management reporting - key performance indicators
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“Management Reporting - Key Performance Indicators
Getting the Most From Your Oracle Applications”
Doug McHughSpectrum
Direct - 630-472-2120
Management Reporting “Musts”
• Realistic Vision of Vertical Market• Plan Anchored in Quantified
Milestones• Actual Performance Measured
Analytically (Cause and Effect)• Fluid Assessment / Adjustment
Process
Effective Use of KPIs is the Glue
Overview
• Define KPIs• Balanced Scorecard
• Supporting Processes• Application Flow
• Oracle’s Approach• 11i Specifically
• Pilot Program• Benefits vs. Big Bang
KPI - Definition
• Predetermined Target– Compare Actual Results
• Best Practices– Go Hand in Hand with KPIs
• Industry Vertical Impact– Unique to Vertical
– Generic all Verticals
• Cause and Effect– Enables Remedial Action
Balanced Scorecard
• Kaplan and Norton – Mid 90s
• Balanced Emphasis of KPIs
– Finance, Customer, Internal and Learning/Growth
• Effectiveness Requires:
– Predetermined Analysis Paths
– Integrated Application Processes
– Centralized Support Process
Balanced ScorecardCustomer Internal LearningFinancial
ROOA
Days W/C
Orders
Expense
Satisfy
New Prod
Pricing
Key A/C
$ per P/O
Quality
Delivery
Inv Turns
Train Hrs
Turnover
Satisfy
Recruit $
Days of Working Capital
A/R
Channel
Country
Economy
Product
Complaints
RMA
Service
Turns
Quality
Deliver
Vendor
RMA
Service
Training
Production
INVENTORYA/P
Predetermination of KPI Analysis Paths
Customer
Days of Working CapitalDays Outstanding of Working Capital 50.4
DSO Drill Down
40 days product X DSO :
Customer Complaints
Quality – Rework-Scrap $
Receivable DSO 57.6 days
35 % returns Product X
30 days target 2 day variance yellow
5 % target 2% yellow variance
5% target2 % variance yellow
55% of Product X Sales
# of Service Calls
2 turns product X
15 turns target product x 2 turn variance yellow
Inventory Turns 6.2
RMA
RMA
Turns Drill Down
Vendor Performance
Overview
• Define KPIs• Balanced Scorecard
• Supporting Processes• Application Flow
• Oracle’s Approach• 11i Specifically
• Pilot Program• Benefits vs. Big Bang
Business Process Definition
• Best Practices Relate to Process Activity
• Benchmarking Facilitates Activity
Monitoring
• Cannot Be Modular Focused
Business Process Definition
• Working Capital Driven Processes
– Order to Cash
– Purchase to Pay
– Order To Distribution ( Through Production)
• Performance Measurement Processes
– Closing
– Management Reporting
Working Capital Driven
Order to Cash Activity Flow
• Sales / Quote• Order Entry• Credit• Billing• Customer Service / Collection• Cash Application• General Ledger Interface• RMA Process
Won / Loss %
DSO
Order to Cash Days
Working Capital Driven
Purchase to Pay Activity Flow
• Originating Requirements• Select / Negotiate Vendor• Order / Contract• Receive / Inspect• Invoice Match / Control• Payment Processing• General Ledger Interface
Purchase to Pay days – Cost per P/O Line
% rejected
Working Capital Driven
Order to Distribution Activity
• Customer Order ( Manufacturing Req.)
• BOM – Engineering Implementation– ECO, BOM, Item Costing
• Planning and Scheduling– Forecasting, Capacity Planning, MRP
• Work in Process– Issues, Job Control, WIP Costing
• Inventory– Controls, Planning, Misc. Transactions
Performance Measurement
Closing• Sub-module Transaction Flows to G/L• G/L Setup• Journal Processing Model• ADI• Organizational Review
Days to close and # of journal corrections
Management Reporting Flow • Planning/Budgeting Process
• Set Tactical KPIs Related to Key Strategy
• Apply Actual Results Against Plan
• Evaluate Variance to Plan
• Simulate Effect on Plan Change
• Adjust Plan / KPIs as Required
• Apply Actuals and Repeat Process
Days to complete
PERFORMANCE MEASUREMENT
Overview
• Define KPIs• Balanced Scorecard
• Supporting Processes• Application Flow
• Oracle’s Approach• 11i Specifically
• Pilot Program• Benefits Vs Big Bang
Examples - Oracle e-Business
Process Activity KPISoftware
i-Procure
CRM
Workflow
BIS
PTP
OTC
MR
all
Select / Negotiate
Quoting
all
Analyze
Expense
Sales
all
all
Oracle e-Business
• General Ledger
• ADI and OFA
• Balanced Scorecard
• Business Intelligence
• Enterprise Data Warehouse
Oracle e-Business
General Ledger
• Chart of Account Definition
– Product / Region Segments
• Value Set Definition
– Parent /Child Relationships
• Cause and Effect Drill Down
Oracle e-Business
ADI and Oracle Financial Analyzer
• Both Can Facilitate Drill Down
• Both Can Mimic Balanced Scorecard
• Ideal for Pilot Situation
• Neither Have Standard KPIs/Alerts
Oracle e-Business
Balanced Scorecard• Part of SEM Offering
• Relates 100% to Definition
• Simulation Capability
• Excel Downloads
• Complete ERP Integration
Oracle e-BusinessBusiness Intelligence
• Targets Specific Operational Areas
• Not intended for Executive Level
• Workbook and Alert Based
• 20 Intelligence Areas:– Financials, Sales Performance, Customer Satisfaction,
Planning, Order Management, etc.
• Internet Alert and Delivery
Oracle e-Business
Enterprise Data Warehouse
• 1 Stop Shopping for all Data Needs
• Underlying Data Source for BIS and SEM
• Pre-built Data Collection Data Packs
• Multi Dimensional (Cube Architecture)
• Facilitates custom applications
Overview
• Define KPIs• Balanced Scorecard
• Supporting Processes• Application Flow
• Oracle’s Approach• 11i Specifically
• Pilot Program• Benefits Vs Big Bang
Pilot Program
Validation:• Establish Key Strategic Initiatives
• Cause and Effect Definitions
– Quantitative and Human
• Reporting Process Flow
– Finance Usually Facilitates
• Workflow Process Definitions
• FSGs – ADI - OFA Are Good Tools
Words of Wisdom
High % of data required for KPIs exists in transaction database
EDW views and BIS designed to address most common needs
Don’t re-invent the wheel
Use statistical entries where appropriate
More Words of Wisdom
If It’s Worth Doing -----It’s Worth Measuring
If You Are Not Measuring -----You Are Just Practicing
without Reliable Data -----You Are Just Another Personwith an Opinion
“Management Reporting - Key Performance Indicators
Getting the Most From Your Oracle Applications”
Doug McHughSpectrum
Direct - 630-472-2120