<Insert Picture Here> Balanced Scorecard Implementation at UniCredit Tiriac Bank

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2 <Insert Picture Here> Balanced Scorecard Implementation at UniCredit Tiriac Bank Jann Tadorian Contact: Managing Partner Inplenion Business Consulting International mobile:

3 Agenda What is the Balanced Scorecard? <Insert Picture Here> How to implement a Balanced Scorecard Project? Unicredit Tiriac Bank Example Overview Oracle Strategy and Scorecard Solution Q&A 3

4 Agenda What is the Balanced Scorecard? <Insert Picture Here> How to implement a Balanced Scorecard Project? Unicredit Tiriac Bank Example Overview Oracle Strategy and Scorecard Solution Q&A 4

5 What is the Balanced Scorecard? A KPI A Report? System? A Fashion? It s a Management System! 5

6 Honestly Do you have a clear formulated mission, vision and strategy in your company? Are the BU strategies aligned with the company strategy? Is there a discussion on strategy implementation within your management meetings? How much time do you spend on it? Are your personal goals (MBO) aligned with the company strategy?...are the projects clearly approved and prioritized according to their strategy contribution? Are you sure that your management reporting reflects the status of your key success factors or the strategy implementation? 6

7 Company Challenges : Strategy Execution The People Barrier Only 25% of managers have incentives linked to strategy The Vision Barrier Only 5% of the work force understands the strategy 9 of 10 companies fail to execute strategy The Management Barrier 85% of executive teams spend less than one hour per month discussing strategy The Resource Barrier 60 % of organizations don t link budgets to the strategy Today s management Systems Were Designed to Meet the Needs of Stable Industrial Organizations That Were Changing Incrementally You Can t Manage Strategy With a System Designed for Tactics 7

8 What is needed for a successful Strategy Execution? Objectives + Competencies + Actions + Resources + Motivation + Information = Intendent Change Objectives + Competencies + Actions + Resources + Motivation + Information = Confusion Objectives + Competencies + Actions + Resources + Motivation + Information = Anxiety Objectives + Competencies + Actions + Resources + Motivation + Information = unsuccessful Implementation Objectives + Competencies + Actions + Resources + Motivation + Information = Frustration Objectives + Competencies + Actions + Resources + Motivation + Information = Little Change Objectives + Competencies + Actions + Resources + Motivation + Information = Chaos 8

9 The Balanced Scorecard! Increased Clarity Customer Kundenperspektive / Market To achieve our vision, how must wir für we unsere look to Kunden our customers zu verwirklichen?"? Better Committment Finanzielle Financial Perspektive If we succeed, Was leisten how wir will für we unsere Kapitalgeber, um den look to finanziellen our Shareholders Erfolg zu? erhöhen? Vision/ Strategy Learning Mitarbeiter/Lern & Growth - und Entwicklungsperspektive To achieve process excellence Wie können wir durch how must Innovation our organization und Lernen unseren Beitrag zur Wert - schöpfung learn and improve verbessern?"? Better Balance Processes Struktur - und Prozessperspektive To satisfy our customers, at optimiert which processes werden, um must zufrieden we excel zu stellen?? Implementation is controllable 9

10 The Balanced Scorecard Story! Source: Kaplan/Norton

11 The Reasons for BSC implementation? Support of a successful Strategy Implementation 69% 24% 6% 1% Better Communication of the Strategy 59% 33% 6% 2% Enhancement in «Cause & Effect Relations» Thinking 43% 43% 10% 4% Put in place of a common Strategy Understanding 61% 24% 13% 2% Better Objective Accountability 43% 35% 18% 4% Very important Relatively important Little importance Not important Improvement of the Organization Learning 20% 42% 28% 10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: Study 100 x BSC, Horváth & Partners 11

12 Agenda What is the Balanced Scorecard? <Insert Picture Here> How to implement a Balanced Scorecard Project? Unicredit Tiriac Bank Example Overview Oracle Strategy and Scorecard Solution Q&A 12

13 The Balanced Scorecard House BSC Project Management (A) Business Content Information Technology Strategic BSC SW Data Foundation Model Solution Management (B) (C) (D) (E) Change Management (F) 13

14 Project Management (Module A) Project Initialisation Clarify Starting Point Buy in Top Management Project Organisation Core Team Sponsor (CFO) Steering Commitee Projectsteering Clarify Objectives Work Group (Content) Work Group (Technical) Project Execution Project Plan Project Organisation Project Documentation Project Plan Modul A Modul B Modul C Modul D/E Modul E Kick Off Woche Project Management Strategic Foundation BSC Architecture SW/Data Management Change Management Jan Projektstart Kick Off: , (1/4 Tag) Klärung Ausgangslage Klärung Zielsetzung Teilnehmer: alle Feb Mar Apr Mai Workshop1 Workshop 2: ( , 1/2 Tag) Ausarbeitung strategische Ziele Entwicklung Ursache-/ Wirkungsbeziehung Teilnehmer: Core team/alle Workshop2 Workshop 1: (4.2.03, 1/2 Tag) Klärung und Erläuterung Leitbild Stakeholderanalyse Teilnehmer alle Workshop3 Sitzung 1: (18.2,1/4 Tag) Verabschiedung Ziele u. Ursache-/Wirkungsbeziehungen Workshop3 Workshop 3: ( , 1 Tag) Definition Messgrössen Definition Aktionen Teilnehmer: Core team/alle Workshop 4: ( , 1/2 Tag) Definition Zielwerte u. Verantwortlichkeiten Teilnehmer: alle Sitzung 3: (20.3,1/2 Tag) Verabschiedung Zielwerte u. Verantwortlichkeiten u. BSC Konzept Sitzung 2: (11.3,1/4 Tag) Verabschiedung Messgrössen u. Aktionen Workshops Meeting Steering Comitee 14

15 Strategic Foundation (Module B) Markets/Products Vision - Strategy - Check SWOT Competitors Vision Actual/ Future Internal View Strengths Weaknesses External View Opportunities Threats Deficits Gaps Strategy: Strategic Priorities Common Strategy Understanding 15

16 Balanced Scorecard Model (Module C) Strategic Objectives Strategy Map Shop Sustainable Growth Operational Excellence Financial Improve Profitability Cause and Effect Chain Increase Revenue Improve Cost Structure Improve Asset Utilization (Strategy MAP) Customer Acquire New Customers Retain Existing Customers Improve Customer Profitability KPI s Owners Targets Processes Potential Enhance Advertising Effectivity Quality of Product Presentation Balanced Scorecard Offer an Optimal Customer Value Proposition Optimize Supply Management Optimize Product Availability A Class Supplier Perspectives Strategic Objectives KPI s Targets Improve Employee 2003 Develop further the Enhance Accessibility of Competencies and Customer Focussed Improve Profitability EBITDA Relevant 18% Customer Motivation Attitude 80 Information % Financials Improve Cost structure Force Growth Improve Capital Expenditures % Gesamtkosten vom Umsatz % Vertriebs- und Verwaltungskosten Gesamtumsatz ROI 7 % 900 Millionen Euro 12% Initiatives PR- Projekt Shop UP- Projekt Acquisition New Customers Anzahl Neukunden + 5 % Initiatives Customer/Market Bind Customers Optimal Value Proposition Churn Rate CSI 2% 80 Indexpunkte Processes Focus on A Classe Supplier Improve Product Presentation % Anteil der Produkte von A Klasse Lieferanten Produkt-Visualisierungsindex 80 % 85 Indexpunkte Einführung eines Lieferantenbewertungssystems Potentials Use new Medias Improve employee Motivation and Competencies Bestellvorgänge über Internet Austritte von Key Employees Mitarbeiterbefragungswerte % 3% 85 % Indexwerte Einführung Mitarbeiterbefragung Feedbacksysteme überarbeiten Balanced Scorecard 16

17 Potencial Process Customer Finance Balanced Scorecard Model (Module C) 1 2 Strategic Priorities BSC 3 4 Documents Cause and Effect Chains+ Explanations Financial Perspective Improve W.C.-ratio Customer Perspective Establish innovator image Strategic Objectives + Explanations Process Perspective Improve strategic akquisition process Learning & Growth Perspective Create global group thinking of local management Strategic Initiatives KPI s and Target Values Strategic goal: Story of Strategy Measurement: Definition/Formula: DEFINITION: FORMULA: Data source: Documentation of strategic goals and corresponding KPI s Strategic goal definition (What shall be reached?): Definition by negative separation (What does not the mean?): strategic goal Goal-No.: P 3 Upper level strategic goal: none Person responsible for strategic goal: Measurement No.: P 3.1 Corporate level: 1 Person responsible for result: Person responsible for reporting: Frequence of reports: Person responsible for data: Frequence: 17

18 BSC Model: Translate Strategy into Action (Module C) 18 18

19 Balanced Scorecard Solution (Module D) BSC Logic Presentation Content Navigation Different Data Inputs Easy Maintenance Company-wide Distribution 19

20 Data Management (Module E) Datasources Data Management Architecture Scorecard User Data Transformation Application Web Interface Data Quality Assurance BSC Application SW - Datatransfer Interfaces DWH Administration & Support Loading Data Business Divisions Quality Assurance KPI Data Mart KPI Interface Data Input Manual Interface (Web Application ) ERP Cubes Excel Slide 9 20

21 Change Management (Module F) Communication Mobilisation Information Training Integration in Management System BSC Review Process MBO Incentive System 21

22 Agenda What is the Balanced Scorecard? <Insert Picture Here> How to implement a Balanced Scorecard Project? Unicredit Tiriac Bank Example Overview Oracle Strategy and Scorecard Solution Q&A 22

23 A Major Banking Group UniCredit Group at a glance* Employees: ~162,000 Customers: ~ 40 million Branches: ~ 10,000 Total assets: ~ EUR 1tn Banking operations in 22 countries International network spanning ~50 countries Global player in asset management: ~ 86 bn in managed assets Market leader in Central and Eastern Europe leveraging on the region s structural strengths *Data as of June 2010, UniCredit Group site 23

24 UNICREDIT TIRIAC BANK AT A GLANCE* ~ 3,000 employees Over 500,000 clients 234 branches 20.5 bn RON total assets *at 30 June

25 OUR GROUP MISSION We UniCredit people are committed to generating value for our customers. As a leading European bank, we are dedicated to the development of the communities in which we live, and to being a great place to work. We aim for excellence and we consistently strive to be easy to deal with. These commitments will allow us to create sustainable value for our shareholders

26 Balanced Scorecard Project January February March April May June July August Start Project Initialization Workshops round WS round 1 ready BALANCED SCORECARD CONCEPT Workshops round 2 Consistency Check WS round 2 ready BSC Concept Ready Inplenion Support and coach implementation Start Installation Project Initialization Design Design ready SCORECARD IMPLEMENTATION Build Test & Training Build ready Migr. PROD T&T ready Go Live Post Production Support January February March April May June July August 26

27 Strategic Check BSC Content Elaboration Definition and Linkage of Strategic Objectives Definition of Strategic Measures Definition of Target Values Definition of Strategic Initiatives Priorisation and Budgeting of Strategic Initiatives Finance Customers Processes Potentials WS 1: Strat.Objectives, Cause-and-effectchain WS 2: KPI s, Target Values and Strat. Initiatives WS 3: Initiative Priorization and Budgeting 27

28 BSC Rollout Structure Rollout Type OWN A Entity has an own strategy as starting point for the BSC elaboration DERIVED BSC B BSC elaboration is derived from Superior BSC and some own strategic input MIX C Financial and L&G perspectives use objectives from superior BSC; individual objectives for customer and process perspective are included. STANDARD D Same strategic objectives and KPI's as superior BSC but with own target values (e.g. Branch) STRATIGIC INITIATIVES E No BSC is elaborated. Only strategic initiatives are defined as contribution to the BSC objectives of superior entities. BSC Communication F No BSC is elaborated but the company and department BSC is communicated and explained. BSC Architecture - 13 scorecards OWN 1. Company DERIVED DERIVED DERIVED DERIVED DERIVED DERIVED 2. Retail 3. CIB&PB 4. CFO 5. GBS 6. CRO 7. HR Mix DERIVED 8.Large Corp 14. IT Phase 1 (2010) Mix SI 9. Intl Cl/CBBM Operations Phase 2 (2011) Mix SI 10. Mid Corporate Org Phase 2 (2011) Mix SI 11. PB Fac. Man. Phase 2 (2011) Mix 12. Markets Mix 13. Real Estate SI Fin Adv & Prod SI GTB Criterias for Rollout Type Type A Type F External Customer Relation (E) vs. Internal Customer (I) E I Revenue Center (R) vs. Cost Center (C) R C Strategic Importance H L Contribution to Business Value H L Independency related to other units H L Size of the Unit H L Diversification of unit H L Complexity of Unit L H Legend High (H) Little (L) 28

29 Strategy- and Operational Management Cycle Stage: Adapt/Translate the Strategy 5Y Financial Plan Bank Strategy Map Bank KPIs Bank targets Bank Initiatives Portfolio Identyfy the Stratex portfolio Stage: Align the organization BL/CL strategic maps BL/CL KPI's BL/CL targets BL/CL Initiatives Stage: Plan Operation/ Budgeting Projects prioritization and CAPEX budgeting Operational budget Personal MBO Stage: Monitor & Learn Data collection & validation process in BSC Monthly Operational Review Meetings Quarterly Strategy Review Meetings** Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec The above described integrated and comprehensive closed-loop system links strategic planning with operational planning, execution, feedback, and learning. The system has many moving parts and interrelationships, and it requires simultaneous coordination among all line and staff units. 29

30 Agenda Introduction <Insert Picture Here> What is the Balanced Scorecard? How to implement a Balanced Scorecard Project? Unicredit Tiriac Bank Example Overview Oracle Strategy and Scorecard Solution Q&A 30

31 OSSM Offers Strategy Management Graphic Visualizations of Strategy: Strategy Maps Strategy Trees Cause and Effect Maps Custom Visualizations Scorecards Collaboration Initiatives Threaded Discussions Related Documents Action Links Agents 31

32 OSSM Offers KPI Management Performance Tracking Against Target / Trending Threshold Assessment Ownership Definition Collaboration Threaded Discussions Related Documents Action Links Agents Drill to Analysis Watch Lists 32

33 OSSM Offers An Interactive, Collaborative Environment Dashboard integration Embed scorecard visualizations into dashboards to foster broad interactive analyses KPI Agents To monitor performance even when you can t KPI & Scorecard Actions Align day-to-day decisions with your corporate strategy Annotations & Overrides Collaborate and document exceptions to prevent future recurrences 33

34 Agenda Introduction <Insert Picture Here> What is the Balanced Scorecard? How to implement a Balanced Scorecard Project? Unicredit Tiriac Bank Example Overview Oracle Strategy and Scorecard Solution Q&A 34