Uploaded byHongming Hu,CFA FRM
Predictive Performance Management Solutionv.pdf
The document discusses an evolution in performance management systems from PM 1.0 to PM 2.0. PM 2.0 utilizes predictive analytics and a multidimensional database to provide four types of intelligence - financial, operational, customer, and people. This closed-loop system allows organizations to develop strategies, plan operations, monitor and learn from results, and ensure alignment across the organization for improved performance. Key aspects include a balanced scorecard with rolling KPIs, actionable insights from predictive models, reliable dynamic forecasting, and expense management to improve profitability. Lastly, it discusses using customer intelligence for life cycle management from prospects to former customers.
Predictive Performance Management Solutionv.pdf
- 1. Predictive Performance ManagementSystem(PM 2.0) Balanced Scorecard Vision Mission Value Strategy Financial Intelligence People Budgeting Customer intelligence Forecasting Intelligence Consolidation Activity based Management Process Sales Purchase MFG Intelligence Predictive Analytic Platform+Multi Dimension Database Platform © 2011 All rights reserved 4
- 2. Evolution of PerformanceManagement Predictive PM 1.0 PM 2.0 Analytic Financial Operational Intelligence PM 2.0 Intelligence Process Customer People intelligence intelligence intelligence © 2011 All rights reserved 5
- 3. Closed Loop PerformanceManagement Develop the strategy Plan the strategy • Mission,values,vision • Strategy map/themes • Strategic analysis • Measures/Targets • Strategy formulatoin • Initiatives portfolios • Funding/STRATEX Strategy Plan Test and Adapt Performance Measure • Strategy map Align the Organization • Profitability analysis • Balanced Scorecard • Strategy correlations • STRATEX • Business units • Emerging Strategies • Support units • Employees Performance Results Measure Operating Plan • Dashboards Monitor and Learn • Sales forecast Plan operations • Resource requirement • Strategy reviews • Budgets • Key process improvement • Operating reviews • Sales planning Results • Resource capacity plan • Budgeting Execution Process Initiatives Source: Robert S. Kaplan ,Execution Premium © 2011 All rights reserved 6
- 4. Balanced Scorecard -Rolling View KPI • Relative KPI • Reliable Key Leading Indicator(KLI) • Rolling view looking forward Visual • Sparkline to show trend • Red Traffic light to focus © 2011 All rights reserved 7
- 5. Balanced Scorecard -Actionable Data From Predictive Model Actionable Data • Link From Summary data to detail actionable top 20 possible to churn important client Predictive Model • Actionable data come from reliable predictive model © 2011 All rights reserved 8
- 6. Reliable Dynamic RollingForecast Let’s focus on the most import number to forecast: Sales Biased Sandbagged Judgment Predictive Model Reliable Trustable Judgment © 2011 All rights reserved 9
- 7. Expense Management –Avoid budget dilemma We should spend up Budget Item Target to 21,999 before Marketing 22,000 year end, otherwise next year9 Expense How can we improve Budget Item Target campaign profitability, can Revenue >=5.3 response model help? /Marketing Expense Predictive Relative KPI Model © 2011 All rights reserved 10
- 8. Customer Intelligence: LifeCycle Customer Value Management Established Former Prospect Responder Customer Customer High Value Voluntary Churn Target New High Responder Market Customer Potential Forced Low Churn Value Source: Michael J. A. Berry, Mastering Data Mining: The Art and Science of Customer Relationship Management © 2011 All rights reserved 11