1. NH Hotels Milanofiori, Assago (MI) - 18 Oct. 13
"How to find the appropriate set of KPI’s to support
Management in Decision Making: An Integrated Approach"
Marco Cossutta, Partner
Reply Consulting

2. Agenda
 Objectives & Components of Management Control System
 An Integrated Approach for Management Control System Enhancement
 From Strategic Objectives to Planning & Control Model
 Strategy to Measures Footsteps
 Conclusions
2
© International Institute of Business Analysis

3. Objectives & Components of
Management Control System
Management Control System should allow a better understanding and monitoring of
performance, risks detection and prevention and the alignment of people behavior to
strategic objectives of the Company.
Management Control System is based on two complementary elements:
 The Control Objects (“What should be controlled?”)
 the Control Tools (“How to control them?”)
Control Tools
Control Objects
Key
Performance
Indicators (KPI)
Analisys
Dimensions
Timing and
key addressee
Organization &
Processes
Incentive System
Accounting
Tools & Policies
Information
System

4. Enterprise Value Management
Reply Consulting Support
Starting from the strategic vision defined by the Company, Reply Consulting offers an external
point of view to support the full roll out of the plans and to support the alignment of
objectives, activities and performance management system.
Reply Consulting has designed a new methodology to evaluate:
•
the completeness of the strategy defined,
•
the alignment of the operational targets to the strategic directions,
•
the completeness of the activities to achieve the targets,
•
the adequacy and reliability of measurement and monitoring tools.
The Strategy Matrix is a tool enhabling an integrated and comprehensive assessment of :
•
The Value Levers,
•
The critical processes,
•
The performance measures (KPIs)
•
The potential enhancements required

5. An Integrated Approach for
Management Control System enhancement

6. FROM STRATEGY TO CONTROL OBJECTS:
STRATEGY TO MEASURES

7. From Strategic Objectives
to Planning & Control Model

8. Strategy to Measures
Footsteps
PERFORMANCE
MANAGEMENT
Defines “How to control them?” (the Control Tools) and are represented by:
Organization & Processes, Accounting Tools & Policies, Information System
CONTROL
TOOLS
Defines “What should be controlled?” (The Control Objects) and are represented by:
Key Performance Indicators (KPI), Analisys Dimensions, Timing & Key Addressee
Represents the translation of strategic guidelines into expected long-term objectives
STRATEGIC
OBJECTIVES
Represents the levers for overcoming barriers for change and promote
strategic guidelines throughout the organization
Communication
KEY
ACTIONS
Training
Defines the action plan to be adopted to succeed in strategy implementation
Rewards
CRITICAL
PROCESSES
Benchmarking
Identify the key processes that enable strategic objectives overcome
STRATEGY
Mission
Vision
Values
CONTINUOUS IMPROVMENT
CONTROL
OBJECTS

9. Enterprise Value Management
Strategy Matrix 1/7
VALUE DRIVERS
KPI
Volumes
REVENUE
INCREASE
PROCESSES
P.01 - UNDERSTAND MARKETS & CUSTOMERS
Key Performance
Indicators
Pricing
P.02 - STRATEGIC PLANNING
P.03 - DESIGN PRODUCTS & SERVICES
P.04 - MARKET & SELL
Commercial,
Technical &
General Costs
P.06 - PRODUCE & DELIVER PRODUCTS /SERVICES
Cost of Goods Sold
P.07 - AFTER SALES
P.08 - DEVELOP & MANAGE HUMAN RESOURCES
Receivables &
Payables
External Factors
and Competitive
Environment
P.11 - REGULATORY & COMPLIANCE
ASSET OPTIMIZATION
CORPORATE
OUTLOOK
Company
Strengths
MARGIN PROFITABILITY
ENHANCEMENT
Tangibles and
Intangibles
P.09 - INFORMATION & COMMUNICATION TECH
P.10 - MANAGE FINANCIAL & PHYSICAL RESOURCE
Inventory
REVENUE INCREASE
ASSETS
OPTIMIZATION
KPI
CORPORATE OUTLOOK
PROFITABILITY
ENHANCEMENT
P.05 - PROCUREMENT
P.12 - MANAGE EXTERNAL RELATIONSHIPS
P.13 - MANAGE IMPROVEMENT & CHANGE
TACTICAL VALUE LEVERS
1. Develop
new
patterns
2. Enhance
incremental
changes

10. Enterprise Value Management
Strategy Matrix – Value Drivers
Value Drivers
2/7
Value Levers
Acquire New
Customers
Marketing & Sales
Product & Service
Innovation
Account
Management
Revenue
Increase
Volumes
Retain and
Enhance Existing
Customers
Cross-Sell & UpSell
Retention
Leverage
Differentiating
Assets
Pricing
Strengthen Pricing
Cash/ Asset
Management
Demand & Supply
Management
Price List
Optimization
KPI

11. Enterprise Value Management
Strategy Matrix – Tactical Value Levers
3/7
The Tactical Value Levers represent the full set of interventions to reach the targets defined by the
Top Management. They could introduce new rules, processes and organizational changes – Develop
New Patterns – or improve existing processes and/or activities – Enhance Incremental Changes.
The below example is related to
Retain and Enhance Existing Customers - Cross-Sell & Up-Sell :
Develop New Patterns
Enhance Incremental
Changes
Increase focus on high value/ high potential
customer
Improve total customer experience
(purchasing, fulfillment, usage, service…)
Increase focus on most profitable products
and services
Improve brand strength and goodwill
Increase focus on most effective sales and
advertising channels
Improve cross-sell/up-sell skill for staff
Increase focus on expansion of customer
relationship
Improve staff incentives for crossselling/up-selling
…
…

12. Enterprise Value Management
Strategy Matrix – Processes 4/7
The Value Chain summarizes all the activities performed in the Company to design, develop, produce,
sell and ship the products . All the activities are classified in two main clusters:
• Operations, including all ‘value creating’ areas to produce, sell and deliver the product to the final
customer, and to offer post sales assistance
SUPPORT PROCESSES
OPERATIONS
• Support & Overheads, including all other supporting areas to operations
P.01
UNDERSTAND
MARKETS &
CUSTOMERS
P.02
STRATEGIC
PLANNING
P.03
DESIGN
PRODUCTS &
SERVICES
P.04
MARKET &
SELL
P.08 - DEVELOP AND MANAGE HUMAN RESOURCES
P.09 - INFORMATION AND COMMUNICATION TECNOLOGIES
P.10 - MANAGE FINANCIAL AND PHYSICAL RESOURCES
P.11 - REGULATORY AND COMPLIANCE
P.12 - MANAGE EXTERNAL RELATIONSHIPS
P.13 - MANAGE IMPROVEMENT AND CHANGE
P.05
PROCUREMENT
P.06
PRODUCE &
DELIVER
PRODUCTS AND
SERVICES
P.07
AFTER SALES

13. Enterprise Value Management
Strategy Matrix – Sub Processes
P.02 - STRATEGIC PLANNING
P.02.1 - Design the organizational
structure and relationships
between units
P.02.2 - Develop budgets
P.02.3 - Business planning and
simulating
P.02.4 - Business development and
corporate performance
monitoring
5/7
P.03 - DESIGN PRODUCTS & SERVICES
P.03.1 – Identify opportunities for
new products and services
P.03.2 - Product costing
P.03.3 - Develop new products
/services concept and plans
P.04 - MARKET & SELL
P.04.1 - Bring the new products and
services to market
P.04.2 - Brand management
P.04.3 - Advertising and promotion
P.04.4 - Customer acquisition
P.03.4 - R&D portfolio planning and
management
P.04.5 - Develop pricing strategy
P.03.5 - Product management
P.04.6 - Sell products and services
P.08 - DEVELOP AND
MANAGE HUMAN
RESOURCES
P.08.1 - Develop and manage base
and variable compensation
P.08.2 - Recruit, select and hire
employees
P.08.3 - Manage deployment of
personnel and teams
P.08.4 - Develop and train
employees
P.08.5 - Time & attendance
P.08.6 - Process payroll
P.04.7 - Channel execution
P.04.8 - Sales force management
P.04.9 - Store management
P.04.10 - Customer relationship mgt.
P.04.11 - Billing

14. Enterprise Value Management
Strategy Matrix – KPI Definition
6/7
The KPI Library is a database of more than 700 indicators of cost, quality and time, each linked to the
related Value Chain processes. Below an example (related to process P.04 Market & Sell):
• KPI Cost-based – summarizing the financial performance
• KPI Quality-based – aiming at evaluating how much the goods/services fit customers’ needs
• KPI Time-based - measuring the quickness of responsed and flexibility to external factors

15. Strategy to Measures –
Analisys Dimensions Definition
7/7
Following KPI definition an applicable set of Analisys Dimension will be identified for each of them. To any
combination of KPI-Analisys Dimension will be assigned addressee and timing (frequency & iteration).

16. Conclusions

17. An integrated approach
The Right Answer
Starting from the strategic vision defined by the Company, Reply Consulting offers a comprehensive
metodology (based on Business Analisys Techniques) for answering to the question:
"How to find the appropriate set of KPI’s to support Management in Decision Making”
Alternative access points

18. Reply Consulting support your Evolution….
Reply Consulting, once defined with the Management or recived from the Company the
Strategic Plan, is able to provide competencies, methodologies and tools for:
• evaluating coehrency, trustworthiness and financial sustainability of defined strategy,
• evaluating adequacy and reliability of the Management Control System (Organization,
Processes and Information System) in place,
• Defining and implementing the corrective actions related to:
ARTICOLAZIONE PIANO INDUSTRALE
DEFINIZIONE
OBIETTIVI
Cosa ottenere
VALIDAZIONE PIANO INDUSTRIALE
• Definizione Strategia
• Declinazione Intenzioni
Strategiche
• Articolazione delle Azioni Chiave
Verifica di:
• Coerenza
• Attendibilità
• Sostenibilità Finanziaria
o Organization:
functions;
DEFINIZIONE MODELLO DI BUSINESS
DEFINIZIONE
MISURATORI
Cosa misurare
ANALISI PROCESSI
• Mappatura Catena del Valore
• Individuazione e definizione di
Fattori Critici di Successo e Rischio
Individuazione e definizione dei
Processi e Sottoprocessi Critici
Definizione indicatori di prestazione
(KPI), dimensioni di analisi e delle
analisi di profittabilità
Verifica di:
• Adeguatezza (confronto KPI
disponibili vs/teorici)
• Affidabilità (analisi affidabilità KPI
disponibili)
Assessment
and
AFC
and
Internal
empowement;
Auditing
MBO
Plans
definition;...
o Processes: Definition and documentation of Policies and Procedures
• Valutazione dell’efficienza ed efficacia
dei processi da reingegnerizzare
rispetto alle best practice
• Formalizzazione procedure
• Compliance.....
VERIFICA ADEGUATEZZA E AFFIDABILITA’
Skill
of
MODELLO DI PIANIFICAZIONE E CONTROLLO
OTTIMIZZAZIONE PROCESSI
DEFINIZIONE
AZIONI
Cosa Fare
Re-organization
OTTIMIZZAZIONE ORGANIZZAZIONE
• Revisione organizzazione
• Definizione piano di incentivazione
per il Management coerente con
gli obiettivi definiti nella strategia
formulata......
OTTIMIZZAZIONE SISTEMI INFORMATIVI
ATTIVITA’ COMUNI A OGNI AZIENDA
ATTIVITA’ MANDATORIE PER QUOTANDE
MA ESSENZIALI PER OGNI AZIENDA
Introduzione di sistemi di
pianificazione e reporting per l’analisi
dei dati ed una loro efficace fruizione
sia in sede di pianificazione sia in sede
di consuntivazione......
related to AFC, Internal Auditing and ICT functions; Re-design or
process improvment; 231 and 262 Compliance;...
o Information
System
(Information
System
Planning;
Software
Selection, Design and Implementation of Planning & Reporting
Systems; ERP Control Model Adjustment; Datawarehousing & EAI;...

19. Q&A

20. Thank you
Marco Cossutta, Partner
m.cossutta@reply.it
Reply Consulting