Chapter 9

BUSINESS PERFORMANCE MANAGEMENT

Sections 9.2, 9.8, 9.10, 9.11

Business Performance Management• Monitoring actual performance against the goals and

objectives • BPM needs BI as its foundation

BPM Methodologies

•Six Sigma •Balanced scorecard (BSC)

Six Sigma*

• A business is a collection of processes/activities• Aims to reduce the number of defects in a business

process to as close to zero defects per million opportunities (DPMO) as possible

• Encompasses the steps of defining, measuring, analyzing, improving, and controlling a process (DMAIC)

• Six Sigma can be challenging to apply if 000’s of processes are involved

*in Statistics, according to Empirical rule, almost all data falls within ±3σ of the mean

Balanced Score Card (BSC)Designed to overcome the limitations of systems that are solely financially focused

– Non-financial objectives considered in BSC: 1.Customer

2.Internal business process

3.Learning and growth

– The term balance arises because contrasting perspectives are considered while measuring organizational performance • Financial and non-financial• Leading and lagging• Internal and external• Quantitative and qualitative• Short term and long term

BSC

Performance Dashboards • Dashboards provide visual displays of important

information that is consolidated and arranged on a single screen so that information can be digested at a single glance and easily explored

Dashboards and Scorecards

– Performance dashboards Visual display used to monitor operational performance

– Performance scorecards Visual display used to chart progress against strategic and tactical goals and targets

Both are built on a business intelligence and data integration infrastructure that enables organizations to measure, monitor, and manage business performance effectively

Both can be built for each type of managerial control activity: operational, tactical, and strategic

Dashboard designChallenge is to display all the required information on a single screen, clearly and without distraction, in a manner that can be assimilated quickly

• Use visual components (e.g., charts, performance bars, sparklines, gauges, meters, stoplights) to highlight, at a glance, the data and exceptions that require action.

• Should be intuitively easy to use• Combine data from a variety of systems into a single,

summarized, unified view of the business• Enable drill-down or drill-through to underlying data sources

or reports • Present a dynamic, real-world view with timely data refreshes,

enabling the end user to stay up-to-date with any recent changes in the business

Business Activity Monitoring (BAM)

• Processes that alert managers to potential opportunities, impending problems, and threats, and then empowers them to react through models and collaboration

• Makes the organization pro-active• Aims for zero-latency monitoring of organizations

(real-time enterprises)• Solution steps can be taken immediately on

detection of dissonance between observed and expected outcomes

• Easy access is provided to tools to model the problems and collaborate with other decision-makers, leading to a quick solution