Cost and Performance Management: Creating Value with Measures Presented by Focused Management Inc. Facilitating Performance Improvement Through Better Use Of Information And The Application Of Decision Support Tools At Issue Implications of The Fish Tank Syndrome We need a variety of perspectives and with which to obtain a balanced, disciplined and dynamic view of our businesses We need to develop a common / agreed understanding of the business and all of its characteristics We need a constantly available set of reference points to which we can return We need a living repository in which locate and maintain knowledge Result – What Is At Stake Inappropriate measurement systems can be costly experiments Sobey’s $50m ERP write off Boeing’s production problems in the late 1990’s Malcolm Baldridge winner, Wallace Co’ bankrupt Fortune 500 companies will face a $31.5 Billion knowledge deficit next year By how much can profit be increased by changing your product/market mix to focus on your most profitable products Performance Architecture A combination of a business logic methodology, relevant software and systems capability.　The links between the tools are as important as the tools themselves. Performance Architecture to Drive Value Understand the Organization Value-Based Management “VBM is a holistic management approach that encompasses redefined goals, redesigned organizational structures and systems, rejuvenated strategic and operational processes, and even revamped human resources practices”. “This holistic practice of VBM is in sharp contrast to the finance-driven appearance that VBM has taken on in the past …” INSEAD Working Paper, Are you (Really) Managing for Value? Processes are where the work is done “If you can’t describe what you are doing as a process, you don’t know what you are doing.” W. Edward Deming How We Organize OurselvesThe Three Levels of Performance Organization Work is Performed by Systems of Processes Detailed Process Map ABC & Process Analysis: Thoughtful Interaction Activity Analysis The first step in an ABC analysis is to understand what activities are performed in the organization. Activity Survey Questionnaire (ASQ) facilitates simple and efficient collection of activity data throughout the organization, prepares the data for import into analysis tools and produces draft activity and process costs. Let’s see ASQ in action Best Practice AnalysisUnit Cost Comparison Key Process Measures Linking Process to Job Knowledge Management Creates “Living Processes” Measures Software to Influence Human Behavior Distribution of consistent and appropriate　measurement information to everyone in the organization is fundamental to execution of A/VBM Use of computer technologies - data warehouse, OLAP and presentation layer software provide the “media” of distribution It is the media that facilitates organization change. The marriage of management philosophy with technology and the imperative to create value The media is represented by the presentation of current measures and performance information on computer screens to all accountable parties The suite of tools includes software to perform simulation modeling of processes and economic performance Driving Performance in Organization Determine stakeholder needs Develop organization strategy Analyze activities, processes and measures Determine costs, current performance and benchmark Establish performance standards Establish goals / budgets & action plans Deploy measures and knowledge repository systems World Class Tools To Lead You Into The Future The Partnership to Implement Your Performance Architect