1. The PERC Methodology Improving Operations Using Data Mining Techniques with a Common Sense Approach to Doing Business

2. The PERC Methodology Performance Evaluation Report Card (PERC) Methodology One of the ten finalists in the 2010 WIPRO/Knowledge@Wharton Innovation Tournament

3. The PERC Methodology Typical Application Scenario Business or Government Entity with Several Similar Operating Units –General Motors, Ford -- Automotive Dealerships –Health and Human Services – Medicare, Medicaid, etc. –McDonalds -- Hamburger Franchises –FDIC – Commercial and Savings Banks –Walmart, Target, Retail Stores – Multiple Outlets –Department of Education -- Schools, Guaranty Agencies –Etc. Etc. Etc.... Etc. Etc. Etc. Large Volume of Data Resources That: –Seem Unmanageable or Incomprehensible –Unwieldy, Making Easy Access to Important Information Difficult –Typically Require Non-Business IT Types to Access –Result in Lost Opportunities From Information Mismanagement

4. The PERC Methodology Typical Application Scenario (continued) Opportunities Exist to Improve Operations with Better Information Management and Technology –Improve Productivity –Move All Units Towards Best Practices –Gain Competitive Advantage –Increase Shareholder/Stakeholder Value –Reduce Costs –Reduce Risk or Potential Fraudulent Activities –Increase Awareness of Critical Success Factors Throughout Organization –Increase Customer/Client Satisfaction

5. The PERC Methodology Through Improved Data Management Quantitative Analysis Statistical Analysis Expert Systems Data Source 1 Data Source 2Data Source 3Data Source 4 Fraud Detection Expert Systems Executive Information Systems Management Summary Reports Forecasting Models

6. The PERC Methodology Drive Toward Best Practices Worst Best Identifying performance differences drives business towards best performances. As the poor performers improve, so does the average or normal business improve.

7. The PERC Methodology Through Quantitative Business Analysis Risk Management Cost Reduction Growth Opportunity Budget Solution Policy Development Profit Increase Operational Efficiency Norms Variances Regressions Correlation Sampling Algorithms NPV Finance Operations Budgeting Marketing Accounting Planning Trend Expert Modeling Graphics Ratios Demographics Quantitative Business Analysis Strategic Management Information

8. The PERC Methodology Through Improved Data Management Quantitative Analysis Statistical Analysis Expert Systems Data Source 1 Data Source 2Data Source 3Data Source 4 Fraud Detection Expert Systems Executive Information Systems Management Summary Reports Forecasting Models Changes in Policy & Operation

9. Improving Operations Using the PERC Methodology Approach

10. The PERC Methodology The Eight-Step Approach Step 1: Establish a Strong Business Oriented Focus Group or Executive Dictum Step 2: Clearly Define Business Objectives at the Start –Simplify and Clarify Step 3: Identify and Evaluate Available Data Sources for Solving Objectives –Determine Data Quality -- Comprehensiveness, History, Value & Integrity –Depending on Findings -- Stop or Move Forward -- If Forward, Step 4: Perform Rapid Quantitative Business Analyses –Identify Relevant Indicators, Establish Benchmarks, Trend History –KISS -- Keep It Simple Stupid –Add Complexity Only As Necessary -- Probably Better in Feedback Cycle Step 5: Present Findings and Concept for Smart System Products Step 6: Design & Develop Smart System Products for Accomplishing Objectives Step 7: Implement, Evaluate, and Obtain Operational Feedback Step 8: Refine or Revise and Update Appropriately

11. The PERC Methodology The Eight-Step Approach Step 1: Business Oriented Focus Group Phase Step 2: Business Objective Phase Step 3: Data Evaluation Phase Step 4: Rapid Quantitative Business Analysis Phase Step 5: Smart System Concept Phase Step 6: Design & Development Phase Step 7: Implementation Phase Step 8: Refine & Update Phase

12. The PERC Philosophy to Improving Operations KEEP IT SIMPLE STUPID ADD COMPLEXITY ONLY AS NEEDED KISS + COAN If what is done cannot be understood then the value, itself, is questionable

13. The PERC Methodology Step 1: Establish Business Oriented Focus Group Organize a Team of Individuals With: –A Business Oriented Focus –Relevant Systems Knowledge –Operational Knowledge and Experience Include Both Line and Staff Level Personnel –Decision Making Authority –Enthusiasm for Rapid Development Projects Alternatively –CEO Directive –Executive Dictum

14. The PERC Methodology Step 2: Business Objective Phase Clarify the Fundamental Business Objectives –Improve Productivity? –Reduce Costs? –Increase Sales & Revenue? –Increase Shareholder/Stakeholder Value? –Improve Customer Satisfaction? –Investigate Fraudulent Activities? Keep the Objectives Simple -- But Not Too Narrow (e.g., –Correct Payments or Cost Savings -- Why not Both? –Default Risk or Improved Operations -- Why not Both? –Improved and Timely Management Information Identify Data Resources for Benchmarking Objectives –Obtain Access for Analytical Purposes

15. The PERC Methodology Step 3: Data Evaluation Phase Evaluate Available Data Sources for Solving Objectives –Determine Data Quality -- Comprehensiveness, History, Value & Integrity –Depending on Findings -- Stop or Move Forward Discuss -- How Do We Go About Doing This? –Simply, Logically and Quickly –Entire Population, Sample Population, or Pilot Group –Frequency Distributions of Coded and Date Fields –Identify Potential Outlyers -- Negatives, Mins, Maxs, Variances, Missing Data –Obtain Sums on Every Numeric Field -- Begin Establishing Controls or Numbers to Validate -- Eliminate Outlyers If Appropriate –Slice & Dice the Key Numeric Fields by Codes and by Month/Year, Year, Etc. –Create New Variables to Help in Validation Process -- Algebra is ok –Putting It All Together -- Does It Make Sense? Are Key Variables Available? Can Benchmarks Be Established for Performance Measurements?

16. The PERC Methodology Step 3: Data Evaluation Phase (Continued) Data Quality Evaluation -- What Did You Learn? -- Presentation of Findings Graphically Present Findings -- By Program Meaningful Codes By Time Intervals (e.g., Month/Year, Year, Week, etc.) By Logical Peer Groups (size, product type, etc.) While Seeking New & Creative Perspectives for Evaluation –Provide Supplemental Detailed Outputs Supporting Findings Decision Point -- Stop or Move Forward to Analytical Phase –Provide Recommendation –Decision Should Be Clear

17. The PERC Methodology Step 4: Rapid Quantitative Business Analysis Phase Perform Rapid Quantitative Business Analyses –Determine if Conceptual Control Groups Exist Establish Best Practice Groups -- Poor Performing Groups If Unable, Then Establish Common Sense Business Practices as Initial Measuring Tools (e.g., net income, sales/employee) –Begin Developing Set of Potential Performance Indicators –Segregate Data by Peer Groups and/or Other Logical Criteria –Evaluate Effectiveness of Individual Indicators using Statistical Correlations by Peer Group Determine Norms, Variances and Outlyers for Performance Indicators Determine Indicators Ability to Be Applied Comprehensively Consider Amount of Bias in Indicator (May Require Feedback)

18. The PERC Methodology Step 4: Rapid Quantitative Business Analysis Phase (Continued) Perform Rapid Quantitative Business Analyses (Continued) –Seek Monitoring Solution with Multiple Indicators –Mix and Match Indicators with Different Weighting Schemes to Look for Best Monitoring Mechanism –Consider Different Rating Evaluation Methodologies A, B, C, D, F 1st Quartile, 2nd Quartile,... Relationship to an Expected Norm for the Population Simple Ranking per Peer Group (e.g., 21st out of 212) Ten Point / Hundred Point Scale –Begin Formulating Concept For Smart System Design

19. The PERC Methodology Step 5: Smart System Concept Phase Determine How This New Knowledge Should Be Implemented –Alternative Media Options Database -- LAN, Web-based Intranet, Software Report Card -- Hardcopy –Periodicity of Rating Evaluation –Forcefully or Experimentally –Peer Group or Entire Population –Relative Measurement or Absolute Measurement Develop Alternative Smart System Concepts, Providing –Pros and Cons –Recommendation

20. The PERC Methodology Step 6: Design & Development Phase Design Output Formats Appropriate For Chosen Media –Group Information Logically –Provide User-Friendly Textual and Numeric Displays Good, Average, Poor --- High, Medium, Low --- A, B, C Color Code Numerics -- Percentiles, Standard Deviations -- Factor Above/Below Norm –Present Rating Mechanism or Evaluation Clearly –Provide Information Regarding Peer Group Benchmark Norms –Show Trend -- Emphasizing Improvements –Seek Self-Improvement Through Fairness

21. The PERC Methodology Step 6: Design & Development Phase (Continued) Develop Design –Program Design Layouts –Program Rating or Monitoring Mechanism –Test Program Logic –Document Program Logic and Production Update Process –Develop User Documentation / Operating Manuals, Explaining Business Objectives Performance Measurements Rating Mechanisms or Methodology All Relevant Output Variables Feedback Mechanism for Improvement Considerations

22. The PERC Methodology Step 7: Implementation Phase Implement System –Install System Pilot or Full Comprehensive Implementation –Provide User Training Explain Objectives Key Operating Features Stress Importance of User Feedback –Provide Users with Operating Manuals and Contacts for Feedback –Over Time -- Monitor Benchmarks for Improving Operations –Focus Group -- Seek Feedback for Improving System –Evaluate Usefulness and Value of Making System Enhancements

23. The PERC Methodology Step 8: Revise and Update Phase Update System –Update System Based upon Logical Processing Periodicty –Ensure Update Receives Quality Control –Identify Major Changes between Previous Period and New Update –Keep Trend Information Revise System –If Feedback Points to Cost-Effective Improvements--Revise –Can Help Ensure User Acceptance –Can Reduce Earlier Unforeseen Biases –Revisions Should Be Somewhat Minor and Quick to Implement –Remember, Add Complexity Only as Necessary -- KISS

24. Improving Operations Using the PERC Methodology Analyze Performance Standards Drive Towards Best Practices Focus on Poor Performers Evaluate Success and Refine Approach

25. Improving Operations thru PERC Drive Toward Best Practices Worst Best Placing pressure on poor performers drives them towards best practices. As the poor performers improve, so does the industry average.

26. The PERC Methodology Typical Project – Fast Track Implementation Focus Group Phase -- (0 weeks) --Done Prior to Project Start Business Objective Phase -- (1-2 Days) Data Evaluation Phase -- (2-4 weeks) -- Starts Upon Receipt of Data Rapid Analysis Phase -- (3-4 weeks) -- Can Start During Previous Smart Concept Design Phase -- (2-3 weeks) Development Phase -- (3-6 weeks) -- Depends on Design Complexity Implementation Phase -- (2-4 weeks) Refine and Update -- (1-2 weeks) -- Updates Dependent on Periodicity Typical Project: Fast Track Implementation Requires 3-6 Months