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Developing Metrics for Financial

Shared Services:

Best Practices, Tips and Traps

Jeff Zwier

Manager IS Communications,Team Lead CISO Audit & Metrics Analysis

ABN AMRO Services IT

Presented at:

IQPC / Finance IQ Shared Services for Finance and Accounting Conference

The Driskill Hotel, Austin, TX

June 23-25, 2007


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Metrics for Shared Services Jeff Zwier 2

Presentation at a Glance

Some Definitions

Before you Begin

Getting Started

Designing your Metrics

Visualization & Presentation

Resources


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Some Definitions

What is a Metric?

Why do we use metrics?


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Incredibly detailed, unfocused

reporting

Most of your stakeholders dont care aboutthe details of your operations!

A cautionary tale. . .


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Metrics Design:

Before you Begin (2)

To avoid the trap:

Set your reporting objectives

Focus on the basics

Define your audience

Start a dialog


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Getting the Right Response:

Reporting Objectives and Types of Metrics

Metrics can be used for. . .

Executive Reporting steer enterprise-level decision making, direct investment and

demonstrate value

Strategic Reporting provide a reality check for your shared services on whether it isreally delivering its intended value

Operational Reporting measure the performance of your staff when executing key

operational processes

Tactical Reporting create a snapshot of performance for use in special projects


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Focusing on the Basics

Good metrics are: Based upon consistent, measurable data

Inexpensive (in terms of time and money)

to collect Expressed in unambiguous, quantitative

terms that are objectively defined

Actionable there are no FYI metrics!


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Defining your Audience:

Questions to Ask

Who wants to know?

What do they want to know?

How often do they need to

know?

Why do they want to know it? What channel is the most

effective way to reach your

audience?

What will they do with yourinformation?

What behavioral change(s) do

you expect as a result?


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They Dont Know What they Want, so I

Have to Give them Everything

Theres always a way to find out more about what your internal or external stakeholdersreally need. Ask your internal communications or training department to help youcreate a survey of potential recipients for your report.

Creating good metrics is a collaborative processif you dont already have a good rapportwith your customers or managers, your metrics development will be a struggle.


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Ways to Start a Dialog with your

Reporting Audience

Focus groups Performance objective setting / SLAs

Budgeting

Surveys User communities / forums

Reactions to industry benchmarks or

commonly referenced research

Account managers / client

engagement professionals


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Designing Your Metrics:

Best Practices

Guiding principles that will help you createthe right metrics for the right objectives: Focus on information, not data

Isolate processes to select the right level of

analysis for your metric Resist the temptation select metrics based upon

business intelligence tooling requirements orinstant dashboard solutions

Select metrics that have clearly defined inputs,outputs and impacts

Set rating criteria based upon the impact of ametric hitting a certain value, not historic trends


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Data versus Information

Data The operational details that

collectively describe the

activities of your service.

Information

Metrics that describe the data

you have available with the

context necessary to make

good decisions about what

your service has been doing.


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In Other Words. . .

Remember:

ACTIVITY

Does not

equal

ACHIEVEMENT


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Isolate your Process to Find

the Right Metrics

Measure withinprocesses to avoid mixinglevels of detail or introducing intervening

variables.

Avoid metrics that draw data from across

processes unless you are creatingexecutive reporting.

Is there a single causeof a metrics value moving

in a positive or negative direction?


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Avoid Tool-specific Metrics

Would you change the planned layout of yourhome in order to take advantage of using a

particular hammer?


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Inputs, Outputs and Impacts:

Use IOI for Higher ROI

Inputs Clearly defined, objective and stableboth over

time and across actors

Outputs Predictable based upon variations of inputs plus

the environment in general

Impacts What real change happens to the business (thebottom line, availability, or other factors) when thevalue of a metric moves?


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Setting Rating Criteria

Popular Rating Schemes Red/Amber/Green

Report Cards

(A, B, C, D, F)

Percentage of Perfection (0-100%)

How do you determine

your rating thresholds?


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Setting Rating Criteria (2)

History is not often a goodbaseline for future

performance measurement

Look for objective impacts in

order to determine what redor green status should be

Stay quantitative

Presence or absence

Volumes, variable costs Losses, gains, rejections

"History is more or less bunk. It's tradition. We don't want tradition. We want to live in the present, and

the only history that is worth a tinker's damn is the history that we make today."

(Henry Ford, quoted in the Chicago Tribune, 1916).

TRAP: Dont use history to set

the standard for futureperformance


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Visualization and Presentation

Dashboards One to three pages of discrete, clearly defined

indicators.

Scorecards Balanced Scorecard summaries across defined

performance dimensions.

Reports Operational detail designed for comprehensive

views of service data.


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Dashboards

Dashboards provide indicators,gauges and simple charts to helpsenior leaders make strategicdecisions

Design principle: Simple

is better! Use your car as a model

Make most critical information mostprominent

Many good (and exceptionallybad) examples to choose

from online Can often be automatically

generated from business intelligencetool platforms.


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A Typical Corporate Services

Dashboard


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What your COO Would Like to See


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Dashboard Examples


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The Balanced Scorecard

Completely focused onoutcomes (or as Jeff says,

impacts)

Management system with

integrated measurement

A fundamental change in

operational management

approach

Far beyond simply defining

your measurement scheme

Not for the faint of heart

Provides highly effectivefeedback loop when designed

correctly

Source: 1998 Balanced Scorecard Institute www.balancedscorecard.org

Used with permission.
http://www.balancedscorecard.org/http://www.balancedscorecard.org/


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Traditional Reports

Helpful for tactical reporting,operational effectiveness analysis

Not the best solution forchanging behavior

Common reporting traps

Executive Summary

Often mistaken for servicemarketing tools

Data density

Jargon

Produced by subject matterexperts, rather thancommunicators


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Using Dashboards, Scorecards

and Reports

If you want to. . . Then consider. . .

steer enterprise-level or CXO

decision making, direct

investment, or generally

demonstrate value

executive communication tools

such as dashboards, monthly

update presentations.

provide a reality check for

your shared service management

team to guide efficient and

effective operations

balanced scorecard, guiding

principle tables, operational

process descriptions with

progress indicators.

create a snapshot of

performance for use in projects

or long term analytics

traditional tactical or operations

reporting formats.


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Resources:

For More Information

Dashboard Designs and Data Visualization The Dashboard Spy www.dashboardspy.com

Instant Cognition Blog http://blog.instantcognition.com/category/visualization/

Edward Tufte Q&A Forums http://www.edwardtufte.com/bboard/q-and-a?topic_id=1

Reporting and Metrics

Article on Reporting for Shared Services (Shared Services Network News)

www.jeffzwier.com/articles

Techweb article on KPI development

http://www.intelligententerprise.com/showArticle.jhtml?articleID=51201364

Balanced Scorecard

What is the Balanced Scorecard?

http://www.balancedscorecard.org/basics/bsc1.html
http://www.dashboardspy.com/http://blog.instantcognition.com/category/visualization/http://www.edwardtufte.com/bboard/q-and-a?topic_id=1http://www.jeffzwier.com/articleshttp://www.intelligententerprise.com/showArticle.jhtml?articleID=51201364http://www.balancedscorecard.org/basics/bsc1.htmlhttp://www.balancedscorecard.org/basics/bsc1.htmlhttp://www.intelligententerprise.com/showArticle.jhtml?articleID=51201364http://www.jeffzwier.com/articleshttp://www.edwardtufte.com/bboard/q-and-a?topic_id=1http://www.edwardtufte.com/bboard/q-and-a?topic_id=1http://www.edwardtufte.com/bboard/q-and-a?topic_id=1http://www.edwardtufte.com/bboard/q-and-a?topic_id=1http://www.edwardtufte.com/bboard/q-and-a?topic_id=1http://blog.instantcognition.com/category/visualization/http://www.dashboardspy.com/


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Developing Metrics for Financial

Shared Services:

Best Practices, Tips and Traps

Jeff Zwier

Manager IS Communications,Team Lead CISO Audit & Metrics Analysis

ABN AMRO Services IT

Jeff [email protected]
mailto:[email protected]:[email protected]

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