Transcript Document

CS
Moderated Discussion
Performance KPIs
and Other Measures
of Success
Kevin Giblin, McGraw-Hill
Rick Collison and Cristen Hughes, Ariba
… and YOU
© 2012 Ariba, Inc. All rights reserved.
Performance KPIs and Other
Measures of Success
Wednesday, April 11, 2012 - 1:15 p.m.
What’s good and what's great when it comes to collaborative
business commerce? How are your peers doing, and how are
they measured by their leadership? Find out when you attend
this informative session. You'll learn not only about how your
peers measure success and the metrics that can be leveraged
to drive your success, but also how Ariba's stealth metrics
program can be used to your advantage.
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© 2012 Ariba, Inc. All rights reserved.
Moderators and Participants
Kevin Giblin
• McGraw-Hill
• Director, Global
Procurement
• ISM Group
Chairman
• Curriculum Advisor
• Various awards
• Well published
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© 2012 Ariba, Inc. All rights reserved.
Rick Collison
• Ariba
• Sr. Director,
Adoption &
Readiness
• Procurement
and Platform
Soln Owner
• Buy and Sell
side background
Cristen Hughes
• Ariba
• More than a
decade in
corporate
reporting
• Ariba’s Metrics
program
You
• Various
Companies
• Newbies and
veterans
• All industries
• Years of
experience!
Session Format
•
Some Initial Topics



•
Audience Suggested Topics



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Rick to setup a topic
Kevin to share his experience
and thoughts
Audience discussion
Cristen to facilitate
Topic + your view
Discussion
© 2012 Ariba, Inc. All rights reserved.
Topics to Start With!
1. Context



Objectives of using KPIs (with leadership, you, and users) (Discussion)
Characteristics of ideal measures (Discussion)
Performance measures – different types (Discussion)
2. Putting it into practice





Governance and getting this to the next level and alignment (Discussion)
KPIs by business process (Discussion)
Putting KPIs into operation (Discussion)
Frequency and to who? (Discussion)
MBOs and KPIs (Discussion)
3. Key takeaways (final notes)
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© 2012 Ariba, Inc. All rights reserved.
Key Takeaways
Final Notes
•
Your final notes

•
What do you need from Ariba?

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[to be completed during the session]
[to be completed during the session]
© 2012 Ariba, Inc. All rights reserved.
Kevin - [email protected]
Rick -
[email protected]
Cristen - [email protected]
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© 2012 Ariba, Inc. All rights reserved.
Discussion Topic
OBJECTIVES OF USING KEY
PERFORMANCE INDICATORS
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© 2012 Ariba, Inc. All rights reserved.
Objectives of Using KPIs
setup
•
•
•
Leadership
You
Users
Insight
Data
Action
Plan
Results
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© 2012 Ariba, Inc. All rights reserved.
Business Pressures in 2012:
How Do We…
Maximize Sourcing Influence
• Consistently apply policy rules
Increase Savings Targets
• Drive year-over-year savings
enterprise-wide?
with fewer resources?
• Leverage expert sourcing practices
• Outperform currency and
across all commodities and divisions?
inflation factors?
Procurement
Organization
Drive Sustainable Savings
• Leverage supplier knowledge
to improve price performance?
• Enforce negotiated terms?
Improve Sourcing Execution
• Reduce negotiation time and effort?
• Exploit the largest savings
opportunities?
• Balance quality, cost and risk?
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© 2012 Ariba, Inc. All rights reserved.
Establishing Performance Measures
Ensuring alignment with suppliers...
Inputs
•
•
•
•
Market sector
supply strategy for
spend category
Background from
sourcing efforts
used to establish
the relationship
Understanding of
how and where
supplier value is
delivered to MH
Prior performance
criteria
Outputs
Implementation
Review value
objective
•
MH and Supplier
alignment on
objectives
 Create metrics that outline
relationship value
•
Completed KPI and
Survey Templates
 Align governance team in the
performance measures
•
Performance
reporting and
communications
requirements
agreed with by
governance team
 Understand what
stakeholders want to get
from the relationship
 Drive discussions around where
supplier performance delivers
the value objective
Establish
Performance
Measures
Engage
Stakeholders
Document &
Communicate
 Solicit their input to the
measures and reporting
 Document the performance
measures agreed upon
 Communicate needs to all
stakeholders
 Establish process for reporting
Developing Key Performance
Indicators
Getting clarity on goals and objectives
Discussion Topic
CHARACTERISTICS OF
IDEAL MEASURES
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© 2012 Ariba, Inc. All rights reserved.
Characteristics of Ideal Metrics
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Performance Evaluation Q&A
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Discussion Topic
PERFORMANCE MEASURES –
DIFFERENT TYPES
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Performance Measures Ensure
Supplier Value
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Supplier Management - Use of Metrics
Daily

Record supplier issues

Update issues status
Monthly

Spend report analysis and review

Monitor issue resolution

Escalate critical issues identified, SLA results
Quarterly

Program “wellness check”, business review, KPI results

Recommendations on program enhancement opportunities
Annual



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Conduct internal customer survey
360 feedback
Financial analysis
© 2012 Ariba, Inc. All rights reserved.
Discussion Topic
GOVERNANCE AND GETTING
THIS TO THE NEXT LEVEL
AND ALIGNMENT
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KPI’s Value Objective
Understanding the expected outcome is a must for good KPI’s
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Performance Measurement through
KPIs
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Discussion Topic
KPIs BY BUSINESS PROCESS
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© 2012 Ariba, Inc. All rights reserved.
Defining Procurement Measures of
Success – Internal KPI
BENEFIT
MEASURE
Cost
•Cost savings
•Cost avoidance
Time to Market
•Shorter project duration
•Greater # of projects per year
•Increased productivity
Development/Maintenance Ratio •Less internal time spend on maintenance
Business Alignment
•Requirements capture
Quality
•Increased customer satisfaction
•Fewer supplier issues
Transition
•Quicker transition time
•Lower transition costs
Sources: McKinsey Quarterly, PSC, Aberdeen
Ariba Suggested Adoption KPIs
And in Solution Reports
•
Business Goals:


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Have a consistent way to view each customer  Data
Have a consistent way to get a sense of success  KPI
© 2012 Ariba, Inc. All rights reserved.
Navigation to Usage Reports
Manage  Prepackaged Reports 
System and Benchmark Usage reports  System Usage Reports  Solution
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© 2012 Ariba, Inc. All rights reserved.
Sourcing Usage Reports
Our “source of truth”
for Adoption
Sourcing Adoption Data
Adoption Rollup
Monthly Projects
Licensed Sourcing Users
Sourcing Projects per Licenced User
Avg Savings Per Project
Suppliers Invited to Events
Suppliers Participating in Events
Category Coverage
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© 2012 Ariba, Inc. All rights reserved.
Red
13
57
0.23
23.43%
4.78
2.41
3
Scenario 1: Sourcing
Number of
Average Number of L1
Based on the
number of Commodities
How many How manysourcingAverage event
Average
number
R/Y/G of the
savings
suppliers that are sourced
users are project per
projects is this
of
suppliers
"Sourcing
month/Number
percentage over participatingover
in a rolling 12
customer “entitled" to
invited
to
each
Projects per
of Sourcing
the last rolling
each eventmonth
(All period
create Sourcing
"creating“ this
event
(All
event
Licensed
12Users
months
event types)
Projects Licensed
month
types)
User"
Adoption KPIs

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Key Performance Indicators (KPIs) that help you determine how
effective you are using the solution.
© 2012 Ariba, Inc. All rights reserved.
Scenario 1: Sourcing
Potential Blocker to Customer Success
Low savings due to low supplier participation
Low savings due to specific category coverage
Low supplier participation due to complex categories
being sourced
Low monthly project count due to small number of
active users
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© 2012 Ariba, Inc. All rights reserved.
Patterns
Platform/Roll Out Plan
Commitment/Expectations
Platform/Roll Out Plan
Platform/Org and Technology
Scenario 2: P2P, P2O and APC
Unique number
Unique number
Percent
of
PO
Based on
of suppliers that
of categories
Ratio of spend
A Customers
R/Y/G values
received at
that been
Annual Annualizedpurchased from
of ActiveThe
POrolling 12
least one (1)
invoiced for over
catalog over a
Contract P2P Spendavs.
Suppliers
and
month
% ContractPO
POover the last
the last rolling
rolling 12 month
Active Invoice
approved Amount ofAnnual Spend
rolling 12
Spend vs. Total
12 months
Spend Entitlementperiod
Categories
invoice spend
PO Spend months
Adoption KPIs
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© 2012 Ariba, Inc. All rights reserved.
Scenario 2: P2P, P2O and APC
Potential Blocker to Customer Success
Low supplier and category count due to phased rollout
(by geography or division)
Platform/Roll Out Plan
Issues with Supplier Enablement
Capabilities/Coaching
Non-Compliant Spending (Not on-catalog and not oncontract)
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Patterns
© 2012 Ariba, Inc. All rights reserved.
Commitment/Value Link
Established
Scenario 3: Spend Visibility
Based on the
Annualized
A Customers
Sum
R/Y/G/B of
theof rolling
Invoice Spend /
Annual Contract
“Spend 12 month Spend Annual SpendInvoice Spend for
Invoice
Entitlement
%” Spend
Entitlement the latest month
Entitlement
Adoption KPIs
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© 2012 Ariba, Inc. All rights reserved.
Scenario 3: Spend Visibility
Potential Blocker to Customer Success
Low Spend or Supplier Enrichment SLA levels
Low number of source systems compared to expectations
Higher than contracted Spend Levels
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© 2012 Ariba, Inc. All rights reserved.
Patterns
Platform/Setup &
Configuration
Platform/Org & Technology
Commercial Issue
Scenario 4: Contracts
% who are Contract
Users compared to
Average
of
Number of
Based on the the#entire
monthly contracts Contract Users
R/Y/G of the
population of
created
over the that have logged
"Average
Contract Users
and
last
rolling
12
Monthly Contract
Contract Teamwithin the last 2
months
Volume" months
Members
Adoption KPIs
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© 2012 Ariba, Inc. All rights reserved.
Scenario 4: Contracts
Potential Blocker to Customer Success
Low User Penetration
Using as a Clause Library vs. a Repository only
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© 2012 Ariba, Inc. All rights reserved.
Patterns
Platform/Org & Technology
Platform/Setup &
Configuration
Discussion Topic
PUTTING KPIs INTO
OPERATION
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© 2012 Ariba, Inc. All rights reserved.
Establishing the KPI Process
Supplier’s input helps drive the program!
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© 2012 Ariba, Inc. All rights reserved.
Make The Program Count
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© 2012 Ariba, Inc. All rights reserved.
Delivery
Sales
Analytics
CMO
CustomerSat
SalesForce
Siebel
2000 Realms
Customer
PeopleSoft
Marketing
Customer
AN
Thousands of
Buyer Customers
 Hundreds of
Thousands
Supplier Customers
Solutions
Fusion
Quadrem Knowledge@Ariba
Finance
Support
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© 2012 Ariba, Inc. All rights reserved.
Data Quality – OMG!
•
•
Metrics updated approximately every month.
Four (4) elements to track completeness




•
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Data Completeness (Entitlement) : Measures the percentage of blank/missing entitlement fields
Data Completeness (Adoption): Measures the percentage of blank/missing Adoption fields
Customer Completeness: Measures the percentage of customers that are missing when
compared to the list of customers from Psoft.
Data Accuracy: Measures the percentage of the data that has known inaccuracies and is not correct yet.
Target for each completeness area = 100%
© 2012 Ariba, Inc. All rights reserved.
Discussion Topic
FREQUENCY AND TO WHO?
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© 2012 Ariba, Inc. All rights reserved.
The Performance Monitoring Cycle
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KPI Tool
Frequency
Issues Log
Daily
Status Updates
Daily
Spend Report & Analysis
Monthly
Compliance Reviews
Monthly
Issue Resolution
Monthly
SLA Results
Monthly
Metrics and Wellness Review, Scorecards
Quarterly
Program Enhancements, Collaborations
Quarterly
Internal Customer Survey
Annual
360 Feedback
Annual
Financial Analysis
Annual
© 2012 Ariba, Inc. All rights reserved.
Discussion Topic
MBOs AND KPIs
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© 2012 Ariba, Inc. All rights reserved.