1. Linking Process and Performance Metrics
Connecting process improvements to
organizational performance gains

2. Aligning Strategy with Process Metrics
This is a process for ensuring alignment among the organization’s performance measures, strategic plans, improvement projects, and budgets. The items in blue were covered previously, and the items in grey will be covered in later class sessions.
1. Establish the organization’s key goals
2a. Develop and deploy the enterprise strategy to the process level
2b. Establish KPIs associated with the organization’s key goals, and measure performance in these
3. Establish process measures (if not already existing)
4. Recalibrate enterprise KPIs and align them with process-level metrics
5. Once the metrics are aligned at all levels, identify process improvement projects
6. Allocate budget aligned with the process improvements needed to achieve the strategic goals. This requires that the budgeting process be scheduled after the strategic planning process
BA 553: Business Process Management

3. How Processes Impact Performance
The performance of any company depends upon the efficiency and effectiveness the work processes used to produce the product or service
Improving performance involves improving the work processes used to get work done
An important step in improving performance is identifying and defining the key work processes associated with producing the organization’s products and services
This was described earlier in this course in the presentation on identifying the value chain
BA 553: Business Process Management

4. Process Networks
Often, problems in a process are caused by issues that occur before the process begins, in earlier processes
These earlier processes are sometimes referred to as “upstream” processes, indicating that the problems flow out of them and continue downstream, impacting the process being studied
In some cases, what starts out as a minor issue can build into a serious problem by the time it arrives downstream
BA 553: Business Process Management

5. Linking In-Process Measures to Process Output Measures
It’s important to link your in-process measures to process output measures to show the results of your improvements
However, you must establish process output measures in such a way that not too many items will influence your measure: otherwise, your process improvements may not show up
For example, if you improved the production process and then measured cost per unit built, you might not see the effect of your improvement, because the cost of raw materials or supplier parts could have risen
It would be better to measure the reduction in rework, or the number of parts coming off the line per day per worker
BA 553: Business Process Management

6. Linking Process Output Measures and Performance Measures
In order to justify the cost of your improvement efforts, it is important to show the effect of the improvement on the bottom line of the organization
To do this, the improved in-process measures must first be connected to process output measures, as discussed previously
Once improvements are measured in process outputs, they must then be connected to improvements in organizational performance measures such as profit or return on investment
This connection (cause and effect) is sometimes difficult to establish
BA 553: Business Process Management

7. Outage Maintenance Example
FEEDBACK LOOPS
Equipment
available
Doing
Outage Maintenance
Providing Clearances
Manpower
availability
Managing the Workforce
Ordering Parts
Managing
Contractors
and their work scope
Materials/
Parts
W/O’s with
status of
equipment
to be fixed
Creating Work Orders
Planning
Outages
Planned schedule
Planned budget
Planned work scope
Outage W/O’s
working
Actual schedule
Actual budget
Actual work
completed
Paperwork done
Amount of contractor work complete
Used parts
Level of satisfac-tion with contractor
Doing Daily Maint.
Operating Plant
Storing or Disposing
of Scrap
BA 553: Business Process Management

8. Outage Maintenance Example: Connecting Process and Performance Measures
Process C:
Doing daily
or outage
maintenance
Process D:
Run the units
Inputs
Outputs
In-process measures
(collect from internal customers)
Input
measures
Plant performance measures
Process output measures
(customers in next process, or external)
Process A:
Getting parts
Process B:
Writing work
orders
Power Plant
BA 553: Business Process Management

9. Process output measures
Outage Maintenance Example: Connecting Process and Performance Measures (Cont’d.)
Planning and
doing outage
maintenance
In-process measures
Number of
work orders
generated
during
outage
Input
measures
just before
Performance measures
Forced outage rate
Capital budget
Availability
O&M budget
Other budget
Process output measures
Work orders
Equipment working
Actual schedule
Actual costs
Amount of equipment fixed
Amount of equip. fixed/replaced that could have been avoided by early detection
Time length of outage
Cost of expedited parts
O/T costs
Cost of extra contractors/expedited contractors
Run the
units
Manage
the budget
Power Plant
Power
Expenses
BA 553: Business Process Management

10. Daily Maintenance Example: Connecting Process and Performance Measures
In-process measures
Wait time for parts
Number of times parts not available when needed
Input
measures
Number of parts of various types in warehouse
Correct min/max for parts in material management system
Performance measures
Forced outage rate
Availability
O&M budget
Process output measures
Work orders
Equipment working
Maintenance costs
Work orders signed off
Amount of equipment fixed
Number of work orders signed off
Cost of expedited parts
Overtime costs
Run the
units
Manage
the budget
Power Plant
Power
Expenses
Parts
Equip.
history
BA 553: Business Process Management

11. Example: Linking Process Measures to KPIs
Input
In-process
Output
BSC measures
Number of parts of various types in warehouse
Wait time for parts
Amount of equipment fixed
Forced outage rate (EFOR), availability
Overtime expense
O&M (non-Capital) budget
Correct min/max for parts in material management system
Number of times parts are not available when needed
Cost of expedited parts
BA 553: Business Process Management

12. Process and Performance Measures Template
Process Measures KPIs
Input measures In-process measures Output measures Perform. measures
BA 553: Business Process Management