Introduction to the Performance Scorecard March 2009
Agenda Concepts Overview Demo Q&A 2
Scorecard & Dashboard 3
Buzz Words for Dashboard and Scorecard Scorecard Strategic Objectives, Targets, Goals Leading / Lagging Indicators Strategy Mapping Cause & Effect Accountability Map KPI Tracking Linking Strategy to Budget Pay for Performance Traffic lighting 4
Scorecards are Cross-functional analytic applications that define, measure, and analyze a business strategy according to key performance indicators." The most famous is the Kaplan-Norton "balanced scorecard" that incorporates a business methodology for defining and relating financial and nonfinancial indicators of performance. These analytic applications manage KPIs and causal relationships, supporting the closed loop process of measuring and managing the execution of strategic goals across the organization. Henry Morris IDC 5
Dashboards are A style of user interface designed to deliver userspecific information relating to the health of the business, typically represented by key performance indicators (KPIs) and links to relevant reports. Visual cues and graphs focus user attention on important trends, changes, and exceptions. Henry Morris IDC 6
Dashboards and Scorecards - Differing Perspectives Past Future Business results Operational and strategic Root cause analysis Guided navigation Alerting Benchmarking Metrics Graphics Reporting Metadata Strategy deployment People & team scoring Accountability maps Management processes Initiative tracking Cause & effect Collaboration Dashboards Scorecards Dashboards: Why did I miss my goal? Scorecards: How does my goal support the corporate strategy?
Key Value Proposition 8
Alignment and Accountability are Key to Driving Enterprise Performance Revisit goals Update models Update plans Reallocate resources Financial & statutory Management reporting Compliance SDR GRI metrics Align Report Set Goals Insight Performance Action Plan Monitor Develop strategies and goals Define key initiatives and KPIs Model scenarios Allocate strategic targets Financial budgeting Operational planning Rolling forecasts Variances to budget Key trends across LOBs Profitability Effectiveness Analyze Financial and operational Revenue, profits, KPIs Efficiency and utilization Benchmarking and metrics
Ensuring Alignment to Corporate Objectives Headquarter Objectives Subsidiary 1 Subsidiary 2 Subsidiary 3 Critical Success Factors Critical Success Factors Critical Success Factors Actions Actions Actions
Hyperion Performance Scorecard Aligns Strategy with Execution Translates strategies into objectives to establish ownership and accountability Communicate goals and objectives to align an entire organization Tailor scorecards by individual or teams to increase adoption Monitor key performance indicators to track execution
Core Competencies Translated into Performance Management Frameworks The Balanced Scorecard Financial Customer Internal Learning & growth Stern Stewart Key Performance Indicators EVA and EVA drivers Customer Cost Capability 6-Sigma Malcolm Baldridge Leadership Process quality Human Resource Development & Management Strategic Planning Information and analysis Customer focus and satisfaction Quality and operational results
Interoperability Consolidated Actuals HFM Budget Goals HP Strategic, Long-Term Goals HSF Financial Actuals Target YEAR 1 Target YEAR 5 Customer Internal Learning & Growth ERP, CRM, HR, Other (Oracle, SAP )
Hyperion Performance Scorecard Advantage FEATURES Methodology neutral Collaborative environment (alerting, notes, initiatives) Strategy management and alignment to accountability The only strategy management application in the world that is tightly integrated with both Planning (Performance or Strategic Planning) BI (especially the BI Workspace) BENEFITS Greater control over strategy Execution Accountability and confidence in long-term plans and strategy Faster response to market dynamics and competitive pressure Pay for performance Process control
Identifying Scorecard Opportunities Likely to have buy-in from TOP management Have strategy maps defined and likely want a way of linking accountability to strategy Communication and collaboration about strategy and measures are important to them Need to record explanations to support the strategy and record outcome analysis narrative LIKELY NOT! Only want to report on and get a better understanding of their metrics Dashboard look is the main focus 15
Discovery Guide & Cross-sell 16
Performance Scorecard Data Collection -Data from external systems -Excel input -Target setting -PTD aggregation -Transformations -Composite KPIs Excel Data Owners Scoring Engine -Scoring -KPI maintenance -Weightages -Cause & Effect -Linking KPIs to strategy -Accountability -Alerts -Corrective actions -Communication -Link to budgets Aggregation Administrator Reporting Cross-sell to Planning? Reporting -Create scorecards -Drill-down to details -Multiple targets -BU performance comparison -Analysis of KPIs -Dashboards Submit Cross-sell to Essbase/BI Corporate Management -Link performance to incentives 17
Best Practices An Aligned Organization Business Challenge Business goals and strategies are confined to the boardroom, and not translated into meaningful performance metrics for which managers can be held accountable. Impact Wasted resources as different parts of the organization pull in different directions Lack of synergy Inability to adapt to changes as an organization Solution Balanced Scorecard to set realistic goals and make managers accountable for their actions. Aligns the organization through proper communication of strategy, performance and actions. Outcomes Managers see the big picture and understands how their activities impact the strategic plan An accountable organization 18
Key Questions Prerequisites Do you have a defined corporate strategy? Does the strategy include strategic objectives or other highlevel goals and/or initiatives? If so, how many? How often is your strategy reviewed and/or revised? Do you have a budget and timeframe for implementing Performance Measurement and/or Scorecards? 19
Key Questions Strategy Deployment How is your strategy communicated throughout the organization? Are the objectives/goals of your strategy decomposed into specifically actionable tasks, projects or initiatives? Do people throughout the organization know what it is and what role they play in it? Are the outcomes of your business processes aligned with your strategy? Is there a linkage between your strategic, operational and budgetary planning processes? 20
Key Questions Measures Are you capturing and reporting performance measures (or key performance indicators) on a consistent basis? How many measures does your organization track and report on? What percentage of these measures would be considered financial? Have you developed measures that relate specifically to issues in your current strategy? 21
Key Questions Scorecards Do you use scorecards to track performance towards meeting strategic goals? Do you have an overall scorecard and is this cascaded up from lower level business units (i.e. scorecards for business units)? Are you following the Balanced Scorecard framework? If not, what are the perspectives you are focusing on? Do you feel that your scorecard is balanced (i.e. not overloaded with financial measures) Does your scorecard have sufficient leading vs. lagging KPI s? (e.g. does it model cause and effect ) Is there a mandate to link scorecards to strategic initiatives? Is there a mandate to link a bonus system to scorecards? 22
Objection Handling 23
Objection Handling Need to customize scorecards Expensive compared to other solutions 24
Demo 25
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