From Reactive to Proactive: Making BI a critical resource

in performance improvement

- Presented by -

The Business Intelligence Special Interest Group

Technology Association of Georgia- Speaker -

David N. Williams

Principal, Williams Alliance International

© 2003, Williams Alliance International. All rights reserved.

FACTS:• 92% of Senior Managers report critical or

important need to improve performance management (The Economist, Price Waterhouse Coopers)

• Strategic change is cited as the greatest challenge of the 2000’s (Booze, et.al. research paper)

• Less than 35% of Senior Managers base decisions on internal corporate data (EDI research paper)

• Greater than 90% of all strategic change efforts fail (ASQ, DM Magazine, etc., etc.)

From Reactive to Proactive:

What is BI?• Show potential optimal intersections of sales,

marketing, finance, and supply chain functions-or-

• Decision makers’ resource for managing change– How are we doing? – Do we need to change?– What needs to change?– How do we change it?– Did it work?– Did we hold onto the gain?

From Reactive to Proactive:

Greater than 80% of all strategic changeefforts fail.

Why?– Loss of priority– Lack of buy-in– Loss of focus– The organization chart– Failure to manage results– Exhausted resources– Bad changes

From Reactive to Proactive:

Operationalizing and managing change through the org’ chart is ineffective:

From Reactive to Proactive:

Managing performance and change through the strategic processes:

From Reactive to Proactive:

Strategic processes

• Create/deliver vital products and services• Critical to competitive position• Directly link to bottom line• High impact on customer satisfaction• How customers “see” the organization• Always cross-functional • Core and support processes

From Reactive to Proactive:

From Reactive to Proactive:

Exercise:

Objective: Identify six to ten strategic processes in your organization or a clientOrganization

Total time: 20 minutes

Steps:1. Identify the organization2. Identify the key products and/or services3. List the six to ten processes that meet the criteria (there can be as few as four, not usually

more than ten) 4. Share your results with those at your table5. Share your results with the rest of the group.

Notes:Organization:

Key products/services:

Strategic processes:

1.

2.

3.

4.

5.

6.

7.

8.

9.

From Reactive to Proactive:

Strategic processes are usually disjointed and unrecognized

Strategic processes are real:• Begin

• End

• Key outputs

• Capable

• Consistent, predictable, and predictive (should be)

From Reactive to Proactive:

From Reactive to Proactive:

They are measurable:

• Cost • Operations: how much, how often, how

long, how efficient?• Quality

– do key outputs conform to requirements?– how much variation?– is the process capable?

• Trailing:

– Financial– Market – Customer

satisfaction– Audits

Driving by the rear

view mirror

From Reactive to Proactive:

They allow forward looking metrics:

• Forward looking – Operations– Suppliers / input– Process capabilities

Knowing the

outcomes

• Internal: – Process– Costs– Risk– Operations

From Reactive to Proactive:

They add internal metrics to the equation:

• External – Customer

satisfaction– Market – Competition– Profits

Process management metrics:

• Cost, quality, operations • Do strategic process key outputs conform to

requirements? Average and variation, over history.• Is the process capable of delivering key outputs to

requirements?• Do the pieces add up to the whole? What is the

impact of suppliers, functional groups, manufacturing sites, on the process and outputs?

• Links to external data

From Reactive to Proactive:

From Reactive to Proactive:

Cost of Poor Quality:

The sum of all costs that would disappear if there were no process or quality problems

– Internal failure costs (scrap, rework, downtime, yield, etc.)

– External failure costs (Complaints, returns, allowances, etc.)

– Appraisal costs (inspection/test)

≈35% of operating costs in an unimproved operation

From Reactive to Proactive:

Gathering metrics up-stream

$$$

Q #s

Op #s

From Reactive to Proactive:

Change management:– Do we need to change?

• Strategic directions• Competition/market • Customer satisfaction• Costs• Process

– What is the objective?– How do we get buy-in?– Which strategic process(es) will have greatest impact?– How big is the change (in measurable terms)– Are we there yet?

From Reactive to Proactive:

Change analysis:– Where and what about the process needs to

change?– Is the process capable?

• If the process isn’t capable, no amount of debugging or problem solving will make it so. The process must be

redesigned.

– Flexible, creative data creation and consumption

• History• Experiments

From Reactive to Proactive:

Process Capability:Is the process capable of creating and/or delivering products and services to customer requirements?

Leadership

Management

Detailed Design and

Test

Ownership

© Williams Alliance International, 2001® Campaign and Campaigning are registered trademarks of Williams Alliance International

From Reactive to Proactive:

From Reactive to Proactive:

Generic strategic processes

Manufacturing– Order fulfillment

– Business resource management

– Design of new product

– Customer life-cycle service

– Service call

– Employee development

– Strategic planning

– Financial planning

– Material management

From Reactive to Proactive:

Speaker:David N. WilliamsPrinciple and Executive ConsultantWilliams Alliance Internationaldavidw@williamsalliance.comwww.williamsalliance.com

From Reactive to Proactive:

References:

Strategic process managementWilliams, David N., Mining the Middle Ground: Developing Mid-level Management for Strategic Change,, Boca Raton, St.Lucie Press, 2001

Measurement and process capability assessmentMontgomery, Douglas C., Introduction to Statistical Quality Control. 4th edNew York: John Wiley & Sons, Inc. 2001

Wheeler, D.J., and R.W. Lyday, Evaluating the Measurement Process 2nd ed., SPC Press, 1990.

Snedecor, George W., William G. Cochran, Statistical Methods, 8th ed., Iowa State University Press, 1989.

Cost of Poor QualityGodfrey, A. Blanton and Juran, J. M Juran's Quality Handbook, Fifth Edition, New York: McGraw-Hill, 1999

Process AnalysisBrassard, Michael, and Diane Ritter, The Memory Jogger II, Qoal/QPC, 1994

Imai, Masaaki, Kaizen: The Key to Japan’s Competitive Success, New York: McGraw-Hill, 1986

From Reactive to Proactive:

Notes:

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