Ebs operational reporting at santos evaluation, selection & implementation
Insync10 1708 145 vella
1. Achieving Organisational Change from
Measurement and Reporting
Paul Vella
17-Aug-2010
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2. Introduction
• Change
• Landscape
• Resistance
• Measurement
• Best Practice
• Use Measurement Strategically
• OBI Analytics KPI and Metrics
• 11g Scorecard Features
3. Change Landscape
Political
Change
“It is change, continuing change, inevitable
Technological Financial change, that is the dominant factor in
Change Change society today. No sensible decision can be
made any longer without taking into account
not only the world as it is, but the world as it
Organisational will be ...” - Isaac Asimov
Change
Demographic Climate
Change Change
Market
Change
6. Resistance to Change – Top 10
1. Risk of Change
2. Connection to “Old Way”
• Resistance relates to people and
3. No Role Models for “New Way” perception
4. Fear about Competence to • You can change technology and
Change systems, but unless it is accepted,
5. People are too busy to Change then there will be significant
6. Healthy Scepticism resistance
7. Fear of a “Hidden Agenda” • Can lead to expensive failures
8. Feeling Threatened / Loss of
Status
9. Past Failure to Change
10. Believe that change is a bad idea
7. Using Measurement Strategically
End State
Assess
What are the
changes needed in
Measure
people, processes,
products/services,
and climate, in Define Take a Leap
order to drive the
required results. Targets Magic Happens
Baseline
Determine Current State
Measures
8. Measures should….
1. Ownership: Connect business results to people
2. Forward Looking: Involve a healthy mix of leading and lagging indicators
3. Current: Are kept alive in discussions-and not left sitting in a binder
somewhere
4. Realistic: Are given time to work
5. Challenging: Have teeth
6. Strategically Aligned: Support organisational goals over and above
functional/divisional goals
7. Consistent: Measure the right things
9. How Measurement Helps…
1. Need for Change: Provide evidence that change is needed
2. Clarity: Clarify the purpose and direction of the change effort, by forcing
people to consider its specific impact in unambiguous terms
3. Communication: Measurement is a form of communication - it tells
people what you care about
4. Progress: Tracking the effectiveness of the change effort both tells people
that it is important and provides a way to judge how well it is being
implemented, or how well it was designed
5. Business Case: The results can be used as a justification for future
projects
6. Direction: The measurement effort can be set up as a framework for
expecting and anticipating change, making it seem more controllable and
less threatening
10. Approach to Measurement
1. Develop Strategy Map of • KPIs are measures by which the
performances of organisations,
Organisation business units, and their divisions,
2. Define Objectives under each departments and employees are
Strategy periodically assessed.
3. Define KPIs under each Objective
• Balanced Scorecard Methodology is
4. Baseline Current State used to review and track
5. Set and Agree Targets performance of KPIs aligned to the
6. Measure and Report on Indicators Objectives and Strategic Map of the
Organisation.
7. Review Progress against Agreed
Targets
11. Defining KPIs
1. Acceptable, understood, meaningful and
measurable.
2. Measured when systems and processes • SMART Criteria (Specific,
to capture and measure are in place. Measurable, Achievable, Relevant,
3. Meaningful by contributing to and Time phased.
organisational improvement.
4. Take into account seasonal, geographic,
demographic considerations
5. Lower level KPIs aligned to higher level
objectives
6. Numerical Targets should be set in terms
of a value, a lower limit, an upper limit,
range of values, percentage or scheduled
date.
13. OBI Analytics Measures
DSO Purchasing ROA AR Turnover
DPO Misses
%Adhoc
Purchases AP Turnover ROE
ROCE
Inventory
EBIT
Turns Compa Ratio
Days Cash in
Current Ratio
Hand CAPEX Ratio Cash Cycle
Quick ratio
14. OBI Analytics KPIs
AP AP Days Payables This metric shows Days Payable Outstanding (DPO). It
Outstanding (DPO) shows the average length of the time the trade payables
are outstanding before they are paid.
This metric determines the average number of days in
accounts payable to measure the effectiveness of the
firm’s credit policies and indicate the level of investment
in payables needed to maintain the firm’s expenditure
level.
AR AR Days Sales This metric compute4s the Days Sales Outstanding- (AR
Outstanding (DSO) Balance / Average Daily Posted Revenue). Average Daily
Posted Revenue is computed by Posted Revenue for the
period / Number of days in the period.
This metric determines the average number of days in
accounts receivable to measure the effectiveness of the
firm’s credit policies and indicate the level of investment
in receivables needed to maintain the firm’s sales level.
15. Common KPIs - 2
AR AR Turnover Accounts receivable Turnover measures the
number of times the trade receivables turnover
annually. The higher the AR Turnover, the lower
the working capital needs of the company.
AP AP Turnover This metric calculates Purchases / Accounts
Payables; where Purchases = total purchases
from various suppliers.
16. Common KPIs - 3
Inventory Avg Inventory Days This metric determines the ratio of inventory to COGS to
measure the efficiency of the firm’s inventory management
(number of days of inventory held). A higher ratio or days
indicates that inventory does not remain in the warehouses
or on the shelves but rather turns over rapidly form the time
of acquisition to sale.
GL Cash Cycle This metric calculates an organisations cash cycle by
subtracting the Operating Cycle in days from the Average
Payables in days
GL Working Capital This metric determines the ratio of revenue to Working
Turnover Capital where working capital = current assets less current
liabilities
17. Common KPIs - 4
GL CAPEX ratio This metric is the ratio of operating cash flow to capital
expenditure for the period.
GL Current ratio This metric calculates the current assets to current
liabilities ratio. Sometimes called the liquidity ratio.
Provides an indication of financial risk.
GL Days Cash In Hand This metric calculates (Cash + AR) / Minimum
Operating Expenses ; where Minimum Operating
Expenses = (Total Operating Expenses + Interest
Expenses – Depreciation)
18. Common KPIs - 5
GL Debt to Equity This metric calculates the long-term debt to total
equity ratio.
GL EBIT This metric calculate profitability by calculating
Revenue – COGS – Selling and Marketing Costs –
Other Operating Expenses – R&D Expenditure +
Other Income
GL Net Working This metric subtracts current assets from current
Capital (NWC) to liabilities, then divides the results into total assets to
Assets determine the ration of net working capital to total
assets.
19. Common KPIs - 6
GL Quick Ratio This metric perovides liquidity information by calculating
(Current Assets – Inventories) / Current Liabilities.
GL Times Interest This metric calculates (Earnings before interest and taxes)
Earned / Interest expense where EBIT = revenue – COGS –
Selling and Marketing Costs – Other Operating Expenses
– R&D Expenditure + Other Income
GL Return on Assets EBIT / Total Assets * 100
(ROA)
20. Common KPIs - 7
GL Return on Capital Pre-Tax Income / Total Capital Employed *100; Capital
Expenditure (ROCE) Employed = (Total Shareholders Funds + Long Term Debt)
GL Return on Equity Net Income / Total Shareholders Funds * 100
HR Leave •Absence Days (Notified / Not Notified)
Ratios •Annual Leave Balance
•Long Service Leave Balance
•Headcount
•Diversity Ratios (M/F), (P/T)
•Compa Ratio (Emp salary / Avg salary)
•Termination ratios
•Average Length of Service
•Training Days pa
•Supervisor / Employee ratios
21. OBI 11g Scorecarding and Metrics
• OBIEE 11gR1 includes a new
product called Oracle Scorecard
and Strategy Management.
•KPIs are defined within the web
catalog and are defined by taking
a measure, a target measure and
a set of thresholds, which can
then be used either directly in
dashboards (by use of another
new feature called KPI
Watchlists) or within one of the
new scorecards.
22. OBI 11g Scorecarding and Metrics
•Build KPIs and KPI Watch Lists
•You can either display the results of
the KPI in a simple table, or you can
add them to a KPI Watchlist.
•These can be added like any other
object to a user’s dashboard.
•This KPI Watchlist can then be sliced
and diced, using dimension controls
at the top of the watchlist, to allow
the user to drill into whatever level of
data they are authorized to view.
23. OBI 11g Scorecarding and Metrics
The Scorecard part of OBIEE
11g builds on the foundation
of KPIs to allow you to define
complex, multi-part
strategies using the metrics
in your semantic layer.
24. OBI 11g Scorecarding and Metrics
•These objectives are
organized into a hierarchy.
•Create a strategy tree
diagram that shows how
each objective feeds up into
the overall strategy.
•The objective of improving
store performance is made
up of financial, and non-
financial objectives, each
with their own set of KPIs.
25. Summary
• Change
• Change Landscape
• Resistance to Change
• Measurement
• Best Practices
• Using Measurement Strategically
• OBI Analytics KPI and Metrics
• 11g Scorecard Features
26. Tell us what you think…
• http://feedback.insync10.com.au
