Performance Measurement (eBook)

Stefano Tonchia, Ph.D., is Full Professor of Business & Innovation Management at the University of Udine, Italy. He is the Dean of the Project Management School at Alenia Aeronautica, the Italian Aeronautics Company, and Honorary Commander USAF Aviano Air Base He has written many articles on international journals, and published several books, including “Process Management for the Extended Enterprise” (2004) and “Industrial Project Management” (2008), both for Springer. He is an international leading expert on Lean Management, Project Management, BPR and Performance Measurement. www.tonchia.it. Luca Quagini, engineer and business consultant, since 1997 he is CEO of SDG Group, a global management consulting firm that specialises in Business Performance Management and Analytical Applications design and development. He is the founder and Head of the Master in Business Intelligence and Knowledge Management at the University of Verona. He is the creator of the Management Intelligence methodology, as well as author of numerous publications dedicated to the Planning and Management Control themes and information processing to support decision making. www.sdggroup.com.

Foreword 6
Contents 8
Introduction 12
Chapter 1: Performance Measurement and Indicators 16
1.1 Company Management and Performance Measurement 16
1.2 Operational Performances 18
1.3 Customer Satisfaction Measurement 20
Chapter 2: Cost and Productivity Performances 24
2.1 Innovation in the Accounting Systems 24
2.2 Balance Sheet Indicators and Corporate Value 25
2.3 Capital Budgeting: Investment Analysis and Evaluation 27
2.4 Cost Accounting 28
2.5 Relationship Between Cost Performance and Economic-Financial Results 30
2.6 Cost Performance Measurement 32
2.7 Efficiency and Productivity Performance Measurement 35
Chapter 3: Non-cost Performances 38
3.1 Total Quality Management and Quality Dimensions 38
3.2 Purchasing and Vendor Quality Rating 40
3.3 Engineering and Manufacturing Internal Quality 41
3.4 Quality Costs 43
3.5 Time Performances 44
3.6 The Flexibility Performance 47
Chapter 4: Performance Measurement Systems 50
4.1 What is PMS? 50
4.1.1 PMS Evolution 51
4.1.2 Dashboards - Balanced Scorecard 51
4.1.3 Business Intelligence Technology 52
4.1.4 Importance and purposes of the PMS 53
4.2 PMS Characteristics 54
4.2.1 Performance Indicators and Measures 54
4.2.2 Architecture 56
4.2.3 Interfaces 57
4.3 PMS Models 58
4.3.1 Vertical/Hierarchical and Truncated-Pyramid Models 59
4.3.2 Balanced Scorecard or Tableau de Bord Models 63
4.3.3 Value Chain and By-Process Models 70
Chapter 5: Design and Integration of the PMS 75
5.1 The Design/Implementation Process 75
5.2 PMS and Organization 79
5.3 Human Resource Evaluation 79
5.4 Measuring Intangible Assets 83
5.5 PMS and Strategy 87
5.6 Performance Improvement Projects 90
5.7 Future Research on PMS 91
Chapter 6: Performance Management: From Decision Support to Performance Governance 95
6.1 Main Components of CPM Frameworks 98
6.1.1 Planning and Forecasting 98
6.1.2 Balanced Scorecard and Dashboard 99
6.1.3 Profitability and Cost Management 99
6.1.4 Group Reporting and Financial Consolidation 99
6.2 CPM Softwares 100
6.2.1 Oracle Hyperion 101
6.2.2 SAP Business Objects 101
6.2.3 IBM Cognos 102
6.2.4 SAS 102
6.2.5 Microsoft 102
6.2.6 Board 103
6.2.7 Tagetik 103
6.3 CPM Project Enablers 103
6.3.1 Metrics Definition 104
6.3.2 Cause-Effect Maps and Relationships 104
6.3.3 Modeling Data Management 105
6.4 Key Roles 105
6.4.1 The Management Consultant 106
6.4.2 The Business Intelligence Expert 106
6.4.3 The Performance Management Architect 106
Chapter 7: Luxottica, a New ``Vision´´ for the Supply Chain 108
7.1 The Success of Luxottica 109
7.1.1 A Constantly Changing Scenario 109
7.1.2 The Needs of the Supply Chain 110
7.2 Operational Performance Management 111
7.2.1 OPM and the SCOR Model 111
7.2.2 Analysis and Approach 112
7.2.3 Critical Success Factors 113
7.3 Supply Chain Processes 115
7.3.1 Raw Material Logistics 115
7.3.2 Product Lifecycle 116
7.3.3 Finished Product Logistics 117
7.3.4 Quality 117
7.3.5 Planning 118
7.3.6 Purchasing 119
7.3.7 Product Development 119
7.4 From the Map to the OPM Solution 119
7.4.1 The Project Architecture 121
7.4.2 Conclusions 121
Chapter 8: The Monte dei Paschi di Siena ``Controlling Data Farm´´, the CPM of the Oldest Bank in the World 125
8.1 Performance in a Bank Group 126
8.1.1 CPM as an Organisational and Information Synthesis 126
8.1.2 Multi-management Integration of Information 127
8.1.3 The Design Guidelines 129
8.1.3.1 Standardisation Versus Customisation of the Analysis Models 129
8.1.3.2 ``Extended´´ CPM: Integrating Enterprise Data Management 130
8.1.3.3 Production Time/Data Publication: Completeness/Quality Versus Timeliness 130
8.1.3.4 Quality and Relevance of Information 130
8.1.3.5 CPM Analysis Areas 130
8.2 Workshop Interventions 131
8.2.1 Reporting 131
8.2.2 Network Control 132
8.2.3 Flows/CRM 132
8.2.4 Costs 133
8.2.5 Finance 133
8.2.6 Risk Management 134
8.2.7 Quality of the Credit 135
8.2.8 Wealth Risk Management 135
8.3 Integration Drivers 136
8.3.1 The Product Master Catalogue 136
8.3.2 The Consistency Between Subsidiaries and Business Segments 137
8.3.2.1 Branch Management 137
8.3.2.2 Business Segment 137
8.3.2.3 Cost Allocation Product/Customer/Branch 138
8.3.3 As-Is and Pro-Forma Vision 139
8.4 Macro Information Flow Architecture 139
8.4.1 Architectural Criticalities 140
8.5 The Continuous Evolution of CPM 141
Chapter 9: Sorgenia, Giving Energy to Performance 146
9.1 The Liberalisation of the Electricity Market 147
9.1.1 Production 147
9.1.2 Transmission and Distribution 147
9.1.3 Sales 148
9.2 Eligibility and Market Segments 148
9.3 Sorgenia and the Balanced Scorecard 149
9.3.1 Critical Success Factors 150
9.3.1.1 Support for Change 150
9.3.1.2 Technological Support 150
9.3.2 The Perspectives 151
9.4 The Key Performance Indicators 153
9.4.1 Defining targets 154
9.4.2 The Scoring Process by KPI and Segment 155
9.4.3 The Scoring Process by Perspective and Total 156
9.5 From the Segment to the Company 158
9.5.1 The Results Achieved 159
References 160
Web sites 163
Index 164