The Corporate Performance Management Practitioner

Here is a great resource on CPM..the personal website of Art Schneiderman. He has some great, very accessible content all over the site, but was particularly impressed by his archive of the earliest Balanced Scorecard initatives at Analog Devices. It is clear that this first BSC evolved from TQM initatives (there is that focus on business process again!). Remember that Kaplan and Norton did not originally focus on the execution of strategy…Kaplan was coming of a number of books and articles where he was questioning how traditional Management  Accounting was failing to meet the needs of Managers. His interests were in TQM, ABC, and so on.

 Make sure you review the Art of Process Management section. Great Articles.

Filed under: Uncategorized, CPM Process Improvement, CPM Theory
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As noted in an earlier post, Cognos Metrics Studio is a great tool for periodic Scorecards: Weekly, Monthly, Quarterly, etc. It wasn’t built for continual monitoring.

Cognos went out and bought Celequest, a software company that makes dashboarding technology focused operational metrics. This seems like another move toward the integration of CPM/BI and Business Activity Monitoring (BAM) that began with Event Studio in Version 8. Interesting Whitepapers on the Celequest Website.

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The concept of the business process is well established. Most of us understand real performance management comes from how well processes function, with the only real measure of value coming from how well the customer’s needs are met. Businesses earn above Market Rate of Returns (what microeconomics calls “Economic Profits”) by beating the competition and building profitable relationships. You can argue about the social/economic impact Wal-Mart has on society, but there is no way to argue with their success at managing the processes that directly touch the customer. Amazon changed how we buy books. Toyota changed how cars are made. There are many others: Geico, Starbucks, Home Depot, Dell, Google, etc. All these firms focused on their customer facing processes, and then revolutionized their industries.

I don’t think the CPM world focuses enough on process measurement. Six Sigma, which focuses on how well the process (or project, or product, or initiative) meets the needs of the customer is the one main exception. Strategy Maps and Execution plans need to take into account how well processes are currently working, and the level of performance needed to achieve strategic goals.

Jerry Harbour wrote a great little book on process measurement. It is a must read for anyone interested in CPM. The book has a strong manufacturing focus, but the truths are global. He points out that are only a handful of ways to measure processes:

• Time (How Long Does the Process Take to Process 1 unit of Output?)
• Quality (How closely does the Output match Customer Expectations?)
• Cost (How Much Does 1 unit of Output Cost?)
• Throughput (How many units get processed in a given time measure?)
• Efficiency (How many Input units are used to Create 1 output unit?)

These measurement types form the basis of any kind of process measurement. They are core to Six Sigma, Business Processing Reengineering, Lean, TQM, and all kinds of other business improvement methodologies. They also should be key to any CPM efforts around scorecarding, metric development, and target setting. Do not measure a process with only 1 measure…use several to provide a balanced view of process performance.

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It has been a busy Q4 for me, and I have not been very active in the Blogosphere…fortunately I have been jotting down some notes, so I do have new material…One of my New Years resolutions was to post at least 3 times every week, so there will be a flurry of activity before the end of January.

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