Business Performance Management 1

Business Performance Management 1

1. What is Business Performance Management?

   • The business processes, methodologies, metrics, and technologies used by enterprises to measure, monitor, and manage business performance.
   • A real-time system that alerts managers to potential opportunities, impending problems and threats, and then empowers them to react through models and collaboration.

2. Benefits of BPM

   • 1) Improves communication: Top mgt communicate organisation's mission, goals, objectives and expectations
   • 2) Improves co-ordination: Fosters exchange of ideas and information between different levels/within dept or business units
   • 3) Improves control: Adjust plans continuously and improve operations

3. A Closed-Loop Process to optimise Business Performance

   • Step 1: Strategise (Where do we want to go? Strategic Planning Process - Identify vision, strategy, objectives goals)
   • Step 2: Plan (How do we get there? Operational planning - Tactic-centric or Budget-centric plan)
   • Step 3: Monitor/Analyse (How are we doing? Address 2 key issues - What to monitor & How to monitor?)
   • Step 4: Act and Adjust (What do we do differently? Success depends on new projects & Chance of Failure)

4. Performance Measurement System

   • A system that assists managers in tracking the implementations of business strategy by comparing actual results against strategic goals and objectives
     • Key Performance Indicator (KPI)
       • Features of KPIs: Strategy, Targets Ranges, Encodings, Time frames, Benchmarks
       • A strategic objective and metric that measures performance against goal
       • A measure is a KPI that represents a strategic objective and that measures performance against a goal

5. Balanced Scorecard (BSC) Methodology

   • A holistic measurement system for aligning strategies with actions based on 4 perspectives:
     • 1) Financial perspective
     • 2) Customer perspective
     • 3) Internal (process) perspective
     • 4) Learning & Growth perspective
   • "Balance" - combined set of measures are supposed to encompass indicators:
     • Financial & Non-financial, Leading (Sales) & Lagging (Revenue), Internal & External, Quantitative & Qualitative, Short-term & Long-term
   • A Six-Step Process