Download Rapid implementation of Balanced Scorecard measurement systems using SAS® software

Rapid implementation
of
Balanced Scorecard
measurement systems
using
SAS® Software
Philip Mugglestone
SAS Institute
European HQ
Copyright 1998 by SAS Institute
Agenda
• Overview and Concepts
• SAS Institute’s Position
• SAS Institute’s Implementation Strategy
• Implementation Examples
Copyright 1998 by SAS Institute
Overview and Concepts
• A Management System
• Devised by Management Gurus
• Multiple Scorecards
• Requires a Measurement System
• Terminology
Copyright 1998 by SAS Institute
A Management System
• Translates the mission and strategy of an
organisation into a coherent set of objectives
and measures
• Perspectives
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Financial
Customer
Internal Process
Learning and Growth
Translating Strategy
into Action
Customer
Financial
Vision:
Maximise
Stakeholder
Value
Internal
Process
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Learning and
Growth
Indicators
• Lag indicators
– Backward looking
– Quantitative
• Lead indicators
– Forward looking
– Qualitative
– Key drivers of future performance
• Each indicator has a defined target
• Achieve balance between lag and lead
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Translating Strategy
into Action
Customer
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Market Share
Satisfaction
Retention
Profitability
Internal
Process
Financial
Vision:
Maximise
Stakeholder
Value
• Flight Delays
• Revenue from New Products
• Actual Introduction vs. Plan
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• ROCE
• Operating Expenses
• Cash Flow
• Asset Utilisation
Learning and
Growth
• Employee Satisfaction
• Suggestions Implemented
• Turnover Rate
Indicator Interdependence
Financial
ROCE
Customer
Customer
Satisfaction
Internal Process
Actual Introduction
vs. Plan
Learning and Growth
Employee
Satisfaction
Copyright 1998 by SAS Institute
Devised by
Management Gurus
• Kaplan
– Harvard Business School Professor
• Norton
– President of Renaissance Solutions Inc.
• Concept first published in Harvard Business
Review in 1993 and followed by subsequent
articles and finally a book
Copyright 1998 by SAS Institute
Devised by
Management Gurus
Robert S. Kaplan
Copyright 1998 by SAS Institute
David P. Norton
Multiple Scorecards
• An organisation may choose to implement
multiple scorecards each one reflecting the
mission and strategy of a particular Strategic
Business Unit
Copyright 1998 by SAS Institute
Requires a
Measurement System
• That’s where SAS Institute can help !
• Obtain values for the chosen indicators
– Access, clean, manipulate, integrate
• View indicator values
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Time based
Static
Interactive
Detailed analysis
Access, Clean,
Manipulate, Integrate
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Example Viewer - Alerts
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Example Viewer - Detail
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SAS Institute’s Position
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Provider of Measurement Solutions
Separate Entity
Data Warehouse
Population of Warehouse is the Major Task
Viewing Systems
Selection of Indicators
Role of Data Mining and OLAP
One Source of the Truth
Why SAS Institute ?
Copyright 1998 by SAS Institute
Provider of
Measurement Solutions
• SAS Institute's combination of products and
services is particularly suitable for the
implementation of Balanced Scorecard
measurement systems
• Custom solutions that exploit existing SAS
enabling technologies
Copyright 1998 by SAS Institute
Separate Entity
• Top down
– Initial focus on rapid BSC implementation as proof
of concept
– In-depth solution later
• Bottom up
– Existing Data Warehouse
– CRM Implementation
– CFO Vision Implementation
Copyright 1998 by SAS Institute
Data Warehouse
• An effective Balanced Scorecard
measurement system needs to be built upon
the solid base of a Data Warehouse
• SAS Institute already has the technology,
methodology and experience to implement
successful Data Warehouses
Copyright 1998 by SAS Institute
Population of Warehouse
is the Major Task
• BSC subject is typically small
– less than 1 MB
• Wide variety of indicators
• Large number of disparate data sources
• Some values will be easy to obtain, others
less so
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Viewing Systems
• Typically very simple requirements - small
part of implementation process
• Custom solution is best approach as no
“packaged” BSC viewers currently exist
• Exploit enabling technologies
– SAS/EIS
– SAS/AF
– SAS/IntrNet
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Selection of Indicators
• Difficult and complex task
– Select appropriate indicators
– Define target values
• Not SAS Institute’s primary area of expertise
Copyright 1998 by SAS Institute
Role of Data Mining
• Data Mining can be used to determine the
relationships between different indicators
• Appropriate early on when “bottom-up”
approach, otherwise best left until initial
implementation is complete
Copyright 1998 by SAS Institute
Indicator Interdependence
Financial
ROCE
Customer
Customer
Satisfaction
Internal Process
Actual Introduction
vs. Plan
Learning and Growth
Employee
Satisfaction
Copyright 1998 by SAS Institute
Role of OLAP
• Used to provide greater analysis capabilities
• Requires more detailed Data Warehouse like
Data Mining - may be best left until initial BSC
viewers are in place
Copyright 1998 by SAS Institute
One Source of the Truth
• Indicator values and their targets are stored
in an open Data Warehouse
• Can be used to supply feedback about the
performance of the organisation
– Direct input into operational systems
– “Closing the loop”
Copyright 1998 by SAS Institute
Why SAS Institute ?
• Superior approach
– World leader in information delivery
• Over 1000 successful DW implementations
• SAS Institute can deliver on it’s promises
– Integrated technology
• Able to access all data sources
• End-to-end solutions
– Implementation skills
– Business focus
– Successful alliances
Copyright 1998 by SAS Institute
SAS Institute’s
Implementation Strategy
• Rapid Scorecarding Methodology
– Adaptation of highly successful Rapid
Warehousing Methodology
– Addresses specific issues typically present when
implementing BSC solutions
– Currently under development
• Preview of some major content areas...
Copyright 1998 by SAS Institute
Rapid Scorecarding
Methodology
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Comparison to EIS
Comparison to OLAP
Implementation Styles
The Implementation Process
Typical Data Model
Viewer Deployment
• Additional Content Areas
Copyright 1998 by SAS Institute
Comparison to EIS
• BSC can be very similar to a true EIS
– Board level (executive) users
– KPIs
• Key differentiators
– Are relationships between KPIs established ?
– Do KPIs translate the mission and strategy of the
organisation ?
– Is information shared throughout the organisation ?
Copyright 1998 by SAS Institute
Comparison to OLAP
• Key differentiators
– Volume of data
– Complexity of viewers
• Can be integrated
– BSC viewers for high level information delivery
– OLAP for detailed data analysis
Copyright 1998 by SAS Institute
Implementation Styles
• Top down
– No Data Warehouse currently in place so populate
the Data Warehouse with chosen indicators as the
primary focus and deploy a simple viewing
application with more detailed analysis to follow
• Bottom up
– Data Warehouse elements are already in place so
the Balanced Scorecard solution represents the
"icing on the cake"
Copyright 1998 by SAS Institute
The Implementation Process
• Iterative Approach
– End-to-end
• Think strategic, start focused
– Rapid delivery
• Major Phases
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Copyright 1998 by SAS Institute
Assessment
Define indicators
Populate warehouse
Deploy viewers
Analyse / review
The Implementation Process
Analyze /
Review
Assessment
Define Indicators
Populate Warehouse
Deploy Viewers
Copyright 1998 by SAS Institute
Typical Data Model
• Fact table
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Strategic business unit
Time period
Indicator
Current / target values
Computed values
• Dimension tables
– Strategic business unit
– Time period
– Indicator
• Perspective
• Additional metadata...
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Viewer Deployment
• Viewer types
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Simple text report
Alerts
Dashboard of CSFs
Organisational chart
Star diagram
Trend graphics
Typical features
• Target application (drill down to OLAP application)
• Notes
• Try to be as data driven as possible
– e.g. avoid “hard-coding” indicator values
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Additional Content Areas
• Project Model
– Roles & Responsibilities
• Indicator Definition
– Manage expectations
• Measurability “sign-off”
• Data Warehouse Loading
– Not all indicators may be loaded at the same
frequency
• Revenue monthly
• Customer satisfaction biannually
– Incremental loading capabilities
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Implementation Examples
• Viewers
– SAS client
• Warehouse
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Access
Clean
Manipulate
Integrate
• Viewers
– Thin client
Copyright 1998 by SAS Institute
Summary
• Leading organisations are already benefiting
from SAS Institute Balanced Scorecard
measurement systems
• Technology
– Data access
– Warehouse management
– Viewer deployment
• Methodology
– Rapid Scorecarding Methodology
Copyright 1998 by SAS Institute
Questions ?
Copyright 1998 by SAS Institute