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4 Ordina Holding Sector Ordina Finance Ordina Finance Amsterdam Ordina Finance Utrecht... Business Intelligence Solutions June, 1999 SEUGI 17 4

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9 Financial Focus Customer Focus Vision and Strategy Internal Organization Focus Learning and Growth Focus June, 1999 SEUGI 17 9

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24 Business Intelligence Solutions A Center of Excellence of Ordina Finance Amsterdam BV 1/12 SEUGI 17 Performance Measurement Fred Tenkink Ordina Finance Amsterdam Ordina Finance Amsterdam BV

25 Business Intelligence Solutions A Center of Excellence of Ordina Finance Amsterdam BV 2/12 The Agenda Ordina BIS Expertise clusters SAS Performance Measurement Performance Measurement Developments in the market The needs of Ordina Finance Amsterdam Definition Performance Measurement Performance Measurement concepts The Business Balanced Scorecard The EFQM model Difficulties for a successful implementation Performance Measurement Solutions built in SAS SKIM The project The architecture Findings Other Performance Measurement solutions Experiences Performance Measurement Test Ordina Finance Amsterdam BV

26 Business Intelligence Solutions A Center of Excellence of Ordina Finance Amsterdam BV 3/12 ORDINA Ordina was founded for more than 25 years ago. The organisation supports a wide range of companies in different kind of markets like Finance, Industries, Telecommunication, Transport, Government and Social Security. Ordina wants to support clients to make their organisation more effectively and efficiently. Ordina only wants to work with de latest methods and techniques in order to build flexible architectures aimed on the future. In this way added value is created. At the moment the Ordina Group counts more than 25 companies. One of it is Ordina Finance BV. It consists of several Business Units like Business Intelligence Solutions. Figure 1 Organisational diagram Ordina Holding Sector Ordina Finance Ordina Finance Amsterdam Ordina Finance Utrecht... Business Intelligence Solutions Figures and Facts Ordina is the fifth ICT company of the Netherlands Annual turnover NLG (1998)+73% EUR Profit NLG (1998)+89% EUR Growth of employees to 2300 (1998) +67% Business Intelligence Solutions Business Intelligence Solutions (BIS)is mainly supportive to financial organisations in obtaining their business information and knowledge of their market. This enables these organisations to have an improved possibility to take strategic decisions in order to approach their market with more knowledge and decisiveness Ordina Finance Amsterdam BV

27 Business Intelligence Solutions A Center of Excellence of Ordina Finance Amsterdam BV 4/12 The basis for this service which results in more efficient and more effective assignments is the continuous offering of an integrated number of services and products. In order to accomplish this nine expertise clusters of BIS join together. The SAS and Performance Measurement cluster are two significant ones. Expertise clusters The SAS cluster The SAS Cluster is a important unit of Business Intelligence Solutions. Ordina uses The SAS System because it supplies the appropriate knowledge and information to transform business problems into business solutions. Therefore The SAS Institute and Ordina are the perfect combination to increase business intelligence of associations. Since 1997 Ordina is a Quality Partner of The SAS Institute. The certified SAS specialists of Ordina focus on solutions linked to Performance Measurement, Risk Management and Customer Relation Management.. Data Warehousing is often an essential part of the solution. To this matter the Rapid Warehousing Methodology of The SAS Institute is a proven useful support to solve business problems. The SAS Institute and Ordina developed a special training program to educate BIS Consultants to become certified SAS specialists. The SAS Institute and Ordina exchange information regularly. In this way both firms keep well informed. PERFORMANCE MEASUREMENT Developments in the market The world is changing rapidly. Due to the fact that a increasing number of people gets well trained effects their attitude: the paying passenger becomes more assertive. This new generation of (well paid) customers is more demanding. A excellent quality of products for a reasonable price delivered fast are some of their demands. Technology also speeds up. A huge amount of new products are offered to the market. The time to market decreases. Finally firms have to deal with global competition. Especially Asian countries manage to offer products of exceptional quality to a lower price and to a high level of service. A increasing number of clients of Ordina feel the need to improve the control of their organisation caused by environmental developments described above. Therefore they need specific, detailed information about the efficiency and effectiveness of their processes, clients, markets, products, customer and employee satisfactory. The needs of Ordina Finance Amsterdam Ordina Finance, a important player in the turbulent ICT market, found out that the current systems were poor of supplying essential information to control the company effectively. Primarily financial figures were produced and used. It was management by looking over one s shoulder backwards in stead of looking forwards. Ordina realised it needed frequent information of subjects linked to the future performance of the company. How do our customers judge the products and services of Ordina? Are our employees content with their jobs? Are we still operating in the most profitable markets? We did not know! Ordina realised it had to take action. Ordina changed her strategy and reorganised the firm. But the present (financial) systems were not capable to fulfil the need for information according the new strategy. A adapted performance measurement system had to be built. Ordina first designed a definition of what Performance Measurement is. Definition Performance Measurement:: To measure those values of a organisation that warrants its continuity Ordina Finance Amsterdam BV

28 Business Intelligence Solutions A Center of Excellence of Ordina Finance Amsterdam BV 5/12 The gathered information leads to actions to improve business movements on a strategic and operational level. It will enlarge the efficiency and effectiveness of the organisation. Furthermore the material enhances the process of taking management decisions. Due to these betterment the control of the company enlarges. PERFORMANCE MEASUREMENT CONCEPTS To measure one s performances several concepts are usable. In general these models are focused on issues essential for guidance of present performance and to target future performance. The information gathered on this issues supports organisations to improve (strategic) decisions and after all the control of the (key area s) is expected to be much better. In this way superior findings are most likely to be achieved. The mission will be fulfilled. A very well known method is the Balanced Scorecard by David Norton and Robert Kaplan. Other concepts are EFQM (European Foundation for Quality Management), its Dutch equivalent called the INK model and Total Quality Management. Which solution fits most depends on the specific needs of the client. Situation determines the answer! To have a better comprehension of the concepts a short review of two concepts will follow. The Balanced Scorecard The Balanced Scorecard is a setting consisting of financial, customer, internal processes and learning perspectives describing the current strategy of a organisation and how to achieve in the future. A set of measurements will reveal how a company is doing. It shows not only how the situation is in financial terms but also what will happen in the other non- financial area s. In this way the management gets important information about the present and future situation on key area s. It improves the process of taking (strategic) decisions significantly. Another advantage is the opportunity of a clear communication about the key issues. Because of this it is expected that the coming (financial) results will increase substantially. Figure 2 The Balanced Scorecard framework Ordina Finance Amsterdam BV

29 Business Intelligence Solutions A Center of Excellence of Ordina Finance Amsterdam BV 6/12 Financial Focus Customer Focus Vision and Strategy Internal Organization Focus Learning and Growth Focus The European Foundation for Quality Management (EFQM) model The EFQM model consists of nine area s. Four area s are focused on achieving outcome and five are focused on enabling this. Figure 3 The EFQM Model People Management People Satisfaction Leadership Policy & Stategy Processes Customer Satisfaction Business Results Resources Impact on society ENABLERS RESULTS The area s where result is essential are: Ordina Finance Amsterdam BV

30 Business Intelligence Solutions A Center of Excellence of Ordina Finance Amsterdam BV 7/12 Business results Customer satisfaction People satisfaction Impact on society The five enablers are: Leadership Management of Policy and Strategy People Management Management of resources Management of processes Performance measurement of the four result area s is done in order to improve findings. The five enablers area s makes clear how things are organised. They are the fundaments for reaching the targets of the area s of result. The Balanced Scorecard and EFQM are identical in many ways. Some similarities are : management system vision transferred to action measurement of performances (indicators) Besides these similarities there are several differences. Some of them are: EFQM is also a concept for diagnosing, This model links measurements also to enablers leadership is according the EFQM model in fact the key issue for success. In the Netherlands a modal similar to the EFQM model is often practised. It is called the INK model. DIFFICULTIES FOR A SUCCESSFUL IMPLEMENTATION After a Balanced Scorecard or EFQM model has been constructed and key success indicators and the performance indicators have been designed many assume that most work has been done. Unfortunately this is not true. In fact the complete process of creating and implementing a performance measurement project like the balanced scorecard can be excessive. Not only in terms of costs, but also in the time required for the entire implementation and the impact on the organisation. Firms have to be prepared to do these investments. When the management is not willing to make these efforts they have to consider a loss of competitiveness. When implementing a balanced scorecard organisations have to face the fact that data are necessary in order to carry out the measurements. Just rely on traditional reporting is unwise. They have several shortcomings. Regularly there is only a focus on finances. Many reports are short term oriented and too vague because of the overkill of information. To measure on facts and figures collected by office work or in excel spreadsheets is not recommendable either. It will take a lot of time to find all the information. It produces a lot of paperwork and can be easily manipulated. Frequently the information has ran out time when collected. When information is accessible it appears regularly that one term has distinctive definitions. Customer for instance can have multiple meanings depending on who uses it (finance/marketing). Ordina Finance Amsterdam BV

31 Business Intelligence Solutions A Center of Excellence of Ordina Finance Amsterdam BV 8/12 Above all many organisations have all kinds of systems and data bases of different ages. Can data be made available effortlessly no matter the age of the systems? Ordina chose the Balanced Scorecard. It fitted perfectly considering the fact the strategy of the organisation had just been modified. The Balanced Scorecard focused on the key area s of Ordina and helped the management to carry out and to control the strategy. However after the construction was completed Ordina had to solve the problem of making data available out of the main sources. Normally Excel sheets were used. This way of collecting data had several disadvantages: lack of flexibility difficult to control to report on the indicators is time-consumable the costs were extensively In order to cope with all the problems described and to have a application that had all the required functionality s Ordina created her own solution: SKIM. SKIM stands for Strategic Knowledge & Information Manager. It is the Ordina application of the balanced scorecard. Ordina not only implements solution s with customers, but has recognised the importance of improvement of her own strategic decisions. SKIM therefore is developed and implemented in the Ordina organisation. PERFORMANCE MEASUREMENT SOLUTIONS BUILT IN SAS SKIM The project The construction and the implementation of the Balanced Scorecard and SKIM was carried out by a project. It consisted of three steps. The construction of The Balanced Scorecard The implementation of The Balanced Scorecard The design and constructing of SKIM Construction of The Balanced Scorecard The management of Ordina Finance re-designed vision and strategy.it was the starting point for constructing of the Ordina Balanced Scorecard. The theory of the Balanced Scorecard and the re-designed strategy of Ordina was discussed in workshops and business unit meetings. Afterwards the targets, key success indicators and performance indicators were created. Ordina managed to construct her own Balanced Scorecard. The implementation The constructed Balanced Scorecard was discussed again in the organisation. Considering the goals and indicators what action had to be taken to meet the objectives and carry out the strategy successfully. In documents was described how. The design and construction of SKIM The information system that supported the Ordina Balanced Scorecard was named SKIM. Employees of BIS designed and built the entire SKIM architecture. Ordina Finance Amsterdam BV

32 Business Intelligence Solutions A Center of Excellence of Ordina Finance Amsterdam BV 9/12 The SKIM architecture It is based on the following principles: flexible and controllable generic model the reports on the indicators have to be clear presentation of the Balanced Scorecard outcome must be bright maintenance is effortless wide range of presentations possibilities SKIM is based on a data warehouse The SAS Institute supplied the tools Figure 4 The SKIM architecture Sources/ Databases Data Warehouse Business Model BBSC Application F C I L BBSC Model Maintenance Application Model Presentation Data Management The functional model The sources/data bases The Balanced Scorecard extracts the data out of several sources of the association like the systems of the financial and client administration. Data Warehouse The SKIM architecture is based on a Data Warehouse. It enables the outcome of standard information for reports and analysis. Business model Based on the data warehouse a special datamart has been designed. It provide the means to transfer data to the SKIM application. The business model consists of all the elements needed to fulfil the standards for measurements. To set up the model the Star technique has been used. The four perspectives of the Balanced Scorecard have been the fundament for the creation. Data Management The Data Management ensures the transfer of data from the Data Warehouse to the firm model. The Balanced Scorecard application Ordina Finance Amsterdam BV

33 Business Intelligence Solutions A Center of Excellence of Ordina Finance Amsterdam BV 10/12 The Ordina Balanced Scorecard application includes four components: Maintenance The input of values and the measurements have been taken care of here. The Balanced Scorecard Model In this component SKIM extracts the data of the firm model. These will be aggregated according the measurement standards of the Balanced Scorecard. The outcome will be compared with the values. The results of this comparison will be transferred to the application. The application The application contains all the information that the Balanced Scorecard will show. The presentation The results of the measurements linked to the Balanced Scorecard are shown by the presentation component. The technical architecture The design of SKIM was focused on the creation of a flexible and long-lasting future oriented system. SKIM has been developed based on Data Warehouse technology. The SAS Institute supplied excellent tools in order to design and construction the SKIM architecture. The Data Management is built with SAS/Base. In order to improve the control of this process SAS/Warehouse Administrator will be considered to support further progress of this component. The Data Warehouse and the business model are constructed with SAS Data sets. It ensures a lot of flexibility and superb performances. SAS/AF has been used to develop the SKIM application. It ensures a clear presentation of the Balanced Scorecard outcome. The architecture of SKIM is designed to enable other presentation means like Intranet. The findings Ordina has experienced that after SKIM was integrated in the organisation the association improved the quality of her strategic decisions. Further benefits to be notified are a far better communication about the strategy and mission. The planning and co-ordination of strategic initiatives have been upgraded and a refined feedback of strategic information is now taking place. In the end Ordina has experienced that it affected her financial findings positively Other Performance Measurement solutions. The number of associations that uses (a kind of) performance measurement is increasing. Benchmarking for instance is often used to make clear what the position of the unit is compared to others. A system of measurements have to be constructed to support this process. The SAS Institute offers the facilities to construct a benchmarking system. Ordina Finance Amsterdam BV

34 Business Intelligence Solutions A Center of Excellence of Ordina Finance Amsterdam BV 11/12 Another experience was the constructing of a Data Warehouse based on the Balanced Scorecard principle to support a Insurance Company to improve the process of taking (strategic)decisions. Besides the use of SAS Institute Tools to construct a Data Warehouse several SAS applications like SAS/MIS-OPAF were needed for storage of the information. To link information of clients, damages, fees and contracts to strategic targets the management had a far better control of the company. When for strategic reasons a firm has decided a strategic and operational turnover have to take place a Balanced Scorecard is used to support the strategic (re) engineering and the EFQM model for the operational improvements. Sometimes a Data Warehouse is the linking pin between the two models. According the EFQM model data are being made available from the sources and collected in the Data Warehouse. Measurements according the EFQM model can be carried out. At the same time these data are the input for the measurements according the Balanced Scorecard. Again the tools of The Institute were most adequate for constructing, linking and implementing the models. Experiences. Performance Measurement processes are dynamic. Organisations have to face modifications repeatedly Processes like the Balanced Scorecard and EFQM are cyclic. Strategy, targets, indicators and the outcome are continually influenced by each other Making data available out of the main sources takes time Theory and technique have to fit The construction and implementation of Performance Measurement Model have to be kept simple. (for example: Don t create complex and perfect indicators) Involvement of the entire organisation effects the outcome positively A organisation has to be prepared to invest time and money in order to implement a Performance Measurement project A massive Performance Measurement project like the Balanced Scorecard or EFQM model can effect the culture of the company intensely But: Most of the organisations who implemented a Performance Measurement model successfully have undergone a far better financial result! A PERFORMANCE MEASUREMENT TEST Ordina has constructed a Performance Measurement Test to analyse organisations. The results of the test indicates whether a firm needs Performance Measurement adjustments or (re)designing. COME TO THE ORDINA STAND TO FILL OUT THE FREE PERFORMANCE MEASUREMENT TEST Ordina Finance Amsterdam BV

35 Business Intelligence Solutions A Center of Excellence of Ordina Finance Amsterdam BV 12/12 Ordina Finance Amsterdam BV