I’m trying to catch up on a big backlog of materials and documents and documents that I’ve found useful…

Here’s an excellent best practices report from TDWI on “how to create and deploy effective metrics” (registration required). The introduction to the document explains the background:

Performance metrics are a powerful tool of organizational change. The adage
“What gets measured, gets done,” is true. Companies that define objectives, establish goals, measure progress, reward achievement, and display the results for all to see can turbo-charge productivity and gracefully move an organization in a new direction.

Executives use performance metrics to define and communicate strategic objectives tailored to every individual and role in the organization. Managers use them to identify underperforming individuals or teams and guide them back on track. Employees use performance metrics to focus on what’s important and help them achieve goals defined in their personal performance plans.

But performance metrics are a double-edged sword. The wrong metrics can have unintended consequences: they can wreak havoc on organizational processes, demoralize employees, and undermine productivity and service levels. If the metrics don’t accurately translate the company’s strategy and goals into concrete actions that employees can take on a daily basis, the organization will flounder. Employees will work hard but have nothing to show for their efforts, leaving everyone tired and frustrated. In short, the company will be efficient but ineffective.

The document then goes into to look at lots of different aspects of creating and deploying KPIs and dashboards. Having read a lot of books in this space, I’d say this is a great, non-nonsense overview. I’ve included some of the key graphics and charts below to give you a flavor of the contents…

There are some interesting parallels with corporate KPIs and the use of profit as an indicator of corporate success:

“The panel, chaired by two Nobel economists, Joseph E. Stiglitz of Columbia University and Amartya Sen of Harvard University, concluded that G.D.P. was insufficient and that measures of sustainability and human well-being should be included.”

“There isn’t a single indicator that can encompass everything,” said Enrico Giovannini, the chairman of the Italian national statistics agency, Istat. “It’s not a question of replacing G.D.P. It’s a question of complementing it with other indicators that can provide other measures of well-being.”

“What we measure affects what we do; and if our measurements are flawed, decisions may be distorted,”

The SAP’s Sustainability Report web site provides a great example of how business intelligence can help with sustainability reporting and analysis. All public organizations will have to start providing this time of information in the future, and SAP BusinessObjects provides some great tools to do it with.

Here are some of the Xcelsius dashboards that are provided as part of the report:

Environment

Carbon Footprint

Sustainable Buildings

People

Retention

Diversity

Social and Community Development

Economic Impact

Economic Performance

Improving Customer Satisfaction

Finally, here’s a great Xcelsius dashboard that lets you work out your own carbon footprint reduction scenarios for SAP. You can choose what to reduce in order to hit the overall reduction target for carbon emissions for the year 2020.

Please help us work on our sustainability priorities: http://www.sapsustainabilityreport.com/materialityAll.html

SAP And Enterprise Support

SAP has agreed a set of key performance indicators with its user group SUGEN, in order to measure the effectiveness of the controversial SAP Enterprise Support services introduced last year. And there’s real skin in the game: SAP has agreed to postpone scheduled price increases until the targeted improvements measured by the SUGEN KPI Index are met.

The KPI Index, defined after discussions with customers, is calculated on KPIs in four categories: business continuity, business process improvement, protection of investment, and total cost of operations.

“We are convinced that SAP Enterprise Support delivers unparalleled value to all customers and, as a demonstration of our commitment, we will provide tangible reductions in their operational costs on a defined schedule,” said Léo Apotheker, co-CEO, SAP AG

“SAP’s goal to provide a rating of application support via key performance indicators is innovative and challenging,” said Peter Wesche, research director, Gartner. “The extensive benchmarking phase and mapping of key performance indicators to business value will allow customers to fully understand the benefits of a comprehensive support program.”

Gross National Happiness

The New York Times reports today that the tiny nation of Bhutan has put together a sophisticated set of indicators to try to measure “gross national happiness”:

“…the Bhutanese produced an intricate model of well-being that features the four pillars, the nine domains and the 72 indicators of happiness.

Specifically, the government has determined that the four pillars of a happy society involve the economy, culture, the environment and good governance. It breaks these into nine domains: psychological well-being, ecology, health, education, culture, living standards, time use, community vitality and good governance, each with its own weighted and unweighted G.N.H. index.”

And it’s not as daft as it sounds – as the New York times reported several years ago, average happiness in many countries has hit a plateau even as median incomes have risen. Governments have always taken account of many different considerations when determining policy. To a certain extent, “gross national happiness” is just another way of looking at what voters want when they are looking to elect their democratic officials.

Measuring Government Ministers

Malaysia’s prime minister has announced that his government’s cabinet ministers and civil servants will be measured on KPIs, as part of his “1Malaysia” plan. Many other countries around the world, of course, have already implemented various types of performance-based budgeting, based on achieving a variety of social KPIs.

Stopping Yourself From Being Too Self-Righteous

The New York Times also has an article today about “self-righteousness”. Studies show that we’re hopeless at estimating our own willingness to do what’s morally right, but pretty good at estimating what other people will do. It’s not technically about KPIs, but if we regularly measured the delta between our expectations and what actually happens, we might get better at estimating our own real-life behavior!

Today’s example, from the New York Times, “Paying Doctors to Ignore Patients“:

“…the best way for a doctor to make money in his practice is not to spend time with patients but to use equipment as much as possible. That means moving the maximum number of patients through the practice, and spending the minimum amount of time with each one. “