Performance Measurement

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The Performance measurement allows you to do the following things :

  • Define a series of measures
  • Record your performance against those measures
  • Set targets for your measures
  • Track your performance versus the targets

The dashboard console graphically displays this information to you.

The Typical Scenario

It is budget time in your organisation or you are a start up business creating your business plan.

Usually, you have a model in your favourite spreadsheet with a number of drivers that you know (or think) drive certain factors in your business. You build your model and test your scenarios until you are happy you have a plan you can work with. If we record these measures and the target levels we expect to achieve in to our ADempiere system, we can track how we are performing against our plan (business drivers).

Business usually define a matrix of measures that link stratgic goals of the major stakeholders to their associated business drivers. We will discuss this in relation to a (real) example.

Billy Smith is the CEO of a telecommunications company called BigTel PLC. BigTel sell a range of internet (IP/ATM) and voice services. BigTels strategic goals (other than for everyone to get a nice bonus) is to:

  • Delight Shareholders
  • Delight Customers
  • Deliver on Strategy
  • Have superlative internal processes
  • Have Outstanding Employees

Most of the staff don't really know what each of these things mean, but they know that their boss want them to show how they are meeting the strategic objectives in their area.

So the managers at BigTel have a meeting and link the strategic directivces to real measures:

  • Deliver Strategy
  • Increase market share
  • % of total revenue from data & IP services to business customers carriers and service providers
  • Market share of target geographies from data & IP services to business customers carriers and service providers
  • Number of POP's in taregt geographies
  • Delight Customers
  • % improvement in Voice of the Customer index by sales and service organisaiton
  • Customer attrition / churn for each sales and service organisation
  • Delight Shareholders
  • Revenue growth %
  • EBITDA and EBIT margin %

Once we have the measures - the numbers we believe drive results in our business - we can set some targets.

The managers then go away and break these down in real targets for their departments that they believe will feed the higher level measures. For example, the Sales Manager in a region may look at how he expects to acquire new customers and define a customer acquisition target of 300 new customers a month.

ADempiere allows us to hold these measures in a hiararchy and report against them so we have a constantly update scorecard and run rates of how we are delivering (or not) on our strategic objectives.

Example

For example, Billy Smith runs a business selling ADempiere appliances. He buys computer parts from wholesalers, assembles the computers and loads them with ADempiere and ships them to Resellers and End Customers. Billy knows that he will be more busy if he sells more appliances. He doesn't know exactly how many appiances he will sell, but he knows last year he sold 500 and this year he thinks he may be able to sell 4,000. Billy also knows it takes 40 minutes to build and test an appliance so he is expecting that 4000 appliances * 40 mins = 160000 is the number of minutes of time that he needs to buy.

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