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 design Challenge 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