corporate performance management: scorecards & dashboards that drive results

THE RESOURCE FOR CORPORATE FINANCE, ACCOUNTING & TREASURY PROFESSIONALS

Tim WeeksPartner and Director of Scoreboards, CFOwise

Metrics that MatterKeeping Score across the Enterprise

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Learning Objectives

After attending this webinar you will be able to:

• Define the current landscape of technology being leveraged to create dashboards and scorecards

• Discover best practices in developing scorecards for your company

• Leverage practical advice in harnessing and unlocking the value in your company data

THE RESOURCE FOR CORPORATE FINANCE, ACCOUNTING & TREASURY PROFESSIONALS

Tim WeeksPartner and Director of Scoreboards, CFOwise

Metrics that MatterKeeping Score across the Enterprise


Applying Lessons Learned from Sports

How many minutes are actually played in an NFL football game?



How many minutes are actually played in an NFL football game?– 11 minutes



How many minutes are actually played in an NFL football game?– 11 minutes– 1 hour of commercials– 75 minutes of player shots, at the line of scrimmage, in the huddle and

general milling about– 7% of the broadcast on coaches and referees– Costs anywhere between $150K and $250K to produce a game with a

staff ranging between 80 to 200 – Source: WSJ, 11 Minutes of Action, 1/15/10



Key Metrics

NFL Football?

Factor Home Away Overall Vs the SpreadFewer Turnovers 83% 72% 78% 75%More Rushing Yards 78% 67% 73% 69%Greater Time of Possession 77% 62% 70% 66%More Total Yards 75% 60% 68% 64%Higher 3rd Down Conversions 75% 59% 68% 63%More First Downs 73% 57% 66% 61%

Source: http://twominutewarning.com/g13.htm



How many calories does an average NBA player burn during a game?



How many calories does an average NBA player burn during a game?– Approximately 860 calories on average– NBA forward runs approx 3 miles on average (college 2 miles)– Source: AOL News 9/14/10



Key MetricsNBA Basketball?

• Two most important predictors are…– Field goal conversion (% of baskets made compared to shots)– Average 3-point conversion of opposing team

• Field goal conversion 3 times greater variance than 3-point conversion of other team

• Suggests offense more important than defense• Every 1% increase in field goal conversion provides a 7.9%

increase in winning %



What is the average life of a baseball in Major League Baseball?



What is the average life of a baseball in Major League Baseball?– Average is 6 pitches– On average 60-70 balls are used in a game– Home team has to have 90 new baseballs on hand– Average of 12 hockey pucks are used in an NHL game– Source: Wiki.answers.com



Key MetricsMLB Baseball?

• Pitching most important• Starting pitcher’s “Earned Run Average” (ERA) best

predictor• Second most important is starting pitcher’s WHIP

(Walks and Hits per Inning Pitched)



What Do We Know?



What Do We Know?

TeamsScore

Runners on BaseChannel (Branding)

Home Team

Pitch CountOuts

InningGame



Therefore, What?

TeamsScore

Runners on BaseChannel (Branding)

Home Team

Pitch CountOuts

InningGame



Applying Sports Scoreboards to Our Companies

Scoreboards Become More Valuable Over TimeFamiliarity over time leads to quick understanding of results; what would a

sporting event be like without a Scoreboard? For leaders and executives, they bring clarity and peace of mind.

What Should Be Measured?Can be subtle; at times even unobvious; what are the key metrics; profit per X.

Defining an Opponent While our companies are facing competitors we cannot always measure directly

against those direct competitors; so our competition becomes our…goal, forecast, budget, results from last month, last week, same month prior

year, etc; assist the executive team in understanding the game.

Predictors of SuccessDid we win or lose today? This Week? This Month? This Year?

Therefore, What?Purpose of the Scoreboards is to lead to good decision making; strategy; quick

identification of negative trends and confirmation of previous strategic decisions.


Building Your Company’s ScoreboardsUsing graphics and current technologies to tell the

story.

Determining the Metrics on Your Scoreboards

Guidelines for determining your Company’s metrics.

Scoreboards for the Entire TeamNot just for the executive team. Every group in the

enterprise can benefit.

Metrics that Matter


Building Your Company’s Scoreboards

Traditional Financial PackageExcel Based Reports

Imported to Acrobat Pro and Marked Up

Charts from Excel



Example of Cloud Based ScoreboardsTrends, sorting, creative charting

Power in speedometers, stoplights and other chart optionsCustomize targets, ranges and min/max options



Features and FlexibilityFrom simple to complex

InteractivePivot capabilities

Graphics vs spreadsheetsIdentifying the critical issues quickly



Online ScoreboardsInteractive

Quick Identification of Trends, Key Metrics, Ratios

Accessible from Any Location with Internet Access

*** Significantly Reduces Preparation Time Prior to Meetings

*** Quickly Keys on Most Important Results


Determining Your Metrics

What youcan be best

in theworld at

What drivesyour economic

engine

What you are deeply passionate

about

Good to GreatBy Jim Collins

Pitney BowesProfit per Customer

Wells FargoProfit per Employee

Walgreen’sProfit per Customer Visit

KrogerProfit per Local Population

Nucor SteelProfit per Ton of Finished Steel

profit per “X”



Good to GreatBy Jim Collins

“The denominator question serves as a mechanism to force deeper understanding of the key drivers in your economic engine. As the

denominator question emerged from the research, we tested the question on a number of executive teams. We found that the question always stimulated intense dialogue and debate. Furthermore, even in cases

where the team failed (or refused) to identify a single denominator, the challenge of the question drove them to deeper insight. And that is, after

all, the point—to have a denominator not for the sake of having a denominator, but for the sake of gaining insight that ultimately leads to

more robust and sustainable economics.”

“The denominator can be quite subtle, sometimes even unobvious. The key is to use the question of the denominator to gain understanding and insight into your

economic model.”



5 Year Forecast

Annual Forecast

Quarterly Forecast

Monthly Indicators

Weekly Indicators

Daily Indicators



Monthly IndicatorsProfit and LossBalance Sheet

Statement of Cash FlowsIndustry Comparisons

Key Performance and Health Ratios

Weekly IndicatorsMetrics for Each Department, Discipline or Team

1 to 3 of the Most Critical MetricsCondensed or Simplified Version of a Balanced Scorecard

Daily IndicatorsThe 1 to 3 Key Drivers of the Company’s Economic Engine



Quarterly Forecast13-Week Rolling Forecast of Cash Flows

Identifies and Manages the Peaks and Valleys of Cash Flow

Annual ForecastCompares Actual Results to the Company’s Forecast, Budget or Plan

Analyzes Performance Month by MonthFocus on Analyzing Variances

5 Year ForecastFinancial Model or Projection of the Core Financial Statements

Assumptions of the Company’s Growth StrategyPlanned Acquisitions, Divestitures, New Product Launches, Pricing Strategies


Scoreboards for the Entire Team

Accounting is the Language of Business


Scoreboards Provide Part of the TranslationLearn through trial and error how the members of your

team learn and understand. Getting your scoreboards right is an ongoing process.

Let Team Members DiscoverTherefore, What? Report Cards.

Who in the Enterprise Should be Included?Division or team leaders, on the line, in the field; who

has influence on key performance indicators?

Who Outside the Enterprise Could Benefit?Improved communication with bankers, vendors and

other partners.

Scoreboards for the Entire Team


Best Practices

Just Get StartedLet go of the idea the process must be perfect. Engage in

dialogue at the executive level. Begin on the back of a napkin if that is what you have.

Flexibility in Technology and MetricsYour first attempt is the rough draft. Do not invest in technology that has to be executed perfectly the first time.

Your Scoreboards and the metrics you track WILL change.

Accept Everyone Understands in His or Her Own Way

Be patient with your team. Continue to try new methods until each member of the team has his or her A-Ha moment.

Scoreboards Must be Accessible Physically and Intellectually

Make it easy to access the Scoreboards. The more—clicks, files that need to be opened, steps, etc—required the less likely

your team is to review the Scoreboards often. Design should make metrics readily available.


Things to Avoid

Dashboard Projects Led by ITEasy to turn over to the IT department. The most critical factor

is what we are tracking and those decisions must be made by the executive team with finance and accounting leading

the effort.

Allowing Design to Get in the WayNever build a chart or graphic that is simply on the Scoreboard

because it is “cool”. Every measurement must on the Scoreboard must have a purpose and be aligned with the

Company’s overall goals.

Viewing Scoreboard as Tools for Management Only

Most team members want to know they are contributing to the success of the Company. Look for influencers.

Bad DataThis is the one area that has to be done right the first time.

Regardless of what you track, the data must be accurate!


Metrics that Matter


Thank You


If you have questions about CPE Credit please [email protected]

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corporate performance management: scorecards & dashboards that drive results

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