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Week 3: Business Performance Management (BSC: Columns (Measure (Unit by…
Week 3: Business Performance Management
Definition
Refers to the business
processes, methodologies,
metrics, and technologies used
by enterprises to measure,
monitor and manage business performance
A set of integrated, closed loop management and analytic processes supported by technology that addresses financial and operational activities
Methods/tools for monitoring KPIs (Key Performance
Indicator), linked to the organisation strategy
Tools to define strategic goals and measure/manage performance against them
Benefits of BPM
Control
It enables staff to adjust plans continuously and improve operations
Communication
The Top management communicate mission/goals/
objectives through plans/performance metrics
Coordination
It helps to foster the exchange of ideas/information between
different levels of organisation
Performance Measurement
A system that tracks the implementations of business strategy by comparing actual results against strategic goals and objectives
KPIs and Operational Metrics
Measures performance against a goal
Closed-Loop Process
Step 1: Strategize
Tasks common to strategic planning process
E.g. Complete gap analysis, create strategic vision, develop a business strategy
Step 3: Monitor/Analyse
How to monitor: Key Performance Indicators (KPI)
What to monitor: critical success factors, strategic goals and targets
Step 4: Act and Adjust
Success/Survivability depends on new projects or streamlining some processes
Step 2: Plan
Operational planning: translates strategic planning into a set of well defined tactic and initiatives, resources requirements, and expected results for some future time period
Tactic Centric (Operationally focused)
Budget Centric (Financially Focused)
BPM Methodology Balanced Scorecard (BSC)
Customer Perspective
Internal Perspective
Financial Perspective
Learning and Growth
BSC: Columns
Measure
Unit by which progress to objectives will be evaluated; may lead or lag
Lag: results of an objective
Lead: drive an objective
Target
Quantitative value at a given point in time needed to achieve objectives
Sources for setting targets: historical data, comparison between business units, best practices, best estimates
Objectives
can have multiple measures: DUMB
Initiatives
Collections of actions designed to achieve objective; identify current and brainstorm for now
Rationalize current initiatives by checking which support strategic objectives
Strategic Map
Shows strategic objectives and links for one strategic theme
BSC: Developing Strategic Foundation
Consists of Mission, Vision and Values
Assessment of Internal & External Environment
SWOT Analysis: Political, Weaknesses, Opportunities, Threats
PESTEL Analysis: Political, Economic, Social, Technical, Environmental, Legal
BSC: Strategy Map
Visual representation; a chain of objectives that will lead to successful execution of strategy
Objectives set must be DUMB (Doable, Understandable, Manageable and Beneficial)
BSC: Strategic Theme
Main/High level business strategies that form basis for the business model