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. 2 © 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 3 © 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 4 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) 5 © 2012 Ariba, Inc. All rights reserved. Key Takeaways Final Notes • Your final notes • What do you need from Ariba? 6 [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] 7 © 2012 Ariba, Inc. All rights reserved. Discussion Topic OBJECTIVES OF USING KEY PERFORMANCE INDICATORS 8 © 2012 Ariba, Inc. All rights reserved. Objectives of Using KPIs setup • • • Leadership You Users Insight Data Action Plan Results 9 © 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? 10 © 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 13 © 2012 Ariba, Inc. All rights reserved. Characteristics of Ideal Metrics 14 © 2012 Ariba, Inc. All rights reserved. Performance Evaluation Q&A 15 © 2012 Ariba, Inc. All rights reserved. Discussion Topic PERFORMANCE MEASURES – DIFFERENT TYPES 16 © 2012 Ariba, Inc. All rights reserved. Performance Measures Ensure Supplier Value 17 © 2012 Ariba, Inc. All rights reserved. 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 18 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 19 © 2012 Ariba, Inc. All rights reserved. KPI’s Value Objective Understanding the expected outcome is a must for good KPI’s 20 © 2012 Ariba, Inc. All rights reserved. Performance Measurement through KPIs 21 © 2012 Ariba, Inc. All rights reserved. Discussion Topic KPIs BY BUSINESS PROCESS 22 © 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: 24 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 25 © 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 26 © 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 27 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 28 © 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 29 © 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) 30 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 31 © 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 32 © 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 33 © 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 34 © 2012 Ariba, Inc. All rights reserved. Patterns Platform/Org & Technology Platform/Setup & Configuration Discussion Topic PUTTING KPIs INTO OPERATION 35 © 2012 Ariba, Inc. All rights reserved. Establishing the KPI Process Supplier’s input helps drive the program! 36 © 2012 Ariba, Inc. All rights reserved. Make The Program Count 37 © 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 38 © 2012 Ariba, Inc. All rights reserved. Data Quality – OMG! • • Metrics updated approximately every month. Four (4) elements to track completeness • 39 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? 40 © 2012 Ariba, Inc. All rights reserved. The Performance Monitoring Cycle 41 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 42 © 2012 Ariba, Inc. All rights reserved.