Embed Size (px)
DESCRIPTION
How to find the appropriate set of KPI’s to support Management in Decision Making: An Integrated Approach"
Citation preview
"How to find the appropriate set of KPI’s to support
Management in Decision Making: An Integrated Approach"
Marco Cossutta, Partner
Reply Consulting
NH Hotels Milanofiori, Assago (MI) - 18 Oct. 13
Agenda
Objectives & Components of Management Control System
An Integrated Approach for Management Control System Enhancement
From Strategic Objectives to Planning & Control Model
Strategy to Measures Footsteps
Conclusions
© International Institute of Business Analysis
2
Objectives & Components of Management Control System
Management Control System should allow a better understanding and monitoring of
performance, risks detection and prevention and the alignment of people behavior to
strategic objectives of the Company.
Management Control System is based on two complementary elements:
The Control Objects (“What should be controlled?”)
the Control Tools (“How to control them?”)
Control ToolsControl Objects
Key
Performance
Indicators (KPI)
Analisys
DimensionsTiming and
key addressee
Accounting
Tools & Policies
Organization &
Processes Information System
Incentive System
Enterprise Value ManagementReply Consulting Support
Starting from the strategic vision defined by the Company, Reply Consulting offers an external
point of view to support the full roll out of the plans and to support the alignment of
objectives, activities and performance management system.
Reply Consulting has designed a new methodology to evaluate:
• the completeness of the strategy defined,
• the alignment of the operational targets to the strategic directions,
• the completeness of the activities to achieve the targets,
• the adequacy and reliability of measurement and monitoring tools.
The Strategy Matrix is a tool enhabling an integrated and comprehensive assessment of :
• The Value Levers,
• The critical processes,
• The performance measures (KPIs)
• The potential enhancements required
An Integrated Approach for Management Control System enhancement
FROM STRATEGY TO CONTROL OBJECTS:STRATEGY TO MEASURES
From Strategic Objectives to Planning & Control Model
KEY
ACTIONS
STRATEGIC
OBJECTIVES
CRITICAL
PROCESSES
CONTROL
OBJECTS
CONTROL
TOOLS
PERFORMANCE
MANAGEMENT
Co
mm
un
icat
ion
Rew
ard
s
Tra
inin
g
Ben
chm
arki
ng
CO
NT
INU
OU
S IM
PR
OV
ME
NT
Mission
Vision
Values
S T R A T E G Y
Strategy to Measures Footsteps
Represents the levers for overcoming barriers for change and promote
strategic guidelines throughout the organization
Defines the action plan to be adopted to succeed in strategy implementation
Identify the key processes that enable strategic objectives overcome
Defines “What should be controlled?” (The Control Objects) and are represented by:
Key Performance Indicators (KPI), Analisys Dimensions, Timing & Key Addressee
Defines “How to control them?” (the Control Tools) and are represented by:
Organization & Processes, Accounting Tools & Policies, Information System
Represents the translation of strategic guidelines into expected long-term objectives
Enterprise Value ManagementStrategy Matrix 1/7
VALUE DRIVERS
REVENUE
INCREASE
PROFITABILITY ENHANCEMENT
ASSETS
OPTIMIZATION
CORPORATE
OUTLOOK
Volumes
Pricing
Commercial,
Technical &
General Costs
Cost of Goods Sold
Company
Strengths
External Factors
and Competitive
Environment
Inventory
Tangibles and
Intangibles
Receivables &
Payables
PROCESSES
REVEN
UE I
NCREASE
MARG
IN P
RO
FIT
ABIL
ITY
EN
HAN
CEM
EN
T
ASSET O
PTIM
IZATIO
N
CO
RPO
RATE O
UTLO
OK
KPI
TACTICAL VALUE LEVERS
1.Develop new patterns
2.Enhance incremental changes
KPI
Key PerformanceIndicators
P.02 - STRATEGIC PLANNING
P.08 - DEVELOP & MANAGE HUMAN RESOURCES
P.09 - INFORMATION & COMMUNICATION TECH
P.10 - MANAGE FINANCIAL & PHYSICAL RESOURCE
P.11 - REGULATORY & COMPLIANCE
P.12 - MANAGE EXTERNAL RELATIONSHIPS
P.13 - MANAGE IMPROVEMENT & CHANGE
P.03 - DESIGN PRODUCTS & SERVICES
P.04 - MARKET & SELL
P.05 - PROCUREMENT
P.07 - AFTER SALES
P.01 - UNDERSTAND MARKETS & CUSTOMERS
P.06 - PRODUCE & DELIVER PRODUCTS /SERVICES
KPIRevenue
IncreaseVolumes
Pricing
Acquire New
Customers
Retain and
Enhance Existing
Customers
Leverage
Differentiating
Assets
Strengthen Pricing
Enterprise Value ManagementStrategy Matrix – Value Drivers 2/7
Account
Management
Cross-Sell & Up-
Sell
Retention
Demand & Supply
Management
Price List
Optimization
Marketing & Sales
Product & Service
Innovation
Cash/ Asset
Management
Value Drivers Value Levers
Enterprise Value ManagementStrategy Matrix – Tactical Value Levers 3/7
The Tactical Value Levers represent the full set of interventions to reach the targets defined by the
Top Management. They could introduce new rules, processes and organizational changes – Develop
New Patterns – or improve existing processes and/or activities – Enhance Incremental Changes.
The below example is related to Retain and Enhance Existing Customers - Cross-Sell & Up-Sell :
Increase focus on most profitable products
and services
Increase focus on most effective sales and
advertising channels
Increase focus on expansion of customer
relationship
…
Increase focus on high value/ high potential
customer
Develop New Patterns
Improve brand strength and goodwill
Improve cross-sell/up-sell skill for staff
Improve staff incentives for cross-
selling/up-selling
…
Improve total customer experience
(purchasing, fulfillment, usage, service…)
Enhance Incremental Changes
SU
PP
OR
T P
RO
CES
SES
OP
ER
ATIO
NS
Enterprise Value ManagementStrategy Matrix – Processes 4/7
P.08 - DEVELOP AND MANAGE HUMAN RESOURCES
P.09 - INFORMATION AND COMMUNICATION TECNOLOGIES
P.10 - MANAGE FINANCIAL AND PHYSICAL RESOURCES
P.11 - REGULATORY AND COMPLIANCE
P.12 - MANAGE EXTERNAL RELATIONSHIPS
P.13 - MANAGE IMPROVEMENT AND CHANGE
P.02
STRATEGIC
PLANNING
P.03
DESIGN
PRODUCTS &
SERVICES
P.04
MARKET &
SELL
P.06
PRODUCE &
DELIVER
PRODUCTS AND
SERVICES
P.01
UNDERSTAND
MARKETS &
CUSTOMERS
The Value Chain summarizes all the activities performed in the Company to design, develop, produce,
sell and ship the products . All the activities are classified in two main clusters:
• Operations, including all ‘value creating’ areas to produce, sell and deliver the product to the final
customer, and to offer post sales assistance
• Support & Overheads, including all other supporting areas to operations
P.07
AFTER SALES
P.05
PROCUREMENT
Enterprise Value ManagementStrategy Matrix – Sub Processes 5/7
P.04 - MARKET & SELL
P.04.1 - Bring the new products and services to market
P.04.2 - Brand management
P.04.3 - Advertising and promotion
P.04.4 - Customer acquisition
P.04.5 - Develop pricing strategy
P.04.6 - Sell products and services
P.04.7 - Channel execution
P.04.8 - Sales force management
P.04.9 - Store management
P.04.10 - Customer relationship mgt.
P.04.11 - Billing
P.03 - DESIGN PRODUCTS & SERVICES
P.03.3 - Develop new products /services concept and plans
P.03.1 – Identify opportunities for new products and services
P.03.2 - Product costing
P.03.4 - R&D portfolio planning and management
P.03.5 - Product management
P.02.1 - Design the organizational structure and relationships between units
P.02.2 - Develop budgets
P.02.3 - Business planning and simulating
P.02.4 - Business development and corporate performance monitoring
P.02 - STRATEGIC PLANNING
P.08 - DEVELOP AND MANAGE HUMAN RESOURCES
P.08.2 - Recruit, select and hire employees
P.08.3 - Manage deployment of personnel and teams
P.08.4 - Develop and train employees
P.08.5 - Time & attendance
P.08.6 - Process payroll
P.08.1 - Develop and manage base and variable compensation
Enterprise Value ManagementStrategy Matrix – KPI Definition 6/7
The KPI Library is a database of more than 700 indicators of cost, quality and time, each linked to the
related Value Chain processes. Below an example (related to process P.04 Market & Sell):
• KPI Cost-based – summarizing the financial performance
• KPI Quality-based – aiming at evaluating how much the goods/services fit customers’ needs
• KPI Time-based - measuring the quickness of responsed and flexibility to external factors
Strategy to Measures –Analisys Dimensions Definition 7/7
Following KPI definition an applicable set of Analisys Dimension will be identified for each of them. To anycombination of KPI-Analisys Dimension will be assigned addressee and timing (frequency & iteration).
Conclusions
Starting from the strategic vision defined by the Company, Reply Consulting offers a comprehensive metodology (based on Business Analisys Techniques) for answering to the question:
"How to find the appropriate set of KPI’s to support Management in Decision Making”
Alternative access points
An integrated approachThe Right Answer
Reply Consulting, once defined with the Management or recived from the Company the
Strategic Plan, is able to provide competencies, methodologies and tools for:
• evaluating coehrency, trustworthiness and financial sustainability of defined strategy,
• evaluating adequacy and reliability of the Management Control System (Organization,
Processes and Information System) in place,
• Defining and implementing the corrective actions related to:
o Organization: Re-organization of AFC and Internal Auditing
functions; Skill Assessment and empowement; MBO Plans
definition;...
o Processes: Definition and documentation of Policies and Procedures
related to AFC, Internal Auditing and ICT functions; Re-design or
process improvment; 231 and 262 Compliance;...
o Information System (Information System Planning; Software
Selection, Design and Implementation of Planning & Reporting
Systems; ERP Control Model Adjustment; Datawarehousing & EAI;...
ARTICOLAZIONE PIANO INDUSTRALE
• Definizione Strategia• Declinazione Intenzioni
Strategiche• Articolazione delle Azioni Chiave
VALIDAZIONE PIANO INDUSTRIALE
Verifica di:• Coerenza• Attendibilità• Sostenibilità Finanziaria
Individuazione e definizione dei Processi e Sottoprocessi Critici
MODELLO DI PIANIFICAZIONE E CONTROLLO
Definizione indicatori di prestazione (KPI), dimensioni di analisi e delle analisi di profittabilità
OTTIMIZZAZIONE PROCESSI
• Valutazione dell’efficienza ed efficacia dei processi da reingegnerizzare rispetto alle best practice
• Formalizzazione procedure• Compliance.....
VERIFICA ADEGUATEZZA E AFFIDABILITA’
Verifica di: • Adeguatezza (confronto KPI
disponibili vs/teorici)• Affidabilità (analisi affidabilità KPI
disponibili)
OTTIMIZZAZIONE ORGANIZZAZIONE
• Revisione organizzazione• Definizione piano di incentivazione
per il Management coerente con gli obiettivi definiti nella strategia formulata......
OTTIMIZZAZIONE SISTEMI INFORMATIVI
Introduzione di sistemi di pianificazione e reporting per l’analisi dei dati ed una loro efficace fruizione sia in sede di pianificazione sia in sede di consuntivazione......
ANALISI PROCESSIDEFINIZIONE MODELLO DI BUSINESS
• Mappatura Catena del Valore• Individuazione e definizione di
Fattori Critici di Successo e Rischio
DEFINIZIONE
AZIONI
Cosa Fare
DEFINIZIONE
MISURATORI
Cosa misurare
DEFINIZIONE
OBIETTIVI
Cosa ottenere
ATTIVITA’ MANDATORIE PER QUOTANDE
MA ESSENZIALI PER OGNI AZIENDA
ATTIVITA’ COMUNI A OGNI AZIENDA
Reply Consulting support your Evolution….
Q & A
