As myDIALS continues to work with more clients across more industries, I am learning more about the commonalities and the variances among these vertical industries.  Over the course of a number of upcoming blogs I’ll share what I’m seeing in terms of improvement methodologies and the associated Key Performance Indicators (KPIs) and Key Performance Drivers (KPDs) that are used to track performance within various industries.

I am fascinated by the amount of commonality we are seeing when dealing with clients and partners across multiple industries.  In general we see an adoption of three aspects with respect to operational performance:

• A movement towards value stream management rather than traditional functional management;
• The use of “lean” measures and measuring performance drivers rather than the outcomes; and
• Continuous performance improvement rather than project-based or sporadic performance improvement initiatives.

 Not all companies are moving with equal speed in the above three dimensions, and in most companies we see a mix of traditional approaches as well as aspects of continuous, lean, value stream management.   When it comes to value stream management there is obviously an amount of variance between industries when you look at the specifics of the processes and KPIs / KPDs that should be measured. 

However, there are a number of similarities across industries.  For example the following value stream segments apply to most companies:

• Customer acquisition;
• Order to fulfillment / delivery of product or service;
• Invoice to cash collection;
• Procurement of supplies, services, parts, components or finished goods;
• Concept to launch of a new product or service.

 In addition to the above, certain industries will have specific value stream segments such as:

• Manufacturing of finished goods;
• Clinical trials and data analysis (This could be considered part of “Concept to launch” but is specialized enough to warrant its own segment).

 In most cases there will also be more horizontal operational performance aspects that require monitoring such as:

• Safety and environmental incidents;
• Employee satisfaction, skills and turnover.

In a series of upcoming blogs, I will take a specific industry, map out the relevant value stream segments and then outline how KPIs and KPDs can be used to understand performance and identify the cause of performance issues and associated opportunity areas for improvement. 

There seems to be increasing noise about the need for more transparency in healthcare and the expected associated performance improvements in terms of outcomes, quality, costs and patient satisfaction.   A recent PWC report “you get what you pay for” was summarized in a recent Healthcare IT News article.  Two points that stood out for me were the statements that: “Better informed patients ranked highest as a way to better manage demand”; and “To better reward quality, quality information must be gathered, measured and acted on”.

This concept was taken further by a Hospital Impact blog which opened with: “Transparency in healthcare will facilitate the improvement of performance and quality by providing hospitals and physicians with the additional information necessary for benchmarking their work.”  I also liked the comment made by a person from Maverick Healthcare Consulting advocating the measurement of cost and quality metrics and the comparison to best practices.

I find it fascinating that among the 18 major countries in the PWC report, the US has the highest per capita spending on healthcare, while the life expectancy is the lowest.  A number of the countries with the highest life expectancy are spending less than half the amount of the US on a per capita basis!  Of course this isn’t entirely related to the effectiveness of US hospitals, but there seems to be ample room for improvement.

At myDIALS, we are working with a number of healthcare centers and consultants and we are seeing a positive shift to a desire for better availability of relevant, timely performance metrics to support improvement initiatives and better operational decisions.   This is a necessary first step in terms of transparency: first ensure internal decision makers have actionable operational information; second compare internal measures to industry best practices; and third expose the relevant quality, cost and outcome metrics to patients.

The old adage of “what gets measured gets managed” would take effect and we should all benefit from the corresponding performance, quality and cost improvements.    

I checked out the “business intelligence for business people” blog over the weekend and found several interesting posts which really resonated with me.  Although each addressed different aspects there was a consistent theme that a significant shift was required for BI solutions.  “I’d rather be wrong” addresses decision makers’ desire for metrics even if the numbers may be suspect; “BI costs Fortune 500 millions” suggests that based on survey results, decision makers are not getting sufficient value from BI reporting and a paradigm shift is required; and “BI has it all wrong” referenced an article by Tom  Gonzalez in which he points to problems with existing BI approaches and suggests that interactive dashboards are the first step in the next phase of BI.

I agree that a fundamental shift is required for BI to deliver as an effective decision making tool that can help improve operational results.  I also strongly agree that interactive dashboards are an excellent starting point for taking BI into the operational intelligence arena.  However, I think there are some other fundamental requirements to transform BI from an expensive, time-consuming, specialist-only tool to something that is useful to all decision makers.

My list of required capabilities for true operational intelligence includes the following:

• A very intuitive, interactive user interface suitable for decision makers (directly monitor relevant performance metrics);
• The ability to combine operational, production and business metrics in “right time” (identify the optimal time granularity of each metric);
• The ability to continuously improve the quality of the underlying data (don’t wait until it’s 100% perfect);
• The ability to embed knowledge regarding metrics, KPI calculations, alert conditions, and guided diagnosis (share best practices);
• The ability to capture changes and events that could or do impact performance (extend the captured knowledge);
• The ability to trigger sophisticated alerts (manage by exception);
• The ability to trigger predictive performance alerts (manage more proactively) ;
• The ability to perform interactive scenario analysis (identify cause and effect); and
• The ability to assign actions and monitor the effectiveness of those actions (close the loop).

Combine the above with the cost-effectiveness and speed to value of a SaaS offering and I think we can shake up the BI world.  I’m betting on it!

It seems multiple analyst firms are taking a fresh look at the relevance of IT, as outlined in the Ventana Research blog I discussed in May.  This week a DM Review Special Report quoted Gartner Group as predicting that IT’s role in BI would be marginalized due to emerging technologies that make it easier to build and consume analytic applications. 

I agree that emerging technologies from innovative companies are providing new capabilities for users – at myDIALS we are combining all aspects mentioned in DM Review article (interactive visualization, in-memory analytics, some aspects of search, SaaS and SOA) - but I continue to believe that rather than being marginalized, IT’s role evolves to provide a different but still important emphasis.

As I outlined in a previous post I think the new role for IT revolves around ensuring the consistency, quality and accessibility of corporate data.  This is a core business requirement and absolutely fundamental to any successful BI or operations performance management initiative.  If IT outsources, brokers and project manages new capabilities to provide users with more autonomy and flexibility in how they view and analyze data, IT can better satisfy business demand for more timely, relevant information and at the same time remain involved in the process.  This also frees up IT resources to focus on their core role as corporate data managers.

One aspect of corporate data management that many IT departments have yet to tackle is that corporate data consists of more than financial, sales and marketing data held within the enterprise.  Other data such as operational data in the form of process information resident in control systems and historians, partner data from the supply and delivery chains and other external data such as industry standards, benchmarks and census data are all valuable and relevant for effective business decision making.  By encouraging the business to adopt self-service capabilities for data visualization and analysis, IT can gain the credibility and support to tackle corporate data management in its broader sense.

It certainly is a brave new world, and emerging technologies should not be seen as a threat, but rather as an enabler for a more focused, strategically important role for IT.

Recently we’ve seen a lot of interest within medical facilities for better visibility and analysis of operational metrics around patient care and outcomes; procedures performed; utilization of beds, operating theatres, nursing staff and physicians; and safety incidents as well as financial metrics. 

There has also been quite an amount of press, consultant and even government attention focusing on greater  metric transparency for better decision making within facilities and even externally to patients and prospective patients.   An example is this article that appeared in the Wall Street Journal that discussed how even good hospitals can improve their outcomes by examining information associated with various procedures.   The Whitehouse even got into the act and called for more transparency of provider quality, outcomes and prices paid to help consumers make better healthcare purchasing choices.

Hospitals use real-time processes to accept, admit, diagnose, treat and release patients.  Along the way skilled professionals apply knowledge, fixed and mobile resources are utilized and materials, medicines and medical devices are used and consumed.  Analyzing the effectiveness of these processes in terms of outcomes, cost, efficiency and quality can help optimize healthcare services.  Performance improvement methodologies such as lean process, six sigma and theory of constraints are very applicable within the healthcare industry, provided the appropriate metrics are available to enable the underlying analysis.

At myDIALS we are working with several healthcare consulting firms to better understand and embed the most appropriate methodologies and best practices into a healthcare-specific offering.  We’re excited about the possibilities helping hospitals and other medical facilities become more efficient and achieve higher quality and more importantly, the delivery of better, more affordable care to patients.

Alison Smith had a very interesting article in Manufacturing Business Technology where she highlights the need for an Operations Warehouse containing Key Performance Drivers (KPDs) which in turn drive outcomes or Key Performance Indicators (KPIs).  This concept is central to the thinking that has gone into myDIALS where we believe the KPDs are most important and we need to relate KPDs to KPIs across value streams so we can show cause and effect.  While KPIs show the end results, KPDs provide actionable leading indicators that help focus initiatives to improve performance and hence results.

Taking this concept a little further, many of the most interesting KPDs live within partners in the supply chain and delivery chain and are outside the enterprise.  A company’s ability to manufacture and deliver on time with appropriate quality is dependant upon on-time delivery of quality raw materials and components from its vendors.  Similarly, leading indicators of demand reside within sales partners particularly within multi-tier distribution models.   Having visibility to these KPDs provides greater understanding and lead time to identify and address performance issues.

One of the best recent examples of the need for better visibility into partners within the supply chain is Boeing’s delayed 787 program.  At a recent summit, Tim Opitz, director of production operations and support & services for Boeing’s 787 program was asked to reveal the biggest lesson learned from the company’s push to bring the 787 to market.  Opitz said the collaboration driver has been key. “The single biggest thing we’re trying to figure out is how we do that integration” across the company and outside its walls. “They don’t naturally come together,” he said.

Providing timely visibility of relevant KPDs to all the decision makers across the supply chain delivers common understanding, encourages better collaboration, and supports value stream performance improvement.

It seems everyone is getting into the 2.0 “thing” and now Apple is releasing the iPhone 2.0.  I carry an iPhone as I like the interface and the ability to combine a phone, email, web browser, iPod, PDA and maps on one device.  The new iPhone enhances that further with push email, new applications and GPS so the maps and directions will be much more usable for the directionally challenged such as me.

I can demonstrate myDIALS on the iPhone today and now with the developer kit we can take that much further  - flipping through KPI dials, providing “tumbler” menus, zooming into additional detail and providing multiple views all sound pretty cool to me.   The issue for us as a young company is one of priorities and balancing resources to ensure we get maximum return on the development investments we make.

So my question is - will the iPhone 2.0 get sufficient business traction to make development in this area the right thing to do now?  Will business decision makers value the ability to quickly gain access to relevant Key Performance Indicators (KPIs) from their mobile device and will they appreciate an interface tuned to the iPhone rather than standard web browser navigation?  I’m interested in hearing comments and insights.

There seems to be a growing amount of discussion in the Blogosphere around BI 2.0, what it entails and the implications for traditional BI vendors. The catalyst for some of this discussion was an article on BI 2.0 by Neil Raden. This then resulted in a number of comments and posts such as this blog. While there is no definitive specification on what BI 2.0 encompasses there seems to be some common thoughts:

• Combining operational and business information;
• Making it available to larger numbers of decision makers;
• Using Web 2.0 technologies to provide better visualization and analytic capabilities and give more control directly to the user;
• Making information available on a more “real-time” basis;
• Integrating information from outside the corporation with internal information.

What’s exciting for me is that when we started myDIALS around two years ago we had all of the above as our objectives. We also specified an additional requirement that we felt was an important “game-changer”. This was the ability to embed vertical industry and business process or value stream expertise. Combining best practices with company-specific knowledge that evolves over time clearly supports Web 2.0 thinking and delivers tremendous value.

The combination of embedded knowledge and SaaS delivery results in very quick implementation and time to value. The embedded knowledge, best practices, and support for performance improvement methodologies ensure successful improvement initiatives and equally important, the sustainability of the improvement. This is the real promise of Operational BI/ Operational Performance Management, which can be realized with the new technologies.

I continue to see more discussions around the relationship between IT and the business particularly as it relates to BI, operational intelligence and decision support.

Ventana Research got my attention with their post “Why Business Should Be Mad as Hell at IT” – certainly an attention getter!  I have to agree that many businesses are dissatisfied with the support they are getting from IT, particularly with respect to putting timely, actionable information in the hands of decision makers.  IT is in a difficult place with limited budget available for new initiatives.  Both Ventana and Mike Beckerle’s recent article in DM Review propose that a solution to this dilemma is for the business to turn to SaaS-based offerings that can be quickly deployed with limited involvement from IT. 

To be successful, an operational intelligence initiative requires the following:

• A cost effective solution that delivers value quickly – inherent in the SaaS model; 
• Best practices that define metrics and Key Performance Indicators (KPIs) related to the various business process / value streams and tailor these for a particular vertical industry – knowledge can be embedded in the solution through partnerships with process and industry;
• Customer-specific expertise to further tailor the KPIs and related knowledge to support corporate strategy and goals – typically provided by internal business and process analysts;
• Secure, automated access to the relevant data sources from which the KPIs are calculated- the role of IT;
• An intuitive user interface to visualize and analyze the KPIs – a requirement of the software solution;
• Project management of the initiative implementation – planning, scheduling and coordinating the internal and external resources can be an additional value-add of the IT department.

The content and capability of SaaS offerings that address operational intelligence continue to evolve and IT’s role must evolve in parallel.  As the custodian of the data and the project manager / broker of required capabilities, IT can satisfy the business and deliver significant value while using limited resources.

I found this InformationWeek article by Mary Hayes Weier to be very interesting. In brief it suggests that the use of Web 2.0 technologies will reduce or eliminate IT involvement in creating analytic applications. This led me to think about the role of IT in a Web 2.0 world, particularly as it relates to BI. There have been a number of articles and blogs regarding the impact Web 2.0 will have on BI, BPM and CPM (Corporate Performance Management) dating back to 2006, such as this by Colin White, or this by Neil Raden.

By putting more capability and hence more autonomy in the hands of the business and operational decision makers, there are implications for IT. However, I don’t think this leads to an elimination of the need for the IT department, but there is a different role to be played. In my view IT must remain the custodians of the corporate data, ensuring its security, compliance, consistency and accuracy.

This means that IT should provide conduits to the data, “broker” applications to deliver the required functionality to the business users and project manage the rollout of BI projects. As a broker, IT can assist the business to select the best alternative to delivering the BI applications – whether it is licensed software, in-house development or software as a service. This should allow IT to work very cooperatively with the business while maintaining the overall direction for the IT infrastructure and data architecture.