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Business Performance Management. DHIREN chATLANI & Jimmy Nguyen. Agenda. Business Performance Management (BPM) Strategize Plan Monitor & Analyze Act & Adjust. Business Performance Management.
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Business Performance Management DHIREN chATLANI & Jimmy Nguyen
Agenda Business Performance Management (BPM) Strategize Plan Monitor & Analyze Act & Adjust
Business Performance Management “A real-time system that alert managers to potential opportunities, impending problems, and threats, and then empowers them to react through models and collaboration” • Outgrowth of Business Intelligence
Strategize • Perform a current situational analysis • Internal analysis • Determine the planning horizon • Time period (1-5)
Critical Success Factors (CSF) • Critical Success Factors (CSF) • Key Performance Indicators (KPI)
Gap Analysis “identify and prioritize the internal strengths and weaknesses…” Vision – effective communications People – incentives should be provided Management – continuous monitoring Resources – requires sufficient resources
Strategic Vision & Goals Strategic vision – image of what the organization should look like in the future Strategic objective – describes the general course of action for a firm to follow Strategic goal – a quantified objective that is time sensitive
PlanOperational Plan “When operational managers know and understand the what, they will be able to come up with the how.” • Operational Planning Tactics & Initiatives • Financial Planning & Budgeting Financial Results
OPERATIONAL PLANNING • TranslateStrategicObjectives & Goals Tactics ResourceRequirements Expectedresultsforfuture(1year) *KEY Factor: Integration Tactics & Initiativesneedto relate tokeyobjectives of strategic plan.
OPERATIONAL PLANNING • Tactic-Centric: • Usedbybestpracticeorganizations. • Definingalternativetacticsthat are usedtoreach a target. • E.g. Ryanair • Budget-Centric: • Financial plan thatsumsthe targetedfinancialvalues. • E.g. Resourcerequirements, financialviability..
Financial Planning & Budgeting Allocation should be based on strategic objectives and key metrics Resource allocation should align with those goals and objectives for success.
MonitorHow Are We Doing? • What to monitor • Diagnostic Control System • Has inputs a process and outputs • A standard to compare the outputs to • Feedback channel: Receive information on variance between standard ie. Profit margin, turnaround time, location in Ryanair. • How to monitor • Balance scorecards, dashboards, reporting systems (pg 111)
MonitorHow Are WeDoing? 1. Set a goal 2. Measure Outputs 3. Calculate performance variances 4. Use varianceinformationtochange input and process. DISCOVERY DRIVEN PLANNING: Waytofindproblematicassumptionsthat are usualynotnoticed. As plansevolve, new data is “uncovered” and new opportunities are found.
Pitfalls of Variance Analysis • Negative Variances • Majority of analysis focus in these, and when functional groups don’t meet their target. • Positive Variances • Rare • May be a sign of opportunity.
Act & Adjust “It is critical for a company to continually monitor, its results, analyze what has happened, determine why it has happened, and adjust its actions accordingly” 70% of IT projects fail Critical for long term success
Paucity of Analysis “The overall impact of the planning and reporting practices of the average company is that management has little time to review results from a strategic perspective, decide what should be done differently, and act on the revised plans”
Conclusion “Best practice organizations do not necessarily develop better predictions or plans; however, they are better equipped to quickly identify changes or problems, diagnose the root causes, and take corrective action”
