1. Business
Performance
Measurement
For
Success
Effective, Realisable and Usable Business
Performance Information to Increase Your
Business Intelligence Quotient
Alan McSweeney

2. Business Performance Measurement For Success
Contents
Business Performance Management..................................................................3
The Data and Information Gap........................................................................3
The Data, Information and Action Cycle..........................................................5
Benefits of Effective Business Performance Management .................................5
Designing and Implementing a Successful Business Performance Management
Programme ......................................................................................................6
A Business Performance Management Measurement Framework......................7
Operational Business Performance Management Framework............................9
Summary and Next Steps............................................................................... 10
Measuring business performance and presenting the resulting information for
action is one aspect of achieving business success. This whitepaper defines an
approach to implementing a measurement framework to improve your Business
Intelligence Quotient (BIQ).
Implementing business measurement can be hindered by practical issues such as
the all too common gap between the theory of effective business performance
management and the measurement of information needed to enable this and the
systems and processes to achieve it. Closing the information gap is often the first
step in implementing business measurement.
Realism and pragmatism are needed when implementing a measurement
framework. There are many practical issues to be addressed. Real success from
implementing measurement is achieved by business and IT working together
collaboratively. Business commitment and sponsorship is vital.
There is little benefit in creating a complex measurement and reporting
infrastructure without it being used to deliver real business benefits. Together
business and IT must productionise BPM and embed its use in the business.
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3. Business Performance Measurement For Success
Business Performance Management
Business Performance Management (BPM) is an umbrella term for a well-
defined collection of processes that assist organisations optimise business
performance. The techniques that exist, are well-proven and supported by a
wide range of effective software. It is not the intention of this paper to provide
details on these techniques. The objective of this paper is to identify a practical
approach to using performance measurement to achieve business success.
There is all too frequently a gap between the theory of effective business How important are budgeting,
performance management and both the measurement of information needed to forecasting and reporting to the
enable this and the systems and processes to define, collect, manage and enable success of your business?
access to information. This gap is the first practical hindrance to implementing
successful measurement.
The reasons for the gap are two-fold:
1. The business does not know or define what measurements and indicator
metrics are to be provided
2. The information technology infrastructure does not exist to collect data
to enable the measurements to be generated
Source: BPM Forum
The business imperatives for BPM include:
• Dynamic and challenging business conditions
• Greater expectation of value from clients
• Changing competition and business models
• Automation driving higher speed business
• Need to reduce costs and do more with the same or fewer resources
• Greater need for business transparency
The purpose of this whitepaper is to define a framework for closing this
gap from both sides. It is only through collective action and co-operation How agile and adaptive are your
that effective IT systems will deliver effective information. It describes an budgeting, forecasting, reporting
overall structure for improving your Business Intelligence Quotient and analysis processes?
(BIQ).
The Data and Information Gap
Within most organisations, there is a noticeable information gap. The key issues
common to many organisations are:
• Timely access to information
• Access to accurate and complete information
• Access to information at an appropriate level of detail Source: BPM Forum
• Inconsistent and patchy information from various business systems and
units
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4. Business Performance Measurement For Success
The core information requirements of any organisation are accuracy,
completeness and timeliness. All too frequently some or all of the following
statements are true:
• The data is there but getting access to it is complicated or not possible
• Finding and collating data across different information sources is often
very difficult
• Performance data is not available quickly enough to act on it effectively
• There is excessive information that conceals what is really needed or
How satisfied are you with important
your company’s ability to • Some of the information required is simply not being captured
respond to change?
The range of information required varies but includes key measures such as:
• Overall financial performance • Overall operational performance
• Performance of partnerships and • Performance relative to
alliances competition
• Product and service line • Delivery of profit and value to
profitability clients
• Client profitability • Client satisfaction
• Client acquisition and retention • Staff performance
Each of these metrics should be available consistently and quickly and at a
Source: BPM Forum high-level and then be available to be analysed to an appropriate level of detail.
The metrics need to be defined by the business and must be appropriate and
useful.
How do your actual expenses
compare with your budget?
Source: BPM Forum
Closing the information gap is an essential pre-requisite to implementing
effective and usable Business Performance Management. This is the
responsibility of both the business and IT working collaboratively.
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5. Business Performance Measurement For Success
The Data, Information and Action Cycle
The data, information and action cycle within the overall Business Performance
Management Framework consists of three elements:
1. Data refers to the source figures and numbers. It is the raw material for On a scale of 0 to 100, where
analysis. The data gap is the absence of the tools and operational 100 is the best, how do you
processes to consistently collect, store and manage the data and make rate the financial IQ of your
available tools to perform analyses. company or organisation?
2. Information is the value extracted from the raw data. The information
gap is the absence of insight caused by the lack of defined metrics and
indicators and their timely and accurate availability and usability.
3. Action is the need for operational business processes to ensure that the
information presented is used and acted upon.
Source: BPM Forum
What is the level of anguish and
frustration associated with
The Data, Information, Action cycle means that there must be a
budgeting in your organisation?
continuum from collecting the raw data to using it effectively. The
process to achieve this must be embedded in the organisation.
Benefits of Effective Business Performance Management
The core benefit of successful Business Performance Management is a greater
focus on value added activities such as business decision support rather than the
collection, reconciliation, and preparation of financial and business data.
A balanced performance measurement system:
• Promotes focus and alignment, enables communication, enables and Source: BPM Forum
encourages people to modify their behaviour in a way which is
consistent with corporate goals.
• Is comprehensive and contains key measures from all operational areas
including financial and non-financial measures, indicators of past results
and conditional forecasts of future performance and metrics
encompassing the areas of time, cost and quality
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6. Business Performance Measurement For Success
The specific detailed benefits include:
What factors most impact your Data Analysis and • Supporting informed and quality decisions
company's level of alertness? Reporting Facility • All data consistent and integrated with financials
• Actuals integrated with budget
• Graphical analysis and trend data readily available
• Flexible reporting to support investigation
Improved Integrity • One version of the truth
• Integrated data validation
• Business ownership of relevant data
• Reconciliation within and between data sources
Enhanced Efficiency • Improved use of resources
• Reduced time spent on non-value added activities
• Streamlined reporting
There are genuine business benefits to BPM when it is implemented
Source: BPM Forum successfully.
Designing and Implementing a Successful Business
Performance Management Programme
Achieving a successful BPM programme requires buy-in from both business and
How would higher levels of IT. It is not just a matter of buying and implementing software. Successful
alertness help differentiate your BPM requires that the business defines what measurement and associated
company? source data are needed. The software tools are a small part of the overall project.
In implementing BPM, it is important to be practical and realise that there may
be a real data and information gap as described above. BPM can be a major
initiative so it is important to start small and with a practical focus. Some of
the key success factors for achieving BPM are:
Management Management sponsorship at the beginning is important to
Sponsorship ensure the project is allocated the resources needed and
there is a willingness to overcome resistance to change. The
sponsor should have commitment, authority and respect
required to drive the project.
The Right Team This is ideally a cross-functional, collaborative team of
capable, committed people. Both business and IT staff
should be on the team. The business owners should drive the
project.
Define the Define what is required to be measured and the raw source
Measures data needed to create these measures.
Source: BPM Forum Planning A well-planned approach delivers benefits throughout the
life of the project and ensures success.
Data A data infrastructure – data warehouse, data load tool, data
Infrastructure marts, is a key piece of IT infrastructure.
Quality of Gaining an effective understanding of what is required and
Analysis what is available is important. Frequently too much detail
detrimentally affects delivery.
Software Appropriate, functional software that can deliver both on
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7. Business Performance Measurement For Success
initial and future requirements.
Iterative Delivery Deliver initial high-level results quickly – ideally within 3
months. Repeat and extend thereafter.
Manage Change Recognise and manage the change associated with adopting
BPM and the impact this will have or be perceived to
have on people.
Education Provide training to begin to build support for the BPM
initiative.
Advertise Success Advertise what has been achieved to create awareness and
acceptance of the BPM approach and encourage further
initiatives.
It is important to be pragmatic and realistic in your approach to
implementation. You need to address the practical issues such as the
information gap as well as implementing the appropriate technology
infrastructure. Business commitment and sponsorship is vital.
A Business Performance Management Measurement
Framework
At a very high level, a BPM measurement framework involves a hierarchy of
activities: What are the leading factors requiring
you to modify business processes and
introduce applications?
The concept of a Scorecard has existed for a considerable amount of time.
Commonly a Scorecard consists of a set of relevant performance indicators
across a set of views of different dimensions of organisation activity:
• Business and financial dimension Source: BPM Forum
• Customer or client dimension
• People and internal process dimension
• Organisational health dimension
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8. Business Performance Measurement For Success
Together these four dimensions combine to form an overall picture of the
business. The Scorecard is the headline indicator.
Business and
Do you have the ability to get Finance
real-time views into the state of
critical business processes?
Organisational Customer
Health and Client
People and Internal
Source: BPM Forum Processes
The business must be able to drill down into the detail of any performance
indicator to gain insight and diagnose problems.
What are the obstacles to quickly Developing an effective Scorecard typically includes four processes:
modifying core business
processes? • Translating the business vision into operational goals
• Communicating the vision and link it to specific performance
• Business planning
• Feedback and learning, and adjusting the measurement accordingly
Ensuring BPM and Scorecard success means:
• Ensuring clarity and that it is linked to overall business strategy
• A balance of measures and indicators
• Quality business analysis and management of issues during the
development process
• Sponsorship and acceptance of the Scorecard as a management tool
Source: BPM Forum
The Scorecard defines the “What” of BPM and is specified by the
business. Now IT must define and enable the “How” and the associated
operational processes. Together business and IT must productionise BPM
and embed its use in the business.
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9. Business Performance Measurement For Success
Operational Business Performance Management Framework
The logical components of an operational BPM system consist of a number of
layers and their individual constituent parts:
1. Operational Data Data needs to be available from a variety of sources
Sources across the operational business systems and from In what way would real-time
external data sources. operational data improve
2. Data Extraction The process for extracting, normalising and business outcomes?
Facility transforming data needs to be automated. This is
commonly referred to as the ETL (Extract,
Transformation and Load) component.
3. Data Warehouse The DW is the corporate data store - single, consistent
and with information stored over time. Implementing
a data warehouse facility requires significant
involvement of and input from IT.
4. Data Models and This reflects the input of the business in defining what
Metrics is being measured and what metrics are being
generated. This is where input from the business is
vitally important.
5. Business This software layer provides analysis, reporting,
Intelligence mining and data access facilities. This is commonly
Facility off-the-shelf software from a variety of vendors,
customised to suit requirements.
6. Business and This optional component stores information for Source: BPM Forum
Subject Area Data specific business areas into separate data stores for
Marts ease of access and use.
7. Specific This element of the overall implementation allows
Operational business specific detailed analysis to be performed.
Business and This type of analysis focuses on identifying and
Process Analysis resolving operational issues and trends.
8. Scorecard View This presents the high-level scorecard view of the
agreed performance indicators.
9. End-User Access to End-users will have appropriate access to information
Reports and Data – from viewing to access to analysis facilities.
Analysis
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10. Business Performance Measurement For Success
How burdensome/time- This view of an Operational Business Performance Management Framework
consuming is the budgeting will help to identify the individual components required of an overall system
process currently? and to recognise those components that may already be partially or completely
in place.
Source: BPM Forum
What are the top three pitfalls
that derail, delay or disrupt
your budgeting process?
Surrounding the operational framework of BPM must be a commitment
to ensure that the information presented is used and acted upon. There is
little merit in creating a measurement infrastructure without it being
Source: BPM Forum
used to deliver real business benefits.
Summary
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11. Business Performance Measurement For Success
The successful implementation of Business Performance Management can
deliver real business benefits, especially in today’s challenging business
environment. Effective performance management is not just about numbers.
BPM is the logical evolutionary next step for organisations looking for ways to
drive business performance.
Any BPM programme and initiative should be benefits-led: identification,
measurement and realisation of benefits is basic to success. Success cannot be
measured purely on factors such as delivery on time and on budget. That
excludes the realisation of actual benefits.
There is a real information gap within most organisations. BPM can fill this gap.
Producing the scorecard pack or report is the start of the process and not the
end.
Software tools are a means to an end not the end in themselves. You should
What are the reasons you will
select a tool based on what is required and not what is available.
put more effort into budgeting
and planning?
Successful BPM requires organisational change. Sufficient education for the use
of BPM software and how BPM can be used to improve roles in the organisation
is important to allay people’s concerns about the impact of a BPM programme
on them personally.
It is crucial that business and operational objectives are part of the scope from
the start of an implementation of BPM.
There may be a significant investment required in IT infrastructure to ensure
that BPM systems operate effectively. IT involvement is therefore important.
There is a demand from the business for BPM so the right supply will be
welcomed.
Success is based on a mix of long term vision and short term wins. Source: BPM Forum
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12. Business Performance Measurement For Success
For more information, please contact:
alan@alanmcsweeney.com
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