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Copyright © 2004, SAS Institute Inc. All rights reserved.
Achieving Performance Improvement: Case Studies in Performance Management
Presented By: Tony C. AdkinsSAS
Visionary perspectives for management insights
BetterManagement Presents
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Copyright © 2004, SAS Institute Inc. All rights reserved.
Meaningful Performance Management
� Meaningful
� Accurate
� Aligned
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Copyright © 2004, SAS Institute Inc. All rights reserved.
Managing the business: Why should I be interested?
Less than 10% of strategies effectively executed
� Confusion & politics• Inconsistent messages, no understanding of what creates value
• Siloed operations, different agendas
• Inefficient allocation of resources
• Short term thinking/ tactics
• Drowning in data, constant fire fighting
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Copyright © 2004, SAS Institute Inc. All rights reserved.
What is Performance Management?
• IT Analysts
• Commercial business
• Public sector
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Copyright © 2004, SAS Institute Inc. All rights reserved.
Commercial business
� Manage the limited resources
� How to achieve more profit
� Ideally aligned with corporate strategy
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Copyright © 2004, SAS Institute Inc. All rights reserved.
Public sector
� The difference here is the lack of focus on “profit.”
In a report outlining the PMA, President George W. Bush wrote:
“Government should be results oriented – guided not only by process but guided performance. There comes a time when every program must be judged either a success or a failure. Where we find success, we should repeat it, share it, and make it the standard. And where we find failure, we must call it by its name. Government action that fails in its purpose must be reformed or ended.”
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Copyright © 2004, SAS Institute Inc. All rights reserved.
Resources
Customers, Products, Services
& Channels
Cost Drivers PerformanceMeasures
resourcedrivers
activitydrivers
Activities
Managing the business
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Copyright © 2004, SAS Institute Inc. All rights reserved.
Resources
Customers, Products, Services
& Channels
Cost Drivers PerformanceMeasures
resourcedrivers
activitydrivers
Activities
Managing the business
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Copyright © 2004, SAS Institute Inc. All rights reserved.
Resources
Customers, Products, Services
& Channels
Cost Drivers PerformanceMeasures
resourcedrivers
activitydrivers
ActivitiesStrategy Modeling
Managing the business
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Copyright © 2004, SAS Institute Inc. All rights reserved.
Resources
Customers, Products, Services
& Channels
Cost Drivers PerformanceMeasures
resourcedrivers
activitydrivers
ActivitiesStrategy Modeling
Managing the business
Planning
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Copyright © 2004, SAS Institute Inc. All rights reserved.
Resources
Customers, Products, Services
& Channels
Cost Drivers PerformanceMeasures
resourcedrivers
activitydrivers
ActivitiesStrategy Modeling
Managing the business
Planning
Budgeting
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Copyright © 2004, SAS Institute Inc. All rights reserved.
Resources
Customers, Products, Services
& Channels
Cost Drivers PerformanceMeasures
resourcedrivers
activitydrivers
ActivitiesStrategy Modeling
Managing the business
Planning
Budgeting
EXECUTION
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Copyright © 2004, SAS Institute Inc. All rights reserved.
Resources
Customers, Products, Services
& Channels
Cost Drivers PerformanceMeasures
resourcedrivers
activitydrivers
ActivitiesStrategy Modeling
Managing the business
Planning
Budgeting
EXECUTION
Consolidation
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Copyright © 2004, SAS Institute Inc. All rights reserved.
Resources
Customers, Products, Services
& Channels
Cost Drivers PerformanceMeasures
resourcedrivers
activitydrivers
ActivitiesStrategy Modeling
Managing the business
Planning
Budgeting
EXECUTION
Consolidation
Scorecard/ Dashboard + Compliance
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Copyright © 2004, SAS Institute Inc. All rights reserved.
Resources
Customers, Products, Services
& Channels
Cost Drivers PerformanceMeasures
resourcedrivers
activitydrivers
ActivitiesStrategy Modeling
Managing the business
Planning
Budgeting
EXECUTION
Consolidation
Scorecard/ Dashboard + Compliance
exploration
exploration
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Copyright © 2004, SAS Institute Inc. All rights reserved.
Resources
Customers, Products, Services
& Channels
Cost Drivers PerformanceMeasures
resourcedrivers
activitydrivers
ActivitiesStrategy Modeling
Managing the business
Planning
Budgeting
EXECUTION
Consolidation
Scorecard/ Dashboard + Compliance
exploration
exploration
Human & IT CapitalManufacturing & Research
Economic & Market trends
Process & Quality Improvement
Supplier/ Customer interactions, logistics & behaviors
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Copyright © 2004, SAS Institute Inc. All rights reserved.
� Information Evolution ModelLevel 5: Innovate (effectiveness)
Level 4: Optimize (efficiency)
Level 3: Integrate (transparency)
Level 2: Consolidate (silos of many)
Level 1: Operate (silos of one)
� Factors that influence results• People (Skills, ability, needs)
• Process (Logical execution)
• Culture (Values toward use of information)
• Infrastructure (How systems support business needs)
Gather
Exploit
Understand how you consume information todayManaging the business: Where do I start?
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Copyright © 2004, SAS Institute Inc. All rights reserved.
Information Revolution –Authors: Jim Davis, Gloria J. Miller, Allan Russell
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Copyright © 2004, SAS Institute Inc. All rights reserved.
A Brief look: Four Case Studies
� LubeOil
� HomeHealth
� Super Draft
� Armed Forces
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Copyright © 2004, SAS Institute Inc. All rights reserved.
LubeOil
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Copyright © 2004, SAS Institute Inc. All rights reserved.
LubeOil
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Copyright © 2004, SAS Institute Inc. All rights reserved.
LubeOil
BENCHMARK TEMPLATE # 1ABC Profit Value ChainAffiliate: Various Global
Sort Criteria: Total Lube Business
*All revenue/cost in USD/BBLRaw Acct Del Sales and Net
Affiliate Volume (BBL) Realization Material GM LOBP Distribution GM Marketing Advertising Margin
Local Affiliate 1 6,202,039 150.5 85.7 64.8 8.6 11.1 45.1 21.8 6.2 17.1Local Affiliate 2 1,025,109 162.2 94.6 67.6 17.5 16.6 33.6 19.7 6.1 7.8Local Affiliate 3 832,344 166.6 84.9 81.7 20.5 11.5 49.6 22.9 5.9 20.7Local Affiliate 4 489,227 135.9 92.2 43.7 8.3 9.7 25.7 9.6 4.0 12.2Local Affiliate 5 368,164 188.9 105.8 83.1 7.9 2.9 72.2 21.1 1.7 49.3Local Affiliate 6 91,373 219.8 87.5 132.3 30.8 4.9 96.7 71.7 14.2 10.8
Affiliate Weighted Average 154.8 87.8 67.0 10.9 11.3 44.8 21.5 5.9 17.4
Regional grouping 487,164 193.0 113.0 80.0 28.0 4.0 48.0 38.0 14.0 -4.0
VARIANCE TO AVG 38.2 -25.2 13.0 -17.1 7.3 3.2 -16.5 -8.1 -21.4
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Copyright © 2004, SAS Institute Inc. All rights reserved.
HomeHealth - Challenges
� Reduce cost• For reimbursement changes
� Maintain quality• Quality as defined by our customers
� Improve access• Provide services that focus on the needs & wants of our
customers
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Copyright © 2004, SAS Institute Inc. All rights reserved.
HomeHealth
� Psych nursing visit is 3 times more costly than med-surg visit
� HMO visits cost 1.5 times more than Medicare visits
� Admission process costs $450/client
� PT travel is 2 times more expensive than RN travel
� Documentation costs $45 per visit
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Copyright © 2004, SAS Institute Inc. All rights reserved.
HomeHealth
� Activity “costing” can elicit fear and defensiveness
� Activity “management” may be more acceptable
� Education begins with staff interviews
� Sharing what makes work hard validates staff long-standing frustrations and involves them in the process
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Copyright © 2004, SAS Institute Inc. All rights reserved.
Strategic Planning
� Focus strategic plan on areas that are most important to customers and/or high cost
� Obtain organizational commitment to objectives and tactical plans
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Copyright © 2004, SAS Institute Inc. All rights reserved.
SuperDraft - Challenges
� Define profit by each of SuperDraft’s more than 18,000 customers
� Create a sustainable ABC/M system
� Build and deploy an ABC/M system in six months
� Deliver results of major impact
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Copyright © 2004, SAS Institute Inc. All rights reserved.
SuperDraft
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Copyright © 2004, SAS Institute Inc. All rights reserved.
SuperDraft
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Copyright © 2004, SAS Institute Inc. All rights reserved.
DND - Canarus
� Create ABC models to support business planning
� Ensure the ABC models are fundamental part of the IME
� Create a scorecard driven system that could also be used for re-engineering, ASD, continuous improvement
� Tie the ABC models into the financial and managerial accounting system
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Copyright © 2004, SAS Institute Inc. All rights reserved.
BALANCED SCORECARD
EIS
Input
PersonnelMateriel
Infrastructure$
Output
CombatCapableForces
OVERSIGHT AND CONTROL FRAMEWORK
BUSINESS PLANNING PROCESS
Operational Forces
Operational Forces
Command & Control
Training
Support
Mandated Programs
OUTPUTS
Performance Measurement
Economy Efficiency Effectiveness
Activity Based Management Risk Assessment
Key Strategies
Accountability View
Process View
LFWA LFCA
... ... ... ... ...
... ...
SQFT LFAA 1 DIV CLFCSC LS
LFC
S Dir C Mgmt
C & C
Pers Eqpt
C Trg Indiv Trg
Op Forces Trg Support M Prog
F Gen F Emp
CF/DND
Maximize OpCapability
StrengthenDefence Team
OptimizeResource Use
ProvideSupport
ProtectEnvironment
PromoteAwareness
CF/DND
Service StandardsTraining Standards
Benchmarks
National Systems
Data MartMatOrg
PersFin
Infra
Safety
Plans
Integrated Management Environment
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Copyright © 2004, SAS Institute Inc. All rights reserved.
Major Lessons Learned
� Highlight and ACT
� Link ABM to Performance Management
� Activity “costing” can elicit fear
� Can be complex
� “Pot of Gold at the End of the Rainbow”
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Copyright © 2004, SAS Institute Inc. All rights reserved.
Upcoming Webcasts� Leadership Essentials for Balanced Scorecard
Success: How to Get Everyone Involved in Running Your Business
� Balanced Scorecard Fundamentals
� Barriers and Benchmarks: Performance Improvement Benchmarking Survey Conclusions
http://www.bettermanagement.com/seminars/seminarList.aspx?f=11
Sam Sheikh