Week 4 - KPIs and Performance Management

Question 1

What is the difference between business intelligence and business analytics?

Answer 1

Business intelligence is about what happened in the past, identifies big trends and patterns without pursuing the why too deeply.
Business analytics focuses on why did this happen, what will happen and break down the why from the past to make predictions of what will happen in the future.

Question 2

What is the purpose of events?

Answer 2

Events produce data.

Question 3

What is a metric?

Answer 3

A business activity that is measured.
 E.g. sales in the Southern region.
 Event – a sale was made.
 Data – sales amount, sales locations, sales date + time etc.

Question 4

What is a performance indicator?

Answer 4

Metric with a target.
E.g. increase of sales in Southern region by 5% within 12 months.

Question 5

What are the five attributes of a well-structured performance indicator (PI)?

Answer 5

1. A metric (what is it that we are measuring).
2. A baseline (what is the current value of this measure).
3. A direction (are we reducing (breakages, time to market) or increasing (gross margins, capacity)).
4. A target (what is the desired value (can be expressed in a number of ways)).
5. A timeframe (how long will it be before we reach the target).

Question 6

What is a key performance indicator (KPI)?

Answer 6

A PI that tells us if the organisation is going in the right direction.
KPI tells you what to do to dramatically increase performance. They are the result of one action and are directly linked to a strategic objective.
They enable you to manage, control and achieve desired business results.

Question 7

What are the four components of the closed-loop BPM cycle?

Answer 7

Strategize, Plan, Monitor/Analyse, Act/Adjust

Question 8

What does the strategize component of the closed-loop BPM cycle involve?

Answer 8

• Requires setting goals and objectives.
• Mission, values, goals, objectives, incentives, strategy maps.

Question 9

What does the plan component of the closed-loop BPM cycle involve?

Answer 9

• Requires establishing initiatives and plans to achieve those goals.
• Budgets, plans, forecasts, models, initiatives, targets.

Question 10

What does the monitor/analyse component of the closed-loop BPM cycle involve?

Answer 10

• Requires monitoring actual performance against goals and objectives.
• Performance dashboards, reports, analytical tools.

Question 11

What does the act/adjust component of the closed-loop BPM cycle involve?

Answer 11

• Requires taking corrective action.
• Interpret, collaborate, assess, decide, act, adjust, track.