A Business Process and Performance Management Framework for the Intelligent Business

Transcription

1 A Business Prcess and Perfrmance Framewrk fr the Business By Mike Fergusn Business Strategies Declaratin f Independence Within this article I will ccasinally refer t prducts and use screensht examples f varius prducts as an aid t cmmunicating specific pints. These examples are chsen at randm and in n way represents any endrsement n behalf f the authr t any prduct in the marketplace. End f Declaratin Over the last several years, the perfrmance management marketplace has been grwing steadily with mainstream business intelligence vendrs having made hay by intrducing perfrmance management prducts that supprt screcards, metrics dashbards (fr easy visualisatin), budgeting, frecasting and planning. Mst f this effrt has been arund the balanced screcard perfrmance management methdlgy. This methdlgy was made ppular by Kaplan and Nrtn in their excellent bk The Balanced Screcard published by Harvard Business Schl Press back in Yet fr sme time nw ver in the wrld f prcess management anther perfrmance management methdlgy has been climbing the charts as a management practice with strange names such as black-belt assciated with it. That methdlgy is f curse Six Sigma which is abut lcating and rectifying defects in prcesses t imprve efficiency and therefre perfrmance. As an analyst and cnsultant I have been invlved in bth f these methdlgies with clients and find it kind f strange that in the area f analysis and reprting peple talk abut perfrmance management like it belngs there and in the area f business prcess management peple talk abut perfrmance management like it belngs there. What is f curse the case is that they are bth right. Balanced Screcard has histrically been abut strategic perfrmance management while Six Sigma has been abut peratinal perfrmance management. In prduct terms the frmer ha s been assciated with s called Crprate Perfrmance sftware while the latter has been assciated with Business Prcess sftware and in particular Business Activity Mnitring (BAM). Hwever, peple like myself and many thers have fr sme time nw been talking abut the fact that these perfrmance management appraches shuld cme tgether t give cmpanies the ability t manage business perfrmance at bth strategic and peratinal levels frm a cmmn tlset. And t a large extent that is what this article is abut i.e. the creatin f a perfrmance management framewrk that allws cmpanies t integrate perfrmance management initiatives t create a truly enterprise wide apprach t perfrmance management. Cpyright Business Strategies, 2008 All Rights Reserved 1

2 I regard perfrmance management as the strategy and prcess f managing a business. This is dne by trying t ptimise resurces and prcesses at all levels in the enterprise t meet a cmmn set f strategic bjectives. I have underlined at all levels quite deliberately here fr a very simple reasn. We have t find a way by which the entire enterprise can pull in the same directin t meet cmmn gals. It is nt enugh t just have strng managers at strategic levels in the enterprise trying t steer the business. Of curse this is necessary but the vast majrity f emplyees are nt included in that exclusive executive club. I am perhaps mre f a fan f the principles put frward in the excellent bk by Dn Tapsctt and Anthny D. Williams entitled Wikinmics Hw Mass Cllabratin Changes Everything. It is actually the subtitle that says it all i.e. hw the pwer f the masses can change everything. Applying this t perfrmance management and the enterprise emplyee base (and even beynd that int its partners, custmers and suppliers) asks a simple questin, Hw d yu leverage the pwer f the masses t imprve business perfrmance at all levels in the enterprise? Surely this is the key questin. It is a questin that in my mind has been bthering executives fr years. Is it pssible t leverage technlgy s yu can enable and trust yur wn emplyees t all tw in the same directin? My answer t this is yes. Abslutely yes. But t get there we have t lk at where perfrmance management is tday and hw it needs t be strengthened t really make this pssible. Perfrmance Tday When I lk at the perfrmance management (PM) marketplace tday, I see multiple types f perfrmance management. These can be classified as fllws: Crprate perfrmance management 1 Integrated with BI systems e.g. Executive Strategy Screcards, Crprate budgeting and planning, Line f business perfrmance management Integrated with peratinal systems such as ERP e.g. Custmer PM, Supply Chain PM, Operatins PM, Resurce PM Operatinal perfrmance management Prcess riented business activity mnitring Hwever the requirement is enterprise wide Perfrmance that engages peple at all levels in the enterprise. In ther wrds, an integrated cmbinatin f all f the abve is needed. Crprate Perfrmance If we lk at Crprate Perfrmance (CPM) tday, we have seen the emergence f screcards, reprting, financial cnslidatin, frecasting budgeting and planning aimed primarily at executives. These CPM systems have been built n tp f data warehuses as shwn in Figure 1 1 Accrding t Wikipedia, Crprate Perfrmance is a cncept that was intrduced by Gartner Research in 2001 Cpyright Business Strategies, 2008 All Rights Reserved 2

3 CPM Is Built On Tp f BI Systems And Supprts Screcards, Dashbards, Budgeting and Planning Emplyees, Partners, Custmers BI Desktp Client MS Office PORTAL cllabrate Perfrmance Reprting, Analysis, Alerting Dashbard builder Functinal Analytic Apps Screcards, dashbards, budgeting & planning CRM, HR, SCM, Finance Data warehuses & data marts peratinal systems Data Integratin Cpyright Business Strategies 2007 Figure 1 Msg Q (XML) The requirement here is t be integrated with BI systems t facilitate metrics rll-up and drilldwn. Many different mainstream BI vendrs have been in the CPM market fr sme time e.g. Actuate, Business Objects (Cartesis), Cgns, IBM, Micrsft, MicrStrategy, Oracle (Hyperin), SAP (OutlkSft), SAS. CPM has its prs and cns. The prs f COM include the fllwing: Built n a base f integrated histrical data Single integrated views f master data and transactinal activity Histrical data fr trend analysis Can therefre supprt financial cnslidatin frm multiple ERP systems BI systems with near real-time data integratin can keep dashbards reasnably well up t date Sme prducts can link with OLAP servers fr drill dwn Sme supprt fr cllabratin e.g. cmment histry against metrics On the dwn side, CPM has als had its limitatins. These include the fact that CPM prducts may a separate summary database fr KPIs which has t be ppulated (e.g. using an ETL tl) and n ability t drill dwn int detail in an underlying BI system. Als there is ften n ability t integrate CPM with prcess management in rder t assciate a prcess (r prcess activities) with an bjective and t initiate business activity mnitring (BAM) frm within CPM tls t mnitr prcesses. There is n dubt that things are beginning t change here in that CPM vendrs are nw recgnising the need t embrace prcess management by intrducing management prcesses int their prducts. An example here wuld be OutlkSft (recently acquired by SAP) which has business prcess flws built in t their prduct t guide things like Cpyright Business Strategies, 2008 All Rights Reserved 3

4 sales frecasts and expense frecasts. Als Cartesis (Recently acquired by Business Objects) has intrduced the cncept f prcesses mdels int their Gvernance prduct (see Figure 2). This is mre fr dcumenting things like the financial reprting prcesses rather that cre peratinal prcesses hwever. Nevertheless the signs are there that prcess management is finding its way int CPM prducts. The issue fr me is whether r nt CPM prducts can imprt standard XPDL prcess mdels that wuld typically be created in business prcess mdelling sftware like BEA AquaLgic, Intali, IDS Scheer, IBM WebSphere Business Mdeller, MetaStrm, Micrsft BizTalk, Tibc, WebMethds etc. When this happens then we start t get true integratin beginning t ccur. Sme CPM Prducts Are Nw Annuncing Prcess Supprt Prduct Example: (Business Objects) Cartesis Gvernance Embedded prcess mdeling capabilities are nw available within Cartesis Gvernance Figure 2 Hwever despite these advances, perfrmance management in the hands f a few when it shuld be in the hands f many. Fr example, what abut peple in peratins? It is still the case that even with the web, many emplyees in peratinal have little r n access t Perfrmance. Given that CPM sftware typically hlds the detail n business strategy, it fllws that tday fr many cmpanies there is n enterprise wide executin f business strategy and n integrated business planning at all levels. Als, cmpanies ften have multiple stand-alne BI systems which makes it difficult t integrate CPM sftware with BI and in additin many CPM systems are nt integrated with ther systems s that they can leveraged t cntinually manage perfrmance Line f Business Perfrmance Lking at Line f Business (LB) perfrmance management tday, this is aimed mre at the tactical level rather than the strategic level. There is sme degree f LB Screcards and Dashbards as well as LB Budgeting and Planning. There is als a lt f peratinal reprting and BI reprts and analysis. Hwever LB perfrmance management is als limited in that it Cpyright Business Strategies, 2008 All Rights Reserved 4

5 may be implemented n tp f peratinal systems (e.g. ERP r CRM) r n tp f line f business BI systems. Bth f these kinds f implementatin are shwn in Figure 3 and Figure 4 respectively. Line f Business Perfrmance Is Often Dne On Tp f Operatinal Systems Custmer PM Resurce Planning, Business Unit PM Supply Chain PM MS Excel PM App MS Excel PM App MS Excel PM App Perfrmance CRM Perfrmance ERP Perfrmance SCM E.g. Sales PM (Quta & Territry ) Call Centre Wrkfrce Planning, Operatinal Reprting E.g. Business Unit Budgeting, Financial Planning, Wrkfrce Planning, Custmer, Demand Planning Operatinal reprting Cpyright Business Strategies 2007 Figure 3 E.g. Supply Chain Perfrmance, Supplier Operatinal Reprting Line f Business Perfrmance Culd Alternatively Be Dne On Tp f LB BI Systems Custmer PM Resurce Planning, Business Unit PM Supply Chain PM MS Excel Prtal MS Excel Prtal MS Excel Prtal Perfrmance Perfrmance Perfrmance LB DW LB DW LB DW ETL ETL ETL Other LB Op.systems CRM Other LB Op.systems ERP Other LB Op.systems SCM E.g. Sales PM (Quta & Territry ) Call Centre Wrkfrce Planning, Operatinal Reprting E.g. Business Unit Budgeting, Financial Planning, Wrkfrce Planning, Custmer, Demand Planning Operatinal reprting Cpyright Business Strategies 2007 Figure 4 E.g. Supply Chain Perfrmance, Supplier Operatinal Reprting Cpyright Business Strategies, 2008 All Rights Reserved 5

6 It is cmmn t see perfrmance management initiatives particularly n tp f peratinal systems like ERP as ppsed t CPM which is built n tp f BI systems. In line f business areas things like Supplier and Custmer perfrmance management fcus n a specific areas and can wrk reasnably well within peratinal areas. One f the key issues why LB perfrmance management ends up n tp f ERP is that many CFOs believe that the nly place they can trust the data is the ERP system itself which is f curse the main peratinal system in use in a Finance department. It is als true that data in ERP systems ffers cnsiderable PM cverage. LB PM n tp f peratinal systems als means access t real-time data. In this envirnment, Crprate Perfrmance is ptentially pssible if there is ne ERP instance. The prblem with LB perfrmance management n tp f peratinal systems is that it is limited by the scpe f the data in the underlying peratinal system. As an example here, CRM systems like Oracle Siebel are ften missing cmmunicatins data captured in telephny systems such as Cisc and AVAYA. Anther limitatin is what happens when there many instances f an ERP system e.g. ne per cuntry in which a cmpany trades. In this case LB PM can be restrictive if there are multiple instances f these applicatins. In additin there is n enterprise wide single view t accunt fr prblems in ther areas e.g. verspend in anther area f the business may impact budget allcated t ther lines f business. Other LB PM limitatins include: Lack f drill dwn and integrated histrical data Financial Budgeting is by Cst Centre (typically rganisatin structure) when plans are typically defined using activities. This makes it difficult t allcate budget t plans unless plans are aligned with cst centres Supply Chain PM nt linked t demand LB PM n tp f ERP systems are weak in sme areas E.g. ERP systems hld very little data n peratins and areas f CRM like Call Centre and Sales territries Often LB des nt include business activity mnitring (BAM) Operatinal Perfrmance Operatinal perfrmance management tday includes peratinal dashbards, peratinal reprts, as well as BAM, alerts and autmated. This is an area f perfrmance management that is grwing but is still in limited deplyment mainly because cmpanies are still rlling ut business prcess management. Operatinal perfrmance management has typically been assciated with BAM. Sme mainstream BI vendrs ffering CPM slutins have nw stepped int the BAM market which I believe is a gd sign in that it indicates that peratinal PM and crprate PM has a gd chance f cming tgether. A gd example f this is Cgns wh have launched their Cgns Nw! prduct as part f the wider perfrmance management prduct set. The prs and cns f peratinal perfrmance management are as fllws: Prs Real-time event-driven peratinal perfrmance mnitring fr pr-active alerting and autmated actins Means peratinal prblems and pprtunities can be rapidly identified and dealt with Cpyright Business Strategies, 2008 All Rights Reserved 6

7 Cns May even mean that prblems and/r pprtunities can be predicted Can deliver significant return n investment e.g. reductin f peratinal csts Prcess BAM vendrs ften have n business intelligence t understand the significance f an peratinal event BAM vendrs struggle t understand peratinal rg structure t cater fr prblem escalatin N tie back t strategic r tactical perfrmance management Having lked at these different types f perfrmance management the prblem we face is that they are nt integrated. The requirement is that we need the whle slutin t wrk frm tp t bttm s that perfrmance management is deplyed t the masses t make everyne perfrmance aware and execute n a cmmn business strategy. S it raises the questin f what an enterprise wide perfrmance management system shuld d? First and fremst a perfrmance management system is the cntrl system fr the enterprise. It shuld be the system that allws yu t manage the business at all levels frm strategic dwn t every day peratins. It shuld therefre supprt all types f perfrmance management - strategic, tactical (LB) and peratinal. In additin everyne in the enterprise shuld be accuntable fr managing their part f the business and fr cntributing twards cmmn bjectives and cmmn gals. Als everyne shuld have access t cmmn BI and perfrmance management that fits with their rle in the enterprise. Figure 5 shws what I mean here which is t get enterprise business strategy executin and integrated perfrmance management at all levels. Enterprise Business Strategy Executin and Integrated Perfrmance At ALL Levels Executive Operatins Managers/ Bus. Analysts Operatins Staff / Infrmatin cnsumers Strategic bjectives, KPIs, targets, wners, budgets, plans, alerts, Tactical bjectives, KPIs, targets, wners, budgets, plans, alerts, Operatinal bjectives, KPIs targets, wners, budgets, plans, alerts, Strategic PM Tactical PM Operatinal PM Cpyright Business Strategies 2007 Figure 5 Ntice that there are bjectives, KPIs, targets, wners, budgets, plans, alerts and at all levels here. This is like driving. If yu turn the steering wheel at the tp Cpyright Business Strategies, 2008 All Rights Reserved 7

8 f the enterprise, hw lng des it take fr the enterprise t turn? Hwever if there are steering wheels at all levels then the decisins made at lwer levels all help t turn the wheel at a strategic level. Its back t the pwer f the masses again. All f this implies a hierarchy (r hierarchies) f sme srt t tie it all tgether s that all levels cntribute twards executin f a cmmn business strategy (see Figure 6). ALL Levels Shuld Cntribute Twards Executin f A Cmmn Business Strategy Executive Operatins Managers/ Bus. Analysts Operatins Staff / Infrmatin cnsumers Strategic bjectives, KPIs, targets, wners, budgets, plans, alerts, Tactical LB bjectives, KPIs, targets, wners, budgets, plans, alerts, Operatinal bjectives, KPIs targets, wners, budgets, plans, alerts, cntribute twards cntribute twards Cpyright Business Strategies 2007 Figure 6 What is the dminant hierarchy are there several? There are several but the emplyee management hierarchy must be recgnised here because it identifies rles, cntact details, immediate reprts etc. The reprting structure f wh reprts t wh needs t be understd. But just lking at the emplyee management hierarchy implies thers because wach manager in the hierarchy needs t have Objectives KPIs and KPI targets Actin initiatives t be carried ut t achieve his r her bjectives Plans i.e. planned activities Budget allcatin by activity Prcess activities and/r whle prcesses t mnitr in their area f respnsibility BI t guide them including sme cmbinatin f reprts, guided analysis, alerts and This implies that many different perfrmance management hierarchies are need t be linked t emplyee rles and reprting structure (see figure 7). Cpyright Business Strategies, 2008 All Rights Reserved 8

9 Many Perfrmance Artefacts Need T Be Tied Tgether in Hierarchies And Linked t Emplyee Structure Strategic bjectives Strategic KPIs Strategic KPI targets Tactical bjectives Tactical KPIs Tactical KPIs targets Operatinal bjectives Operatinal KPIs Operatinal KPIs targets Strategic budget Strategic plan Strategic alerts Tactical budgets Tactical plans Tactical alerts Operatinal budgets Operatinal plans Operatinal alerts Cpyright Business Strategies 2007 Figure 7 Sme prducts like IBM Wrkplace fr Business Strategy Executin (WBSE) already supprt this cncept. Hwever in explring elements f perfrmance management such as plans at lwer levels in the enterprise I have fund again and again that the technlgy use at lwer levels fr planning peratinal initiatives is nt the same as the perfrmance management tls fund at strategic levels. What I keep bumping int fr peratinal planning is Micrsft Prject. In a recent presentatin at the BI cnference in Rme I thught I wuld check ut my findings t validate whether this is in fact cmmnplace. T my surprise abut 80% f the audience raised their hands cnfirming the dminance f Micrsft Prject in business planning at lwer levels in the enterprise. Therefre as yu g dwn the levels f the enterprise, integratin f perfrmance management sftware with prject management sftware is very much required. As a regular speaker at prtal cnferences, I have hwever realised smething else abut this link between perfrmance management and prject management and that is that prject management sftware (that hlds plans) is nw heavily integrated with Web 2.0 cllabrative wrkspaces in prtal sftware. Prtal vendrs like BEA, IBM, Micrsft and Vignette are all capable f cllabrative prject management tday in their prtal prducts. This pint abut PM, prject management and Web 2.0 cllabrative wrkspaces is imprtant in answering the questin f hw t empwer the masses with respect t perfrmance management. I already mentined the Tabsctt/Williams bk n hw mass cllabratin changes everything. Enterprise Wide Perfrmance Requirements Lking at what we have discussed s far it is clear that the scpe f perfrmance management needs t change t becme capable f leveraging ther infrastructure. Perfrmance management needs t include: Traditinal screcards, dashbards, budgeting, planning, frecasting Cpyright Business Strategies, 2008 All Rights Reserved 9

10 Hierarchies f linked bjectives, KPIs, KPI targets, plans, budgets and alerts Integratin with Office fr what-if planning and analysis Integratin with BI fr KPI rllup and drill dwn (OLAP cubes) Integratin with BI reprting Integratin with prcess management (e.g. via XPDL imprt) t view and change prcess mdels Business activity mnitring t mnitr the efficiency f business prcesses and t drive autmatic alerts and Activity based csting t mnitr the cst f business prcesses and t create csted plans since plans are at an activity level Integratin with prject management t link t lwer level plans and t imprt/exprt plans in this frm Integratin with prtals fr rle based PM BI and PM services t integrate n-demand intelligence and with peratinal applicatins and prcesses Integratin with Web 2.0 cllabrative wrkspaces t share infrmatin and cllabrate In additin, many f my clients have said t me that perfrmance management will never achieve maximum effectiveness if we dn t link perfrmance t individual emplyee appraisals. In ther wrds we need t hld peple accuntable fr perfrmance. Fr this t happen, perfrmance management needs t access HR applicatins. prpses standard services and XML cntent that ERP HR systems shuld expse t get at emplyee perfrmance infrmatin int and ut f ERP systems. This whle set f wider requirements suggests that Perfrmance needs t becme a cmpsite applicatin sitting abve an enterprise service bus in a service riented architecture (see figure 8). Perfrmance As A Cmpsite Applicatin PM Screcards & dashbards, budgeting & planning Enterprise Prtal Office Cllabrate with thers ver perfrmance t make jint decisins Prcesses HR Appraisals Frm ERP system actins Enterprise Service Bus CRM ERP SCM Operatinal Apps Master DI Operatinal alerts BAM agents services actins prduct custmer MDM System Transactin data KPIs & prcess csts plan activity csts Enterprise Service Bus Data integratin Figure 8 BI services BI System Cpyright Business Strategies, 2008 All Rights Reserved 10 DW BI System Cllabratin services Prject m gmt services plans

11 Lking at this in the cntext f a SOA architecture diagram just cnfirms the fact that Perfrmance is set t becme a cmpsite applicatin leveraging ther services and infrastructure sftware t empwer the masses in rder t create the perfrmance aware intelligent enterprise. This can be shwn in Figure 9. End Game Business Persnalised Cllabrative PM with BI and BAM At The Centre Guiding ALL User Decisins AND Optimising Operatins Operatins My Objectives My Business activities (prcess tasks) My Reprts My Perfrmance metrics My Alerts My Recmmendatins My Actins My Team My Cntributin BI, BAM and Decisin services guiding everyne in every business prcess t cntribute t meeting strategic gals Partners & custmers Custmer Sales Custmer intelligent Service Emplyees Cpyright Business Strategies 2007 Suppliers Single Sign On My Prtal My Office Web 2.0 Cllabrative Wrkspaces Enterprise Wide Perfrmance Integrated Business Prcesses Marketing Frnt Office applicatins peratins Key Perfrmance Indicatrs Event Driven Prcure BI & BAM ment RULES services Supply ESB Chain Finance HR Middle Office Apps Cmmn Metadata Figure 9 Back Office applicatins Mike Fergusn is Managing Directr f Business Strategies Limited ( a leading infrmatin technlgy analyst and cnsulting cmpany. As lead analyst and cnsultant he specializes in enterprise business intelligence, enterprise business integratin, and enterprise prtals. He can be cntacted at r at ukinf@intelligentbusiness.biz Cpyright Business Strategies, 2008 All Rights Reserved 11