Management IS. Approaches. CSF KPI (Balanced scorecards) (Management accounting) (Customer and market profiling) (Strategic analysis methods)
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1 Organizational level Group served by IS Management IS STRATEGIC LEVEL MANAGEMENT LEVEL SENIOR MANAGERS MIDDLE MANAGERS KNOWLEDGE LEVEL KNOWLEDGE & DATA WORKERS OPERATIONAL LEVEL OPERATIONAL MANAGERS 2 Approaches Management and Strategic level IS should support managers in monitoring and controlling the organization Using few, reliable indicators How to define these indicators? CSF KPI (Balanced scorecards) (Management accounting) (Customer and market profiling) (Strategic analysis methods) 3 4
2 CSF 5 6 CSF Critical success factors [Rockart 79] Concept Few areas (4-5) in a company are responsible for business success (failure) They should be monitored constantly CSF refer to internal areas, not objectives or targets Ex. company objective: be market leader Ex. Company target : acquire 25% of market share by.. CSF - levels CSF exist at different levels, following org structure Corporation Function Production, product design, etc Role Manager 7 8
3 CSF - example CSF objective Corporation Brand recognition, image Dealers network Equipment of cars Reliability of cars After sales service Function (manufacturing) Production costs Quality of product Environment issues Relationship with trade unions Manager (quality manager) Reputation wrt. other functions/roles Skills of technicians Process certification Technology for monitoring quality To identify in top down mode essential information for managers Cfr. bottom up: starting from currently available information Cfr. Information vs. data To define / modify a reporting system within IS 9 10 CSF method 1. Identify CSF 2. Interview managers Profile CSF 3. Robustness analysis 4. Refinement, presentation, implementation 1 Identify CSF For each candidate CSF Level (corporate, function, role) Name Type Description 11 12
4 CSF types From business domain Key areas for all companies in same business domain Ex: cost for PC manufacturers, skill of personnel for consulting companies From competitive factors within business domain Factors that differentiate company from others Ex: for airlines, low cost vs. quality of service From environmental factors Constraints from outside such as norms, rules, standards Ex.: for car manufacturers, eurox pollution norms From contingency factors Temporary constraint Ex.: merge IS of two companies after financial merge/acquisition Ex.: recover brand reputation after failures (see Benz Class A) 1 Identify CSF Output: List of CSF with name, level, type, description Interview managers 2 Output Using output of step 1 interview each manager Each one proposes CSF for function and role (max 5), and measures )1 or more) for each CSF Output For each CSF Measures, source of (raw) data, rationale 15 16
5 3 Robustness Robustness Comprehensibility How simple Cost Cost and delay to process Cost and delay to collect raw data Initial and incremental Meaningfulness How much the indicator covers the CSF Frequency How often indicator varies Structure How much the indicator is objective/not ambiguous 19 20
6 4 Refinement, presentation, implementation Refinement Aggregate, simplify CSFs Presentation And acceptance from managers Implementation Define requirements and design for IS Implement KPI KPI Process perspective Cfr CSF, focuses on areas May correspond to process but in general wider and cross processes Cfr financial indicators (traditional management accounting), focus on finance only Cfr. SLA (service level agreement), ITIL, focuses on process Management accounting Cost, expenses, revenues, cash flow Per hierarchical node 23 24
7 KPI KPI Process view Involves one or more hierarchical nodes Financial and non financial indicators Process as a chain of services Ex. Average delay to satisfy order Ex. Average productivity of resource KPI description Name Average delay to satisfy order (DO) Average productivity of resource Definition How the KPI is computed DO 11 : 30 / number of orders satisfied in month Computed per calendar month: jan, feb,.. DO 12 : 30 / number of orders satisfied in month Computed every day, for last 30 days DO 2 : 365 / number of orders satisfied in year DO 3 : average i ( delay to satisfy order i) Measurement unit Type actual, target, estimate, benchmark KPI general framework General Input volume Output volume Human resources Non human resources (plants, machines, facilities) Inventory Other resources Cost Cost per unit Productivity of resources Utilization of resources Quality Conformity Reliability Customer satisfaction Service Response time, Lead time On time Perfect orders Flexibility toward customer 27 28
8 General KPIs examples General KPIs Input volumes Output volumes Human resources Non human resources Inventory Hotel reservation #of reservation requests, modif, delete #reserved rooms #full time, part time employees Call center, reservation system, rooms and supplies #rooms Lift maintenance #urgent requests, #normal requests #services made #personnel for maintenance (technical) Reservation and dispatch system, tools Product sale supermarket #sales (person passing at register) #products sold #personnel (at cash register, security) Sales building, storage building, products #products on shelves Book sale on web # orders # shippings # books sold #personnel for sales and distribution CRM, call center, web site, storage building #books Building licence (egov) #licences requested #licences issued #employees Supporting IS Cost KPIs Cost per unit Total cost/volume Productivity Volume/resource Utilization Used resource /available resource Other resources Laws 30 Cost KPIs Quality KPIs Input/output Human resources Non human resorces Inventory Time Information Unit cost Cost per unit of input Cost per unit of output Amount information/ output Productivity Output/ # employees Output/ resource (ex # machines) Sales/ stock Time to produce service)/output Utilization Used capacity / available capacity Load factor Time to service/ total time Amount information / total amount information Conformity With defined service/product description Non conform items/total # items Items Input requests (from customer) Intermediate output Final output (defects, complaints from customer) Reliability Probability that product /system satisfies its function after time T MTTF mean time to failure MTTR mean time to repair MTBF mean time between failures (= MTTF + MTTR) Customer satisfaction Satisfaction through interviews/questionnaires Qualitative scales (very high, high..) 32
9 Quality KPIs Service KPIs Conformity Reliability Quality in input Non conform requests Quality internal Number discarded/re worked items Cost/effort for rework MTTF MTBF Quality in output MTTF MTBF Response time, Lead time Time to satisfy order, from reception to delivery of good/service To be checked in peak periods Punctuality delay = actual lead time - nominal lead time Average delay #delayed orders Perfect orders On time and within specifications Flexibility towards customer # modified orders/ total # orders value modified orders/ total value of orders Satisfaction MTTR MTTR Number satisfied customers It is NOT internal flexibility = how internal resources can respond to changes in mix/number of orders Evaluation of product/service 34 Processes and stakeholders KPIs and stakeholders Process has several stakeholders Operator Manager Customer Process (and consequently KPIs) should be designed considering all stakeholders Ex cost Cost for operator: work fatigue Cost for manager: financial cost Cost for customer: price tag + cost for finding ordering and obtaining the product 35 36
10 KPI steps 1. Select processes to monitor 2. For each process, select KPIs 3. Profile KPI 4. Robustness and CSF 5. Dimensions 6. Requirements and design 1 select processes Starting from models SCOR AP Business domain specific select KPIs Using KPI templates General, cost, quality, service. 3 Profile KPI For each KPI detail Definition and how computed Where data comes from 39 40
11 4 Robustness Are KPIs covering strategic areas? Cross check with CSF Are KPIs robust? Same attributes as for CSF Comprehension Cost Meaningfulness Frequency Structure 5 Dimensions Or segmentation: data to which indicator is associated and therefore Data the indicator can be aggregated on Common dimensions 6 Requirements and design Time window Sales per hours/per day/per month.. Hierarchical node in organizational geographical structure Sales per country/per region/per shop Expenses per company/per division/per group/per person Product / product category Sales per phone xy / per business phones Customer/ customer category Activity in process Cost per design / production Defects from design/ from production Project Cost per project Defects per project Define requirements Use cases, class diagram etc Define design For supporting IS 43 44
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