Case study

PA Consulting Group (PA) stands apart from the field

of alternatives as a recognized utility sector expert in

the development and implementation of best-practice

performance management frameworks as a catalyst for

business transformation.

Beginning in late 2007, PA engaged with a leading

supplier of integrated customer management solutions

supporting oil and gas majors. Our client provided

services such as call center operations, billing, accounts

payable and receivable, financial reporting, logistics

and distribution operations and performance analysis

and assurance reporting. The customer base included

a nationwide gas retail network as well as a wide range

of franchisees and dealers. PA was asked to provide

standardized service contracts with the client’s business

customers and also develop a new Performance

Management Framework. The framework requirements

covered scorecard and strategic and operational

performance metrics.

Development of a value-driven performance management framework

Aligning performance metrics with stakeholder value for a customer support center

As scrutiny on utility performance intensifies, more attention is being focused on the role of performance metrics in business operations. Stakeholders are demanding more from their service providers at a time of rising commodity costs, increasing capital requirements for refurbishment, new construction and a growing set of customer interests. All these demands seem to pull leadership teams in multiple directions. What levers should they focus on? And more importantly how?

Despite positive reports on their performance, our client

was facing increasing discontent from stakeholders and

business customers with low level of service, eg, long

call wait. Stakeholders were also impatient to see any

return on investment in this recently-established shared

services center. The client also felt that they were lacking

or even losing control in certain areas of their business.

For instance, the project management team had little

influence on transformation and IT projects. Other areas

of concern included:

lack of service definition with increasing out-of-scope

service delivery

debatable usage of performance metrics, which were

often meaningless

increase in the number of reports generated for a large

number of stakeholders.

complete disconnect between internal performance

reporting and customer experience

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existing measures focused on speed of service

delivery while completely neglecting quality

Leveraging PA’s experience in the sector, the goal of the

engagement was to:

provide customers and stakeholders with more

transparency on services and costs

develop performance metrics clearly aligned with

business needs

focus on proactively-managed customers relationships

and expectations

enhance overall performance information and reporting

processes

As a result of feedback collected from internal client

surveys that outlined a disconnect between the client and

its business customers, our team worked with the client to

address the business issues and the customer concerns

through a series of initiatives as described below.

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Service catalog: Our team worked with the client to create a service catalog that provides detailed descriptions of

all services offered by client. In addition, the team created a single service contract for each business unit that details

the client’s services used by the unit and the service levels to which the client is expected to adhere. The client rapidly

identified benefits from this single initiative through a tighter definition its services and therefore higher clarity to

customers. It also built the foundations for the KPI, Scorecard, and Benchmarking workstreams.

Key Performance Indicators (KPIs): A comprehensive set of KPIs were developed through a series of collaborative

sessions with business unit representatives that are focused on measuring service delivery and identifying improvement

opportunities. The outcome was a set of flexible SLAs designed to alter behaviors and drive performance improvement.

The key benefits of this workstream were the clear representation of customers’ expectations through the KPIs and

the deep involvement of customers and stakeholders in the process. With such a cooperative process, the buy-in

was achieved rapidly.

Figure 1: From issues to outcomes

Business issues

Services and costs are not transparent to

customers

Performance metrics are not clearly aligned with stakeholders’

and customers’ needs

Customers relationship and expectations are not managed

proactively

Overall performance information and reporting processes could

been hanced

Service catalog completed and

validated by business

Set of key KPIs and SLAs validated by

customers

Working balanced scorecard developed and agreed with client

Benchmark-driven targets and realistic opportunities for

improvement

Develop service catalog defining services provided to the business

Develop business-aligned SLAs defining required performance levels

Develop balanced performance scorecard to track and report performance against key metrics

Benchmark costs and operational performance against comparable shared services organizations for target-setting

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PA initiatives Outcomes/deliverables

Balanced Performance Scorecard: In alignment with the KPIs workstream, which

focuses on operational excellence only, PA developed a Balanced Performance

Scorecard (‘Scorecard’) covering the key management areas: shareholder value

(finance), customer value (customer), operational excellence (KPIs), and people and

capabilities (HR & training). The Scorecard was aligned with the parent-company’s

objectives as well as the strategy of the business unit. It also provided greater

transparency on the business performance to the leadership team as well as their key

stakeholders. Finally, the Scorecard helped the organization prioritize its transformation

program by focusing on the most significant levers for stakeholders and customers.

Figure 2: Key benefits from scorecard

Benchmarking of costs and performance: The benchmarking exercise was executed

in an effort to understand costs, staffing levels, service levels, performance compared

to best practice. It also provided a point of reference for the client’s new KPI’s. These

benchmarks were used to develop market-based performance targets that the client can

use for setting ‘realistic’ goals and objectives.

Normalized data is compared to high performing target companies and is used to define

stretch, market-based targets and objectives for overall performance. Best practices

of the better performing companies are identified for implementation by the Client and

initiatives created to enable achievement of stretch targets and associated move from

second to first quartile performance.

Figure 3: Charting the normalized results drives target-setting and best practice initiatives to improve performance

Pre-scorecard Post-scorecard

Number of reports

Level of details

Target setting

Performance review

Over 100 reports generated across the organization

Uneven report granularity

Lack of market – driven targets

Areas of business without clear performance review

Market – and consensus – driven target-setting process

Fact-based strategy discussions enabled by the scorecard tool

Reports being rationalized using the scorecard framework

Clear top-down reporting structure

Average time to answer – seconds Longest time to answer – seconds Average time to answer – seconds

Customer satisfaction survey by customer type(regular, key, new customers)

Abandonment rate Inbound agent call wrap-up time – minutes

Q1

Q2

Q3

Q4

COA

20.00 40.00 60.00 80.00 100.00

32.50

32.50

42.30

79.25

84.00

Q1

Q2

Q3

Q4

COA

2,000.00 4,000.00 6,000.00 8,000.00

178.75

253.8

515.125

1946

6900

82%

81%

78%

75%

Q1

Q2

Q3

Q4

COA

65% 70% 75% 80%

88%

85% 90%

74%

73%

70%

Gap

Q1

Q2

Q3

Q4

COA

0% 20% 40% 60%

82%

80% 100%

Q1

Q2

Q3

Q4

COA

5% 10% 15% 20%

2%

3%

6%

8%

15%

0%

46.00

69.00

127.00

841.00

Q1

Q2

Q3

Q4

COA

200.00 400.00 600.00

23.75

800.00 1,000.00

“ We faced the really daunting task of both re-defining the services we offered and completely overhauling our performance reporting structure. The primary challenge was that we needed to inform the new performance metrics through a combination of customer input and industry benchmarks. After spending the time to genuinely understand our business and organization, PA conducted interviews with over 70 customer representatives and managed to identify the services required to support their changing business and formulated metrics that provided a genuine depiction of the customer experience. Further, they provided incredibly detailed and customized benchmarking that gave us real insight to the things being measured by industry leaders.”

Business Unit Leader

of Performance

Management

Client Confidential

The effort succeeded in identifying current client ‘good practices’ as well as a series of

potential process improvement efforts by:

clarifying underlying information relating to volumes associated with calls,

transactions and business processes

highlighting best practices in use in the industry

identifying and clarifying barriers to success

defining best practices suited to the client environment to yield best results.

Of the approximately 45 operating and cost metrics benchmarked, a portfolio of potential

improvement opportunities was identified and categorized based on implementation

complexity and benefit. Implementation of such improvements will propel the client to a

Quartile 2- and even Quartile 1-performer in the areas of customer value, operational

excellence, people and capabilities and shareholder value.

Figure 4: Moving to best-practice

By the end of the engagement, the client was able to gain control of their organization

by putting in place a series of transformation initiatives based on the new Performance

Management Framework. The framework helped identify and prioritize the transformation

initiatives and select those with the greatest impact on long-term success. The scorecard

was also an effective communication tool to stakeholders and customers. The business

not only improved its focus on the bottom-line while enhancing customer experience

and stakeholder satisfaction, but also clearly identified the next steps to enhance its

performance rapidly.

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Corporate headquarters123 Buckingham Palace Road

London SW1W 9SR

United Kingdom

Tel: +44 20 7730 9000

Fax: +44 20 7333 5050

E-mail: info@paconsulting.com

Global Energy Practice1700 Lincoln Street

Suite 4600

Denver, CO 80203

Tel: +1 720 566 9920

Fax: +1 720 566 9680

Contact: Carolyn Misage

Tel: +1 720 566 9845

E-mail: energy@paconsulting.com

www.paconsulting.com

PA Consulting Group is a

leading management, systems

and technology consulting firm,

operating worldwide in more

than 35 countries.

Principal national offices inArgentina, China, Denmark,

Germany, India, Ireland,

Malaysia, The Netherlands,

New Zealand, Norway,

Sweden, United Arab Emirates,

United Kingdom, United States

© PA Knowledge Limited 2008. All rights reserved.

00960-0

Balanced Scorecard Quadrant

Customer value

Operational excellence

People and capabilities

Shareholder value

Overall

Q1 Q2 Q3 Q4

“ The work that was done has exponentially improved our relationship and credibility with customers – materially improving engagement and fundamentally changing our conversations from highly anecdotal to fact based and metric driven. We now have a performance structure that allows us to accurately measure and manage performance.

I have worked with all of the big consulting firms over the last ten years and PA has unquestionably delivered the most useful and tangible results – all at a comparatively outstanding cost.”

Business Unit Leader of Performance Management

Client Confidential