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DSS News
D. J. Power, Editor
September 1, 2002 -- Vol. 3, No. 18
A Bi-Weekly Publication of DSSResources.COM
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Check the Bayer UK case featuring Cognos Series 7
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Featured:
* DSS Wisdom
* Ask Dan! - Where can I find information about KPIs for building
DSS in different industries?
* Spreadsheet-based DSS Tip - Use Informative Headers and Footers
* What's New at DSSResources.COM
* DSS News Releases
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DSS Wisdom
Charles Hofer and Dan Schendel (1978) argued the assessment of
competitive position involves identifying the key success
factors for an industry. They note "Key success factors are
those variables which management can influence through its decisions
that can affect significantly the overall competitive positions of the
various firms in an industry. These factors usually vary from
industry to industry (p. 77)." Examples of key success factors include:
market share, breadth of product lines, sales distribution
effectiveness, relative product quality, productivity, price
competitiveness, caliber of personnel and general image.
from Hofer, C. W. and D. Schendel, Strategy Formulation:
Analytical Concepts, St. Paul, MN: West Publishing Co., 1978.
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Get information about Dan Power's new book, Decision Support
Systems: Concepts and Resources for Managers, at
http://www.dssresources.com/dssbookstore/power02.html .
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Ask Dan!
by Daniel J. Power
Where can I find information about KPIs for building DSS in different
industries?
The topic of identifying KPIs or Key Performance Indicators is a major
issue in developing Executive Information Systems, Balanced Scorecard
Systems and Performance Management Information Systems. Allan Yiin
posted a question requesting information about KPI (key performance
indicators) that the managers should track, especially for manufacturing
and finance. I've also had a number of inquiries about what software is
best for tracking KPIs. So this Ask Dan! trys to resolve some of the
issues associated with tracking and identifying performance indicators
and to identify web resources for finding more information.
In 1979, John Rockart identified an approach for defining
decision-making data needs that is appropriate for many data-driven DSS
and especially Executive Information Systems (EIS). Rockart's Critical
Success Factors (CSF) Design Method focuses on individual managers and
on each manager's current hard and soft information needs. A CSF
analysis can be beneficial in identifying "the limited number of areas
in which results, if they are satisfactory, will insure successful
competitive performance for the organization." If organizational goals
were to be attained, then these key areas of activity - usually three to
six factors - would need careful and consistent attention from
management.
Key Performance Indicators were originally called Critical Success
Factors (CSF) and were used in Executive Information Systems (EIS).
These indicators of performance were rediscovered and renamed KPIs and
MPIs (Management Performance Indicators). KPIs, CSFs or MPIs are
strategic measures or a set of measurements used to measure strategic
initiatives. Metrics can be expressed as ratios or absolute values. It
is important to identify metrics appropriate to a specific company. The
metrics should be key areas of business activity in which favorable
results are necessary for a company to reach its goals. Establishing key
performance metrics should start with business/organization planning.
Managers should define appropriate goals, measures (metrics), targets,
schedules, data collection processes, and analysis procedures.
Robert Kaplan and David Norton (1996) pioneered the Balanced Scorecard
(BSC) approach to develop KPIs. They first introduced the idea in the
January/February 1992 issue of the Harvard Business Review. The BSC
focuses on financial and non-financial measures in the areas of
financial performance, customer satisfaction, internal business
processes, and organizational growth, learning and innovation. A
balanced scorecard attempts to translate a company's objectives and
strategies into tangible measures.
For a manufacturing organization one might identify performance metrics
like: revenue per employee, average machining time, warranty claims,
ratio of sales to inquiries, in-process inventory levels, and order
fulfillment time. For a finance unit KPIs might focus on metrics like:
average cash balances, revenue per employee, return on capital, total
cost per transaction or inventory turnover. KPIs for a university or
college might include student turnover or "defections", articles per
faculty member, employment rates of graduates or graduation rates by
program.
Vodafone (2001) identified and reported on its KPIs. The KPIs included
registered blended average revenue per user ("ARPU") based on a 12 month
rolling average as a measure of customer activity, data revenues as a
percentage of service revenues, EBITDA margins and operating profit
margin.
Some of the advantages of tracking performance metrics include providing
a continuity of knowledge in a firm, improving communications, reducing
biases, facilitating analysis of trends, and improving planning (cf.,
Camillus, 1986).
There are a wide range of definitions and approaches for performance
measurement. Performance management can be enhanced by a web-based
decision support/executive information system. Some vendors with BSC
software include SAS Institute (sas.com), Dialog Software
(dialogsoftware.com), Executive Dashboard (iexecutivedashboard.com) and
PM-Express(TM) (www.pm-express.com).
Also, readers may want to check the Balanced Scorecard Institute
(http://balancedscorecard.org/) for more information. The website is a
clearinghouse for managers to exchange information, ideas and lessons
learned in building strategic management systems using the balanced
scorecard approach. Kaplan and Norton operate the Balanced Scorecard
Collaborative, Inc. and its website at http://www.bscol.com/. Also, Hopf
et al. prepared a guide to performance management targeted to
procurement executives that is available on the web.
References
Camillus, J. C. Strategic Planning and Management Control, Lexingtton,
MA: Lexington Books, 1986.
CEOReview.com URL http://www.ceoreview.com/books/scorecard.htm
Hopf et al., Guide to a Balanced Scorecard: Performance Management
Methodology, URL http://oamweb.osec.doc.gov/bsc/guide.htm
Kaplan, R. and D. Norton. The Balanced Scorecard: Translating Strategy
Into Action. Harvard Business School Press, 1996.
Rockart, J.F. "Chief Executives Define Their Own Data Needs". Harvard
Business Review, March/April, 1979.
Vodafone staff, "Key performance indicators for Vodafone show ARPU
stabilising", Press Release July 24, 2001 at URL
http://www.vodafone.com/media/111.mc?article_id=10000156
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Visit DSS News Sponsors - Crystalball.com and Teradata.com
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Spreadsheet-based DSS Tip
Use Informative Headers and Footers for Decision Support Reports
Spreadsheet-based DSS often create reports that users print. It is easy
to forget that a decision support report created in Excel and saved as a
PDF document or printed for distribution should provide data like who
created it and when. To add a header click View on the menu bar and then
click Header and Footer, click Custom Header.
In the dialog box enter informative information that helps document the
report. You can view the headers and footers in Print Preview.
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What's New at DSSResources.COM
08/26/2002 Posted case by Cognos Staff, "Bayer UK effectively
manages corporate performance with Cognos Series 7", Cognos,
Inc., 2002.
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DSS News Releases - August 18 to August 30, 2002
Complete news releases can be found at DSSResources.COM.
08/29/2002 Legend announces debut launch of supercomputer.
08/29/2002 Redundant Networks' free online tool helps companies
assess risk of network security threat.
08/28/2002 Information systems upgrade at Hershey Foods powers business
transformation.
08/28/2002 Intergraph ships powerful, single-GIS-environment,
grid data modeling and visualization technology.
08/28/2002 SAP announces employee productivity suite.
08/28/2002 Consolidated Container selects Business Objects as business
intelligence standard.
08/28/2002 Teradata's data warehousing event to be World's largest.
08/27/2002 New study from University of Michigan Business School and QAD
verifies business value of implementing a lean supply chain.
08/27/2002 Morris Communications selects Ascential DataStage XE to speed
deployment of enterprise decision support solution.
08/27/2002 Towers Perrin increases client satisfaction with Brio
performance suite.
08/26/2002 Intergraph’s new and improved GeoMedia WebMap 5.0 now
available for web mapping needs.
08/26/2002 Visual communication package provides new visualization for
FreeForm modeling system.
08/26/2002 Haestad Methods announces Scenario Control Center(TM) for
WaterGEMS(TM).
08/26/2002 Ballantine releases QuickGantt 4.0 project management
software.
08/22/2002 Diebold Election Systems tallies Georgia primary results for
2 counties in step toward statewide touch-screen elections.
08/22/2002 CALL FOR PAPERS: IUFRO conference Vienna, April 2003,
Decision Support for multiple purpose forestry.
08/22/2002 New decision guide at MayoClinic.com helps women understand
hormone replacement therapy.
08/21/2002 Cognos delivers enterprise reporting and analysis, drives
corporate performance management initiatives at KeyCorp.
08/21/2002 ServiceWare Technologies, Inc. acquires InfoImage assets.
08/20/2002 Sybase powers HIPAA compliance and data warehousing solution
for Ochsner Health Plan.
08/20/2002 Warehouse Workbench - The first data movement and
transformation tool for under $1,000 - is introduced by Solonde.
08/20/2002 ProClarity teams with Unisys in the "Partners in Excellence"
program.
08/20/2002 Borders Group, Inc. chooses OutlookSoft to provide strategic
business performance management solution.
08/20/2002 General Cable gains ROI, improved customer service by
automating transportation management.
08/20/2002 Siemens Power selects ClickSoftware for scheduling more than
2,000 field service personnel worldwide.
08/19/2002 DataJungle Software extends Cognos Business Intelligence
through Cognos Web Services.
08/19/2002 Researchers develop easy calculator to gauge risk of heart
attack.
DSS News is copyrighted (c) 2002 by D. J. Power. Please send your
questions to daniel.power@dssresources.com.
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