University of Nevada, Reno Business Performance Management 1 Class Agenda: 2/27/2014  Understand BI in relation to business performance management (BPM).  Understand the importance of interface design to BI  Understand how interface design relates to business performance management (BPM) 1

University of Nevada, Reno Business Performance Management 2 Understanding the use of BI for BPM  Know how to pick your spot for data driven decision making (analytics).  Be able to create reasonable metrics.  Be able to design an effective business-oriented experiment.  Be able to design an effective user interface. 2

Chapter 3 View of BI 3

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Chapter 1 View of BI 6

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Why have past BI projects failed? What are the key factors that contribute to those failures? 8

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Business Performance Management 10 The business processes, methodologies, metrics, and technologies used by enterprises to measure, monitor, and manage performance.

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University of Nevada, Reno Business Performance Management 12 Process of BPM  Strategize  Plan  Monitor/Analyze  Act/Adjust 12

Strategize: Where do we want to go? 13 To become the Harvard of the west. (Stanford in the 1940’s) To give unlimited opportunity to women. (Mary Kay Cosmetics) To give ordinary folk the chance to buy the same things as rich people. (Wal-Mart) To make people happy. (Walt Disney) Sony in the 1950’s: Become the company most known for changing the worldwide poor quality image of Japanese products. Make “Made in Japan” mean something fine, not something shoddy.

Tasks in the Strategic Planning Process 1. Conduct a current situation analysis 2. Determine the planning horizon 3. Conduct an environmental scan 4. Identify critical success factors 5. Complete a gap analysis 6. Create a strategic vision 7. Develop a business strategy 8. Identify strategic objectives and goals 14

Components of a strategy  Strategic vision A picture or mental image of what the organization should look like in the future  Strategic goal A broad statement or general course of action prescribing targeted directions for an organization  Strategic objective A quantifiable goal with a designated time period and a defined measurement method  Critical success factors (CSF) Key factors that delineate the things that an organization must excel at to be successful 15

University of Nevada, Reno Business Performance Management 16 Planning: How do we get there? Operational plan: plan that translates an organization’s strategic objectives and goals into a set of well-defined tactics and initiatives, resources requirements, and expected results for some future time period (usually a year). 16

University of Nevada, Reno Business Performance Management 17 Strategy dictates planning  An organization’s strategic objectives and key metrics should serve as top-down drivers for the allocation of an organization’s tangible and intangible assets  Resource allocations should be carefully aligned with the organization’s strategic objectives and tactics in order to achieve strategic success 17

University of Nevada, Reno Business Performance Management 18 Monitor: How are we doing?  Performance measurement system A system that assists managers in tracking the implementation of strategy by comparing actual results against strategic goals and objectives Comprises systematic comparative methods that indicate progress (or lack thereof) against goals Requires the development of metrics. All measurement is about comparison. 18

University of Nevada, Reno Business Performance Management 19 You can’t monitor what you don’t measure  Key performance indicator (KPI) A KPI represents a strategic objective and metric that measures performance against a goal  Distinguishing features of KPIs: Consistent Time-related Benchmarked 19

What are the most common KPI’s for profit-making organizations? 20 How about non-profit organizations?

Balanced Scorecard Approach to Measurement 21

Act and Adjust: What should we do next?  Success (or sometimes mere survival) depends on new projects: creating new products, entering new markets, acquiring new customers (or businesses), or improving some process.  But, most new projects and ventures fail! Hollywood movies: 60% chance of failure Mergers and acquisitions: 60% IT projects (large-scale): 70% New food products: 80% New pharmaceutical products: 90% … 22

University of Nevada, Reno Business Performance Management 23 Act and Adjust: do it fast!  The goal is to fail fast.  Or to know when something is failing so that it can be adjusted before fully failing.  Or to fail on a smaller scale so that the effects of failure won’t be profound.  Or to be aware of why something failed so that failure produces learning. 23

BPM “architecture” 24

So, where does Business Intelligence fit in relation to Business Performance Management? 25