2 2 2 2 2,2 energy consumption 2 1 2 4 2 2,2

SLIDE 17

KPI method: 5 – Dimensional Analysis

For each KPI:

applicable dimensions

For each dimension of an indicator:

purpose

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elements of the domain
applicable hierarchies (? bottom-up?)

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KPI method: 6 – Finishing requirements

For each indicator:

as CSF

data sources
processes of aggregation / calculation
description of the properties (dimensions)

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distribution within the organization
correlation with CSF (step 4)

SLIDE 19

Balanced Scorecard (BSC)

Kaplan & Norton 1996
Integration of many previous concepts:
Integration of many previous concepts:

– customer orientation – BPR – MBO (Management By Objectives)

Performance Measurement System

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Performance Measurement System

(“scorecard”), based on the “balance” of various classes of indicators, each geared to specific analysis perspective"

SLIDE 20

Identification of KPI: Balanced Scorecard (BSC)

Customer STRATEGY Internal Process Financial

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Employee Learning and Growth

SLIDE 21

BSC: general structure

performances service level

customer

profitability development

financial perspective

perating cycle (traditional)

innovation cycle (project / product development.)

internal processes

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staff technological systems

rganizational procedures

learning and growth