Post on 06-May-2015
Achieving Organisational Change from Measurement and Reporting
Paul Vella
17-Aug-2010
The most comprehensive Oracle applications & technology content under one roof
• Change
• Landscape
• Resistance
• Measurement
• Best Practice
• Use Measurement Strategically
• OBI Analytics KPI and Metrics
• 11g Scorecard Features
Introduction
Change Landscape
Technological
Change
Demographic
Change
Market
Change
Climate
Change
Financial
Change
Political
Change
Organisational
Change
“It is change, continuing change, inevitable change, that is the dominant factor in society today. No sensible decision can be made any longer without taking into account not only the world as it is, but the world as it will be ...” - Isaac Asimov
Change Landscape•Political Change
•Government Policy
•Taxation Policy
•Regulatory Framework
•Financial Change
•Recession
•GFC
•Interest Rates
•Inflation
•Climate Change
•Environment Change
•Catastrophic Events
•Market Change
•Competitive Framework
•Consumer Demand
•Developing Markets
•Organisation Change
•Merger
•Acquisition
•Succession
•Turnover
•De-Centralisation
•Shared Services
•Relocation
•Demographic Change
•Population Age
•Urbanisation
•De-Urbanisation
•Technological Change
•System Change
•User Interface Change
Change Process
Change
Plan
Baseline
Measure
Continuous
Improvement
• TQM• Baldridge• Six Sigma (define, measure,
analyze, improve, control)• Kaizen (standardise, measure,
gauge, innovate)• PDCA (plan, do, check, act)
Resistance to Change – Top 101. Risk of Change
2. Connection to “Old Way”
3. No Role Models for “New Way”
4. Fear about Competence to
Change
5. People are too busy to Change
6. Healthy Scepticism
7. Fear of a “Hidden Agenda”
8. Feeling Threatened / Loss of
Status
9. Past Failure to Change
10. Believe that change is a bad idea
• Resistance relates to people and
perception
• You can change technology and
systems, but unless it is accepted,
then there will be significant
resistance
• Can lead to expensive failures
Using Measurement Strategically
What are the
changes needed in
people, processes,
products/services,
and climate, in
order to drive the
required results.
Current State
End State
Baseline
Define
Targets
Determine
Measures
Measure
Assess
Take a Leap
Magic Happens
Measures should….
1. Ownership: Connect business results to people
2. Forward Looking: Involve a healthy mix of leading and lagging indicators
3. Current: Are kept alive in discussions-and not left sitting in a binder
somewhere
4. Realistic: Are given time to work
5. Challenging: Have teeth
6. Strategically Aligned: Support organisational goals over and above
functional/divisional goals
7. Consistent: Measure the right things
How Measurement Helps…1. Need for Change: Provide evidence that change is needed
2. Clarity: Clarify the purpose and direction of the change effort, by forcing
people to consider its specific impact in unambiguous terms
3. Communication: Measurement is a form of communication - it tells
people what you care about
4. Progress: Tracking the effectiveness of the change effort both tells people
that it is important and provides a way to judge how well it is being
implemented, or how well it was designed
5. Business Case: The results can be used as a justification for future
projects
6. Direction: The measurement effort can be set up as a framework for
expecting and anticipating change, making it seem more controllable and
less threatening
Approach to Measurement
1. Develop Strategy Map of
Organisation
2. Define Objectives under each
Strategy
3. Define KPIs under each Objective
4. Baseline Current State
5. Set and Agree Targets
6. Measure and Report on Indicators
7. Review Progress against Agreed
Targets
• KPIs are measures by which the
performances of organisations,
business units, and their divisions,
departments and employees are
periodically assessed.
• Balanced Scorecard Methodology is
used to review and track
performance of KPIs aligned to the
Objectives and Strategic Map of the
Organisation.
Defining KPIs1. Acceptable, understood, meaningful and
measurable.
2. Measured when systems and processes
to capture and measure are in place.
3. Meaningful by contributing to
organisational improvement.
4. Take into account seasonal, geographic,
demographic considerations
5. Lower level KPIs aligned to higher level
objectives
6. Numerical Targets should be set in terms
of a value, a lower limit, an upper limit,
range of values, percentage or scheduled
date.
• SMART Criteria (Specific,
Measurable, Achievable, Relevant,
and Time phased.
OBI Analytics
350 Fact
tables
550
Dimensions
2500
pre-built
metrics
2000+ derived
metrics
109
Dashboards
430
Dashboard
Pages
3250
Reports
OBI Analytics Measures
DPO
DSO
EBIT
AP Turnover
Inventory
Turns
AR Turnover
ROE
Current RatioCAPEX RatioQuick ratio
ROA
ROCE
Compa Ratio
Cash Cycle
Days Cash in
Hand
Purchasing
Misses
%Adhoc
Purchases
OBI Analytics KPIs
This metric compute4s the Days Sales Outstanding- (AR Balance / Average Daily Posted Revenue). Average Daily Posted Revenue is computed by Posted Revenue for the period / Number of days in the period.This metric determines the average number of days in accounts receivable to measure the effectiveness of the firm’s credit policies and indicate the level of investment in receivables needed to maintain the firm’s sales level.
AR Days Sales Outstanding (DSO)
AR
This metric shows Days Payable Outstanding (DPO). It shows the average length of the time the trade payables are outstanding before they are paid.This metric determines the average number of days in accounts payable to measure the effectiveness of the firm’s credit policies and indicate the level of investment in payables needed to maintain the firm’s expenditure level.
AP Days Payables Outstanding (DPO)
AP
Common KPIs - 2
This metric calculates Purchases / Accounts Payables; where Purchases = total purchases from various suppliers.
AP TurnoverAP
Accounts receivable Turnover measures the number of times the trade receivables turnover annually. The higher the AR Turnover, the lower the working capital needs of the company.
AR TurnoverAR
Common KPIs - 3
This metric determines the ratio of revenue to Working Capital where working capital = current assets less current liabilities
Working Capital Turnover
GL
This metric calculates an organisations cash cycle by subtracting the Operating Cycle in days from the Average Payables in days
Cash CycleGL
This metric determines the ratio of inventory to COGS to measure the efficiency of the firm’s inventory management (number of days of inventory held). A higher ratio or days indicates that inventory does not remain in the warehouses or on the shelves but rather turns over rapidly form the time of acquisition to sale.
Avg Inventory DaysInventory
Common KPIs - 4
This metric calculates (Cash + AR) / Minimum Operating Expenses ; where Minimum Operating Expenses = (Total Operating Expenses + Interest Expenses – Depreciation)
Days Cash In HandGL
This metric calculates the current assets to current liabilities ratio. Sometimes called the liquidity ratio. Provides an indication of financial risk.
Current ratioGL
This metric is the ratio of operating cash flow to capital expenditure for the period.
CAPEX ratioGL
Common KPIs - 5
This metric subtracts current assets from current liabilities, then divides the results into total assets to determine the ration of net working capital to total assets.
Net Working Capital (NWC) to Assets
GL
This metric calculate profitability by calculating Revenue – COGS – Selling and Marketing Costs –Other Operating Expenses – R&D Expenditure + Other Income
EBITGL
This metric calculates the long-term debt to total equity ratio.
Debt to EquityGL
Common KPIs - 6
EBIT / Total Assets * 100Return on Assets (ROA)
GL
This metric calculates (Earnings before interest and taxes) / Interest expense where EBIT = revenue – COGS –Selling and Marketing Costs – Other Operating Expenses – R&D Expenditure + Other Income
Times Interest Earned
GL
This metric perovides liquidity information by calculating (Current Assets – Inventories) / Current Liabilities.
Quick RatioGL
Common KPIs - 7
•Absence Days (Notified / Not Notified)•Annual Leave Balance•Long Service Leave Balance•Headcount•Diversity Ratios (M/F), (P/T)•Compa Ratio (Emp salary / Avg salary)•Termination ratios•Average Length of Service•Training Days pa•Supervisor / Employee ratios
LeaveRatios
HR
Net Income / Total Shareholders Funds * 100Return on EquityGL
Pre-Tax Income / Total Capital Employed *100; Capital Employed = (Total Shareholders Funds + Long Term Debt)
Return on Capital Expenditure (ROCE)
GL
OBI 11g Scorecarding and Metrics• OBIEE 11gR1 includes a new
product called Oracle Scorecard
and Strategy Management.
•KPIs are defined within the web
catalog and are defined by taking
a measure, a target measure and
a set of thresholds, which can
then be used either directly in
dashboards (by use of another
new feature called KPI
Watchlists) or within one of the
new scorecards.
OBI 11g Scorecarding and Metrics•Build KPIs and KPI Watch Lists
•You can either display the results of
the KPI in a simple table, or you can
add them to a KPI Watchlist.
•These can be added like any other
object to a user’s dashboard.
•This KPI Watchlist can then be sliced
and diced, using dimension controls
at the top of the watchlist, to allow
the user to drill into whatever level of
data they are authorized to view.
OBI 11g Scorecarding and Metrics
The Scorecard part of OBIEE
11g builds on the foundation
of KPIs to allow you to define
complex, multi-part
strategies using the metrics
in your semantic layer.
OBI 11g Scorecarding and Metrics•These objectives are
organized into a hierarchy.
•Create a strategy tree
diagram that shows how
each objective feeds up into
the overall strategy.
•The objective of improving
store performance is made
up of financial, and non-
financial objectives, each
with their own set of KPIs.
• Change
• Change Landscape
• Resistance to Change
• Measurement
• Best Practices
• Using Measurement Strategically
• OBI Analytics KPI and Metrics
• 11g Scorecard Features
Summary
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