casestudies

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


Meaningful Performance Management

� Meaningful

� Accurate

� Aligned


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


What is Performance Management?

• IT Analysts

• Commercial business

• Public sector


Commercial business

� Manage the limited resources

� How to achieve more profit

� Ideally aligned with corporate strategy


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.”


Resources

Customers, Products, Services

& Channels

Cost Drivers PerformanceMeasures

resourcedrivers

activitydrivers

Activities

Managing the business


Resources


& Channels


resourcedrivers

activitydrivers

ActivitiesStrategy Modeling



Resources


& Channels


resourcedrivers

activitydrivers



Planning


Resources


& Channels


resourcedrivers

activitydrivers



Planning

Budgeting


Resources


& Channels


resourcedrivers

activitydrivers



Planning

Budgeting

EXECUTION


Resources


& Channels


resourcedrivers

activitydrivers



Planning

Budgeting

EXECUTION

Consolidation


Resources


& Channels


resourcedrivers

activitydrivers



Planning

Budgeting

EXECUTION

Consolidation

Scorecard/ Dashboard + Compliance


Resources


& Channels


resourcedrivers

activitydrivers



Planning

Budgeting

EXECUTION

Consolidation


exploration

exploration


Resources


& Channels


resourcedrivers

activitydrivers



Planning

Budgeting

EXECUTION

Consolidation


exploration

exploration

Human & IT CapitalManufacturing & Research

Economic & Market trends

Process & Quality Improvement

Supplier/ Customer interactions, logistics & behaviors


� 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?


Information Revolution –Authors: Jim Davis, Gloria J. Miller, Allan Russell


A Brief look: Four Case Studies

� LubeOil

� HomeHealth

� Super Draft

� Armed Forces


LubeOil


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


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


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


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


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


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


SuperDraft


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


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


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”


Questions?

Tony Adkins

[email protected]


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

[email protected]

casestudies

Technology

sas institute

services channels copyright

business needs copyright

allanrussell copyright

fighting copyright

lubeoil copyright

management insights

corporate strategy copyright