Business Performance Mgmt 1

Business Performance Mgmt 1

1. What is BPM?

   • BPM, aka CPM (corporate performance mgmt) is a real time system that alerts biz managers of potential opportunities impending problems and threats, and helps them to react to these through models and collaboration. BPM refers to the business process, methodologies, metrics, and technologies used by enterprises to measure, monitor, and manage their business performance.
   • 3 BPM Key Components
     • 1. Set of integrated, closed loop mgmt 2. Analytic processes 3. Technology supported. BPM is a tool that helps businesses define strategic goals and helps measure their performance against them. Methods/tools for monitoring key performance (KPI) shld be linked to their organisational strategy
   • 3 Benefits of BPM
     • 1. Improves Communication (Thru generation of performance metrics and plans, business mgmt can communicate with the organisation's missions, goals, objectives etc. 2. Improve Coordination (BPM fosters exchange of ideas and info between the diff levels within an org, within depts, or biz units. 3. Improve Control (BPM enables staff to adjust plans continuously and improve operations

2. 4 Step Closed Loop Process

   • STRATEGIZE - WHERE WE WNA GO: Conduct current situation analysis, develop biz strategy, conduct environmental scan, determine planning horizon, identify and delineate critical success factors, complete gap analysis etc
   • PLAN - HOW TO GET THERE: Operational planning (Plan that translates goals and objectives into tactics and initiatives, resource requirements and expected results to be achieved in a time (e.g 1 year) Operational planning has 2 types, tactic-centric op plan (operationally focused), or budget centric op plan (financially focused)
   • MONITOR/ANALYZE - HOW ARE WE DOING: Implement a framework (essential structure) that addresses and monitors critical success factors, strategic goals/ targets
   • ADJUST: WHAT TO DO DIFFERENTLY - Create new markets/products, acquiring new customers, streamlining some processes

3. Performance Measurement System

   • PMS is a system that assists managers in tracking the implantation of biz strategy by comparing actual results vs goals with indicative (progress? stagnant?) systematic comparative methods
   • KPIs represent strategic objective and metric that measure performance against goals. (Benchmarks, time frames, encoding colours, ranges, targets). Measure = A KPI represent of a strategic objective that measures performance against a goal
   • Balance Scorecard: A holistic (complete) measurement methodology that measure strategies against actions based on 4 perspectives: FINANCIAL, CUSTOMER, INTERNAL (PROCESS), LEARNING & GROWTH
     • Balance Measures - Financial & Non Financial, Leading (Sales Lead) & Lagging (Revenue), Internal & External, Quantitative & Qualitative, Short Term & Long Term
     • 6 STEP PROCESS: 1. DEVELOP AND FORMULATE STRATEGY (Vision, Mission, Values), 2. PLAN THE STRATEGY (Obj, measures, targets), 3. ALIGN THE ORGANISATION 4. PLAN OPERATIONS 5. MONITOR AND LEARN 6. TEST AND ADAPT THE STRATEGY

4. Strategic Themes

   • High level biz strategies that forms into business models. It includes building a balanced score card, and is to be applied to every part of the org. Selecting strategic themes: ideal = 3-5 themes, 3-5 words in each theme and begins with a verb, and one that bridges strategic gap. (E.g IBM: Total Solution, Lexus: Quality, Apple: Leading Edge Products and Services, Microsoft: System Lock In)

5. Assessing internal and external environment

   • PESTEL
     • 5 EXTERNAL INFLUENCES: POLITICAL (election changes, war, terrorism, public policy changes), ECONOMICAL (inflation, economic growth, gov funding, new biz formation rates, unemployment rate, exchange rate, foreign competition), SOCIAL (ageing popln, migration rates, demographic rates, health shifts), TECHNICAL (new production or communication methods, new fuel and energy sources, outsourcing), ENVIRONMENTAL (environmental regulation changes, public opinion, recycling habits, environmental risks/accidents - natural disasters), LEGAL (employment law, consumer protection law, international law & regulations, law industry
   • SWOT
     • STRENGTH, WEAKNESSES, OPPORTUNITIES (potential ventures), THREATS (what could be a risk?) SWOT is used for one strategy at a time only
   • PORTER'S 5 FORCES
     • SUBSTITUTE - Possibility of consumers switching to other products, NEW COMPETITORS - How likely are new competitors to enter the market, RIVALRY - How intense is the current competition, CONSUMER BARGAINING POWER - How easily can consumer lower prices, SUPPLIER BARGAINING POWER - How easily can supplier raise prices