Performance Software and KPIs

John Aderibigbewww.dutconsulting.com

PMS Software

• Identify various software?• Which of these software do you use and how

does it enhance performance management?• What shortcoming do you notice and• What are the possible solution

Employee Performance Management

• Employee performance management with SAP ERP HCM helps you plan, assess, improve, and analyze the performance of your workforce from end to end. You can align individual objectives with corporate goals by cascading your enterprise strategy; assess and manage performance through feedback, development, and appraisals; and reward your employees accordingly.

• The solution is highly adaptable, allowing you to tailor both the content of your performance feedback documents and processes to the needs of your organization. A consistent, user-friendly

Competency Management• Organizations must be able to identify the skills and competencies

needed to successfully align their workforce with their business strategy and develop those skills. Competency management functionality forms the foundation for all your talent management processes. It enables you to compile a competency catalog, which all talent management processes can leverage. Competency management features let you define and then link and assign key competencies throughout your job architecture – a job catalog with functional areas, job families, jobs, and positions – and cultivate corresponding talent pools.

• You can compare an employee’s qualifications with the requirements of a certain position to determine his or her suitability and leverage profile matchup for automated identification of potential successors

Talent Assessment and Review• Through a structured and impartial approach supported by

the software, line managers across your organization can assess talent, employee potential and competencies, and what risk they have of losing talent. Wizards allow you to define useful assessment templates. You can hold talent-review meetings and support your higher level managers as they calibrate the performance and potential of the individuals nominated.

• The application helps you ensure high quality management decisions about talent development, succession, and career planning. The result for your organization is greater employee motivation, which means your retention level of key talent remains high.

Key Performance Indicators

• Key performance indicators (KPIs) are significant predefined measures that provide individuals with the information they need to assess previous actions. KPIs define target performance and provide individuals with the ability to assess past performance. For example, if the goal is to improve customer satisfaction, then several KPIs can help to monitor that goal.

Example of KPIs• Customer satisfaction KPIs could include order

cancelation, late shipment, incomplete order shipment, returns and customer attrition. Looking at the order cancelations KPI in greater detail, the purpose of this KPI is to monitor the number and value of items that have been canceled during the sales process. This KPI should address several questions such as when do most cancelations occur during the sales process? What is the lost revenue due to cancelations? Why are these transactions being canceled? How do the current cancellations compare to target performance and to historical trend?

Example of KPIs• In this example, there are four stages to the sales process. The

process begins by a sales representative issuing a quote to a potential customer. If the customer approves the quote, the sales transaction moves to the order approval stage for consideration of extension of credit to the customer and then to the shipment stage where the product is sent to the customer. Once the product has been shipped, an invoice is created and sent to the customer for payment. Order cancelations are monitored to assess performance at each stage of the sales process.

For the current full month, order cancellations were: • 626 orders valued at $5,173,434 at the quote stage, • 17 orders valued at $109,869 at the order approval stage, • 16 orders valued at $139,417 at the shipment stage, and • 31 orders valued at $212,075 at the invoice stage.

Creating Key Performance Indicators

To define meaningful KPI measures that align withthe goals of the organization, the following

questions need to be asked:• What are the business / organization measures?• How do these translate into IT service measures?• How does a process support the IT service

measures?• How will I collect and analyze the measure?

Process Goal (KPI) Measure Definition Measurement architecture

Service level management

Improve ability to track and meet service levels agreed to with clients

% increase or decrease in meeting service level

Tracked through incident management and monitoring

Change management

Reduce incidence caused by unauthorized change

% reduction in the number of incidents resulting from unauthorized changes

Tracked through incident management and change management and monitoring

Sales Increase Customer satisfaction

% reduction in order cancelation, late shipment, incomplete order shipment, returns and customer attrition.

Tracked through incident and process management and monitoring

Group Exercise

• Considering your corporate goal vis-à-vis the HR processes, identify KPIs using the table above as an example?

Effectively Using Key Performance Indicators

Once the measures are defined and linked to the various business goals the focus of the measurement activity is on the measurement process itself. How the data is going to be collected, analyzed and reported needs to defined. The measurement program will identify the sources of data and who is responsible for the measurement activity. The overall intent is to use the measures to evaluate and improve the processes.

The KPIs should provide insight into:1. Quality – How well is the process working? Are we improving

toward goals that were established for this process?2. Efficiency – Is the throughput of the process sufficient?3. Compliance – Is the process being followed?4. Value – Are we doing what we are supposed to be doing?

Visualization of Key Performance Indicators

Detailed Metrics that Visually Represent Order Cancellation by Sales Process Stage

Product Category Advantages Disadvantages

Spreadsheet software

Software is the least expensive of the three product categories

Easy to use Rich in functionality

Manually intensive and prone to errors and inconsistencies

KPIs and metrics will need to be defined

Updates are time-consuming

Business Intelligence software

Easy to use Rich in functionality Enables research and analysis

through ad hoc query capabilities

Requires configuration of the software

KPIs and metrics will need to be defined

Presentation of the information may be too detailed and not in a manner that is suitable for executive or senior management

Analytic Applications Easy to use Standard templates which

contain KPIs and metrics by subject area are often available by vendor

Automated process of data extraction and updating of KPIs and metrics

Software is the most expensive of the three product categories

Requires configuration of the application and validation of KPIs and metrics

No value is provided if the source data is not available for the subject area templates

Measurement Practices Within the I.T Infrastructure Library (ITIL ) Framework

The “Initiate” Phase.• Define the scope of the ITIL effort; includes the groups,

functions, and processes that are targeted and included in the effort.

• Link the ITIL objectives to the organization’s business objectives.

• Define the success criteria for the ITIL initiative – ‘How will we know that we have achieved success?’

• KPI Measurement activity – Define priorities• Determine quality parameters• Establish value criteria• Business case or ROI for implementing ITIL

The “Assess” Phase.• • Document a description of the Current State for the

functions or processes that are• included in the scope of the ITIL effort.• • Identify the Desired Future State by comparing the

Current State to the Best Practices in ITIL.• • Report strengths as well as gaps or weaknesses that

should be addressed.• • KPI Measurement activity – Baseline performance

• Evaluate performance• Identify supporting data• Identify data gaps

The “Plan” Phase.• • Plan improvements for the Gaps from the

Assess Phase based on the• organization’s timeline and available

resources.• • KPI Measurement activity – Develop

measurements– Define metrics– Develop Measurement collection process

The “Implement” Phase.• • Designed, developed, and rolled out the

future state solution.• • Determine if the success criteria has been

achieved.• • KPI Measurement activity – Evaluate

information– Id process impacts– Define improvements