Management Information Services -
We will help you develop
your Management Information so that it dovetails with a corporate business strategy based on
your business metrics and where appropriate a Balanced Scorecard.
Management Information Framework
The Management Information (MI)
produced by many companies is often good at the micro level or the
macro level. It is rarely good at both levels.
Progmanuk
will help you develop a cohesive MI Framework that will tie in
departmental KPIs to a corporate set of KPIs. The MI Framework will be
based on a well defined business metrics and where appropriate a Balanced Scorecard.
The Balanced Scorecard
In the early 1990's Drs. Robert
Kaplan (Harvard Business School) and David Norton developed the
concept of the Balanced Scorecard.
Kaplan and Norton describe the
innovation of the balanced scorecard as follows:
"The balanced scorecard retains
traditional financial measures. But financial measures tell the
story of past events, an adequate story for industrial age companies
for which investments in long-term capabilities and customer
relationships were not critical for success. These financial
measures are inadequate, however, for guiding and evaluating the
journey that information age companies must make to create future
value through investment in customers, suppliers, employees,
processes, technology, and innovation."
The balanced scorecard suggests that
an organization can be viewed from four perspectives
(see figure 1), and that we can
develop metrics, collect data and analyze it relative to each of these
perspectives:
Figure 1 - From the Balanced Scorecard Institute
The Balanced Scorecard and Measurement-Based
Management
The balanced scorecard is a
management system (not only a measurement system)
that enables organizations to clarify their vision and strategy and
translate them into action. It provides feedback around both the
internal business processes and external outcomes in order to
continuously improve strategic performance and results. When fully
deployed, the balanced scorecard transforms strategic planning from an
academic exercise into the nerve centre of an enterprise.
The balanced scorecard methodology
builds on some key concepts of previous management ideas such as Total
Quality Management (TQM), including customer-defined quality,
continuous improvement, employee empowerment, and -- primarily --
measurement-based management and feedback.
Double-Loop Feedback
In traditional industrial activity,
"quality control" and "zero defects" were the watchwords. In order to
shield the customer from receiving poor quality products, aggressive
efforts were focused on inspection and testing at the end of the
production line. The problem with this approach -- as pointed out by
Deming -- is that the true causes of defects could never be
identified, and there would always be inefficiencies due to the
rejection of defects. What Deming saw was that variation is created at
every step in a production process, and the causes of variation need
to be identified and fixed. If this can be done, then there is a way
to reduce the defects and improve product quality indefinitely. To
establish such a process, Deming emphasized that all business
processes should be part of a system with feedback loops. The feedback
data should be examined by managers to determine the causes of
variation, what are the processes with significant problems, and then
they can focus attention on fixing that subset of processes.
The balanced scorecard incorporates
feedback around internal business process outputs, as in TQM,
but also adds a feedback loop around the outcomes of business
strategies. This creates a "double-loop feedback" process in the
balanced scorecard.
Outcome Metrics
You can't improve what you can't
measure. So metrics must be developed based on the priorities of the
strategic plan, which provides the key business drivers and criteria
for metrics managers most desire to watch. Processes are then designed
to collect information relevant to these metrics and reduce it to
numerical form for storage, display, and analysis. Decision makers
examine the outcomes of various measured processes and strategies and
track the results to guide the company and provide feedback.
So the value of metrics is in their
ability to provide a factual basis for defining:
-
Strategic feedback to show the
present status of the organization from many perspectives for
decision makers
-
Diagnostic feedback into various
processes to guide improvements on a continuous basis
-
Trends in performance over time as
the metrics are tracked
-
Feedback around the measurement
methods themselves, and which metrics should be tracked
-
Quantitative inputs to forecasting
methods and models for decision support systems
Management by Fact
The goal of making measurements is
to permit managers to see their company more clearly -- from many
perspectives -- and hence to make wiser long-term decisions. The
Baldrige Criteria (1997) booklet reiterates this concept of fact-based
management:
"Modern businesses depend upon
measurement and analysis of performance. Measurements must derive
from the company's strategy and provide critical data and
information about key processes, outputs and results. Data and
information needed for performance measurement and improvement are
of many types, including: customer, product and service performance,
operations, market, competitive comparisons, supplier,
employee-related, and cost and financial. Analysis entails using
data to determine trends, projections, and cause and effect -- that
might not be evident without analysis. Data and analysis support a
variety of company purposes, such as planning, reviewing company
performance, improving operations, and comparing company performance
with competitors' or with 'best practices' benchmarks."
"A major consideration in
performance improvement involves the creation and use of performance
measures or indicators. Performance measures or indicators are
measurable characteristics of products, services, processes, and
operations the company uses to track and improve performance. The
measures or indicators should be selected to best represent the
factors that lead to improved customer, operational, and financial
performance. A comprehensive set of measures or indicators tied to
customer and/or company performance requirements represents a clear
basis for aligning all activities with the company's goals. Through
the analysis of data from the tracking processes, the measures or
indicators themselves may be evaluated and changed to better support
such goals."
More
Information
To receive more information about our
Management Information and Balanced Scorecard Services or to arrange a
meeting, please email us on
enquiries@Progmanuk.com or click the envelope below.
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