Housing Technology Performance Management Articles - Richard Bayley and Chris Coan
20 | housing technology | performance management www.housing-technology.com Business coordination with performance management Richard Bayley, research & planning director, Places for People If anyone thinks that the future housing business will be unaffected by Customer service sits over and above these performance responses, structural changes in the economy and government policy then they not least because customer retention reduces the void turnover costs are strongly advised to think again. Yes, there is and will continue to be incurred when people move on but also because it is a good measure strong demand for housing, but anaemic economic growth means that of reputation for other stakeholders such as investors and regulators. the government deficit is not reducing as quickly as planned and financial Core business applications institutions face a new wave of problems, even if a sustainable solution is So how can performance management systems (PMS) help with found for the Eurozone. dealing with these issues? Essentially, the PMS strategy should Historically, the housing sector’s response in times of recession is be to interact with and interrogate the plethora of core business to increase the amount of rental properties on offer and keep the applications and databases. rent increases at or slightly higher than RPI (retail price inflation). In order to succeed, the PMS will increasingly need to integrate with This time it is slightly different. A combination of more restricted the core business applications as follows: commercial lending by banks together with pressure on disposable • Housing systems – more analysis of customer profile information for incomes will mean that housing providers will have to manage their targeted action plans to reduce arrears and void turnovers; businesses more efficiently. • Maintenance systems – greater focus on forward planning for non- Business influences emergency responsive repairs in order to save procurement and So what does this mean for the way housing providers are managed? travel costs; In practical terms, it means that there needs to be greater focus • Mobile working – more use of tablet PCs for inputting and reporting on monitoring business performance to ensure that year-on-year housing and repairs information; efficiency improvements are achieved. The table below outlines some • Asset systems – more analysis of the profit and asset values from performance risks facing housing providers together with some implementing planned and major repair programmes; potential responses. • Finance and risk systems – greater focus on predicting the benefits of taking proposed actions from financial and risk perspectives. Performance risks Performance responses In fact by integrating in these ways, the PMS provides enables a Higher arrears due to reductions in Cash management balanced scorecard approach by delivering overall coordination from government benefit payments top to bottom and across the different aspects and geographies of the business, such as down to neighbourhood level. Higher arrears due to lower growth in Cash management Quantitative & qualitative benefits real disposable incomes for non-benefit Historically, the value of a PMS in the housing sector has tended to be payment customers assessed in regulatory terms and not necessarily in overall business Tighter corporate/mortgage lending Profit margins terms. Companies have often relied on pre-configured reporting from pushing up real interest costs core business applications which not only then required manual intervention to produce management information but also often Higher growth in maintenance costs Profit margins only looked at one element of the business, thus reinforcing a silo due to increased costs of materials approach. In future, difficult choices need to be made about the allocation of Lower growth in house price inflation Asset management scarce resources when housing providers develop their business plans. The quantitative value of a good PMS is therefore not just about achieving improvements in cash management (arrears), profit Little or no future government grant Asset management margins (bad debts, void turnover, management and maintenance savings) and asset management (leveraging value from existing properties). The PMS should also be capable of providing overall coordination by monitoring the execution of the business plan together with identifying the financial and risk implications of having Let’s look in a little more detail at the performance responses in the to vary the plan during the year. Qualitative value will also then be table above: enhanced by increasing brand reputation with key stakeholders such • Cash management – arrears is the obvious performance issue, not as lenders, customers and regulators. least because good income management reduces need for housing providers to borrow more from the banks; Summary • Profit margins – tighter management of specific geographic areas The future economic and political risks facing the housing sector will allow housing providers to make cost savings in maintenance mean that it needs to focus more than ever on improving performance and management (such as staff, office space and void turnover); levels. This can only be achieved through the implementation of • Asset management – targeted investments to maintain or increase effective performance management strategies and technologies which the value of existing properties will allow housing providers to either are commonplace in other business sectors. leverage future capital receipts or increase their borrowing capability. Richard Bayley is research & planning director at Places for People.
22 | housing technology | performance management www.housing-technology.com Performance management – Delivering a single version of the truth Chris Coan, managing director, Visualmetrics Housing Technology recently interviewed Chris both operational and executive insight into What are the qualitative benefits of a Coan, managing director of Visualmetrics, core processes around housing operations, performance management system? on what drives the adoption of performance developments and repairs processes as well While a quantitative business case should management systems, the tangible and as finance and cashflow management. support the decision to invest in enhanced intangible benefits of doing so, and how to performance management, many of the A pertinent example would be the changes integrate your performance management benefits of doing so cannot be measured in the housing benefits ceiling, where the system with other core business applications. individually. Instead, cross-sector reference need to monitor and manage tenant arrears data for these combined qualitative benefits will become acute in certain areas. Only by What are the business influences behind provides assurance of their business benefits. having the information to quickly respond the adoption of a performance management to arrear trends, will housing providers be • Executive benefits include: enhanced system? able to minimise the financial impact these tenancy engagement, streamlined and The drivers for enhancing performance changes could bring. automated performance management management fall into four categories. First, processes, increased staff motivation, we have executive drivers, key among which Operational and functional drivers assurance of regulatory compliance for are tenancy engagement, government and (information aggregation, user self-service, inspection, and alignment of strategic regulatory compliance, executive command time-based analysis, financial comparatives, goals with operational measures, metrics and control, monitoring finance and budgets, drill to detail, etc) and technical drivers and reporting; and delivering a single KPI-based view of (data integrity, integration, automation, • Operational benefits include: time-based performance linked to strategic objectives. traceability and security) are the final two analysis and trending, comparatives of areas that influence the need to enhance While regulatory compliance and government plan versus actual, multi-dimensional performance management. It is the lack of initiatives do not dictate how a housing analysis, real-time information alerting, operational and functional capabilities, or provider should measure business mobile device deployment, user self- the technical configuration of the current performance, they inevitably influence service, and drill to detail. system, to deliver against either executive or strategic goals at an executive level. These • Technical benefits include: enhanced business area drivers that result in the need must be cascaded down to operations and data integrity, integration, automation, to enhance reporting systems. a best-practice performance management auditability, traceability and security – system must flex and grow to support What are the quantitative benefits of a some of which are becoming quantitatively them. The Affordable Housing Development performance management system? measurable as companies begin to initiative will create a need for companies Alongside the cost savings arising from understand better the value of information to deliver insight from the top (executive) to information automation, the increased as a business asset. the bottom (operational) of how long-term opportunity for cost of service delivery What should potential buyers of a capital developments are performing. optimisation completes the quantitative performance management system look business case. Equally, the change in regulatory compliance for, in terms of functionality and corporate metrics that follows the disbanding and The focus has to be driven from improving credentials? replacement of the Audit Commission and income from assets while effectively Above all else, a proposed partner for the TSA could be weighted to place particular controlling expenditure. Key areas for delivery of a performance management emphasis on any key area of operations to analysing returns include voids and arrears solution must understand the customer’s ensure cost-effective service delivery. In turn, reduction, enhanced efficiency in all aspects exact requirements. No two companies are this will affect a company’s ability to ensure of the repairs process, better control of the same, and it is only through consultation operational reporting and executive strategy income and expenditure, ensuring more and project scoping that a solution can are aligned, if the system they currently use effective capital and revenue expenditure, be delivered that ensures it addresses a cannot adapt. driving increased reserves/surplus, and customer’s specific challenges. where appropriate, better insight and control As many organisations in the housing A performance management system must of financial management across the life-time sector look to consolidate or merge to have the design flexibility and scalability of commercial developments. deliver more cost-effective services, the to change as the business evolves through challenge of delivering a single view of group Creating a mutually-agreed RoI model organic, acquisitive or external forces, such performance – from operational to executive between the supplier and the customer as the affordable rent or the (planned) levels and from multiple people, processes ensures that the performance management option-to-buy initiatives. Other requirements and technologies, and leverage combined system not only delivers against the include sector knowledge, a proven approach data assets – often drives a requirement to functional and technical requirements, but to designing and delivering performance enhance performance management. also that business adoption is properly management projects, and a technical promoted to support and drive business knowledge of operational applications and The second key area is the greater need for change, thereby ensuring the financial associated software tools. performance management systems to deliver benefits are fully realised. Continued on the next page
housing technology | performance management | 23Performance management – Finally, the vendor must have the philosophy company’s business performance state to to engage in a partnership that is flexible complement and overlay with the operationalDelivering a single version of enough to cope with changing business applications. By drawing data from thethe truth demands over time. housing, financial, asset management and other operational applications, it providesContinued from previous page How does performance management fit an ‘information viewfinder’, giving business within the pantheon of ‘core’ businessWhile technology should always remain a users an intuitive and understandable way of applications?secondary concern to fulfilling the business monitoring performance metrics in line with Every company analyses its performance;requirements, a partner with the ability the executive strategy and to streamline and it is already a core activity. How well itto exploit current technology investments enhance performance. does so, whether it’s through anecdotaland deliver a system using whichever manual information or a best-practice Best-practice performance managementsoftware technology fits best, whether it’s performance management system, will must support the information demandsSAP BusinessObjects, IBM Cognos, Oracle determine its success. of all user communities; the better aor Microsoft, will maximise the business company exploits its data assets and feedsbenefits and mitigate the risks. Best-practice performance management information to its employees, the more cost provides a summarised KPI view of a efficient its services can become.
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