Jeff Zwier presents best practices for developing metrics for financial shared services. He discusses defining objectives and audiences, focusing on the basics, and designing metrics around clearly defined inputs, outputs, and impacts. Zwier recommends dashboards for executive reporting, scorecards to guide operations, and reports for tactical analysis. Metrics should be based on consistent data, inexpensive to collect, quantitative, and drive actions to change behavior.

1. Developing Metrics for Financial
Shared Services:
Best Practices, Tips and Traps
Jeff Zwier
Manager IS Communications,
Team Lead CISO Audit & Metrics Analysis
ABN AMRO Services IT
Presented at:
IQPC / Finance IQ Shared Services for Finance and Accounting Conference
The Driskill Hotel, Austin, TX
June 23-25, 2007

2. Metrics for Shared Services Jeff Zwier 2
Presentation at a Glance
• Some Definitions
• Before you Begin
• Getting Started
• Designing your Metrics
• Visualization & Presentation
• Resources

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Some Definitions
• What is a ‘Metric?’
• Why do we use metrics?

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Metrics Design:
Before you Begin
• As financial professionals, we
are expected to take a
thorough, analytical approach
to our work.
• Depending upon your
audience and objectives, this
expectation can lead to
somewhat less than ideal
results.

5. Metrics for Shared Services Jeff Zwier 5
Incredibly detailed, unfocused
reporting
Most of your stakeholders don’t care about
the details of your operations!
A cautionary tale. . .

6. Metrics for Shared Services Jeff Zwier 6
Metrics Design:
Before you Begin (2)
To avoid the trap:
• Set your reporting objectives
• Focus on the basics
• Define your audience
• Start a dialog

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Getting the Right Response:
Reporting Objectives and Types of Metrics
Metrics can be used for. . .
• Executive Reporting
– steer enterprise-level decision making, direct investment and
demonstrate value
• Strategic Reporting
– provide a “reality check” for your shared services on whether it is
really delivering its intended value
• Operational Reporting
– measure the performance of your staff when executing key
operational processes
• Tactical Reporting
– create a snapshot of performance for use in special projects

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Focusing on the Basics
• Good metrics are:
– Based upon consistent, measurable data
– Inexpensive (in terms of time and money)
to collect
– Expressed in unambiguous, quantitative
terms that are objectively defined
– “Actionable” – there are no ‘FYI’ metrics!

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Defining your Audience:
Questions to Ask
• Who wants to know?
• What do they want to know?
• How often do they need to
know?
• Why do they want to know it?
• What channel is the most
effective way to reach your
audience?
• What will they do with your
information?
• What behavioral change(s) do
you expect as a result?

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They Don’t Know What they Want, so I
Have to Give them Everything
There’s always a way to find out more about what your internal or external stakeholders
really need. Ask your internal communications or training department to help you create
a survey of potential recipients for your report.
Creating good metrics is a collaborative process – if you don’t already have a good rapport
with your customers or managers, your metrics development will be a struggle.

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Ways to Start a Dialog with your
Reporting Audience
• Focus groups
• Performance objective setting / SLAs
• Budgeting
• Surveys
• User communities / forums
• Reactions to industry benchmarks or
commonly referenced research
• Account managers / client
engagement professionals

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Designing Your Metrics:
Best Practices
• Guiding principles that will help you create the
right metrics for the right objectives:
– Focus on information, not data
– Isolate processes to select the right level of
analysis for your metric
– Resist the temptation select metrics based upon
business intelligence tooling requirements or
‘instant dashboard’ solutions
– Select metrics that have clearly defined inputs,
outputs and impacts
– Set rating criteria based upon the impact of a
metric hitting a certain value, not historic trends

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Data versus Information
• Data
– The operational details that
collectively describe the
activities of your service.
• Information
– Metrics that describe the data
you have available with the
context necessary to make
good decisions about what
your service has been doing.

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In Other Words. . .
• Remember:
ACTIVITY
Does not
equal
ACHIEVEMENT

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Isolate your Process to Find
the Right Metrics
• Measure within processes to avoid mixing
levels of detail or introducing intervening
variables.
– Avoid metrics that draw data from across
processes unless you are creating
executive reporting.
– Is there a single cause of a metric’s value moving
in a positive or negative direction?

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Avoid Tool-specific Metrics
• Would you change the planned layout of your
home in order to take advantage of using a
particular hammer?

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Inputs, Outputs and Impacts:
Use “IOI” for Higher ROI
• Inputs
– Clearly defined, objective and stable – both over
time and across actors
• Outputs
– Predictable based upon variations of inputs plus
the environment in general
• Impacts
– What real change happens to the business (the
bottom line, availability, or other factors) when the
value of a metric moves?

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Setting Rating Criteria
• Popular Rating Schemes
– Red/Amber/Green
– Report Cards
• (A, B, C, D, F)
– Percentage of Perfection
• (0-100%)
• How do you determine
your rating thresholds?

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Setting Rating Criteria (2)
• History is not often a good
baseline for future
performance measurement
• Look for objective impacts in
order to determine what “red”
or “green” status should be
• Stay quantitative
– Presence or absence
– Volumes, variable costs
– Losses, gains, rejections
"History is more or less bunk. It's tradition. We don't want tradition. We want to live in the present, and
the only history that is worth a tinker's damn is the history that we make today."
(Henry Ford, quoted in the Chicago Tribune, 1916).
TRAP: Don’t use history to set
the standard for future
performance

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Visualization and Presentation
• Dashboards
– One to three pages of discrete, clearly defined
indicators.
• Scorecards
– Balanced Scorecard summaries across defined
performance dimensions.
• Reports
– Operational detail designed for comprehensive
views of service data.

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Dashboards
• Dashboards provide indicators,
gauges and simple charts to help
senior leaders make strategic
decisions
– Design principle: Simple
is better!
• Use your car as a model
– Make most critical information most
prominent
– Many good (and exceptionally
bad) examples to choose
from online
– Can often be automatically
generated from business intelligence
tool platforms.

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A Typical Corporate Services
Dashboard

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What your COO Would Like to See

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Dashboard Examples

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The Balanced Scorecard
• Completely focused on
outcomes (or as Jeff says,
impacts)
• Management system with
integrated measurement
• A fundamental change in
operational management
approach
– Far beyond simply defining
your measurement scheme
– Not for the faint of heart
• Provides highly effective
feedback loop when designed
correctly
Source: © 1998 Balanced Scorecard Institute www.balancedscorecard.org
Used with permission.

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Traditional Reports
• Helpful for tactical reporting,
operational effectiveness analysis
• Not the best solution for
changing behavior
• Common reporting traps
– ‘Executive Summary’
– Often mistaken for service
marketing tools
– Data density
– Jargon
– Produced by subject matter
experts, rather than
communicators

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Using Dashboards, Scorecards
and Reports
If you want to. . . Then consider. . .
…steer enterprise-level or CXO
decision making, direct
investment, or generally
demonstrate value
…executive communication tools
such as dashboards, monthly
update presentations.
…provide a ‘reality check’ for
your shared service management
team to guide efficient and
effective operations
…balanced scorecard, guiding
principle tables, operational
process descriptions with
progress indicators.
…create a snapshot of
performance for use in projects
or long term analytics
…traditional tactical or operations
reporting formats.

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Resources:
For More Information
• Dashboard Designs and Data Visualization
– The Dashboard Spy
• www.dashboardspy.com
– Instant Cognition Blog
• http://blog.instantcognition.com/category/visualization/
– Edward Tufte Q&A Forums
• http://www.edwardtufte.com/bboard/q-and-a?topic_id=1
• Reporting and Metrics
– Article on Reporting for Shared Services (Shared Services Network News)
• www.jeffzwier.com/articles
– Techweb article on KPI development
• http://www.intelligententerprise.com/showArticle.jhtml?articleID=51201364
• Balanced Scorecard
– What is the Balanced Scorecard?
• http://www.balancedscorecard.org/basics/bsc1.html

29. Developing Metrics for Financial
Shared Services:
Best Practices, Tips and Traps
Jeff Zwier
Manager IS Communications,
Team Lead CISO Audit & Metrics Analysis
ABN AMRO Services IT
Jeff Zwier
jeff@zwier.net
Jeff Zwier
jeff@zwier.net