It’s been interesting to see recent articles in mainstream publications that outline the results of a survey conducted by Harvard School of Public Health.  Hospital patients in 40 metropolitan areas were surveyed to gather their perceptions of the quality of the care they received including eight areas: communication with doctors, communication with nurses, quality of nursing services, communication about medications, pain control, information received when leaving hospital, and whether hospital rooms were clean and quiet.

The results were mixed.  While patients felt they were receiving high quality clinical care, they also felt that hospitals were failing in other areas such as communication, managing pain and coordinating discharges.  As reported in Modern Healthcare, hospitals that have more nurses at bedside received better ratings from hospitals.

Understanding patient perceptions and satisfaction while patients are still in the hospital is becoming increasingly important.  Time reported that soon, reporting patient-perception data, like reporting of other hospital-performance data, will be linked to Medicare funding.

So the question is what can be done to improve hospital performance in these areas?  There are two aspects to this and both can be supported by operational intelligence and analysis of key Performance Indicators (KPIs). 

The first is capturing patient perception of treatment, hospital conditions, nurse and doctor communication and other interest areas while the patient is in the hospital.  Allen Technologies, a myDIALS partner, provides bedside information and data capture solutions to not only gather this information but also facilitate patient education and better patient communications.   Presenting this information to decision makers so they can visualize results, identify trends and correlate operational metrics to patient perceptions of quality can ensure better operational decisions and hence higher satisfaction ratings after the patient is discharged.

The second is capturing and reporting on multiple KPIs in real-time so that patient care outcomes can be improved.  A simple KPI example is measuring nurse/patient ratios by facility, department and shift, which is important since this was highlighted as having a direct correlation with patient ratings.  Being able to look at the nurse / patient coverage and then using that information to better balance nursing staff for each shift would have a positive effect on patient satisfaction without any additional costs.

Similarly, examining patient satisfaction issues, request response times and identifying trends across facilities, departments, shifts, procedures etc., will quickly highlight areas for improvement – perhaps in staff training or process changes.  

Since funding may be predicated on exposing patient satisfaction ratings in the future, hospitals should examine their internal processes now and determine what KPIs will be most important to track, visualize and analyze on an ongoing basis.  Not only will this improve patient care outcomes and satisfaction, it will enhance the hospitals’ ability to compete for new patients and receive funding.  I also believe this will lead to improved processes, efficiencies and reduced costs – that hopefully will be passed on to patients.

Given myDIALS is all about helping companies improve operational performance, I’ve been very encouraged to see a growing trend in terms of companies setting up centralized performance improvement teams.  The actual team titles vary such as:

• Strategy and Continuous Improvement;
• Process Excellence; and
• Business Excellence.

The team members were in multiple operating divisions before being combined into a central team.  Most have some formal process improvement training such as six-sigma black belt, theory of constraints and / or lean process.  Interestingly they seem to have a broad scope in terms of identifying opportunities for performance improvement across all areas of the company, although they tend to work with the various divisions and business units to identify those opportunities with the largest return potential.    

These teams are typically headed by a Director or a Vice President and report into the CxO head of operations, strategy, or finance.  Are we seeing the beginnings of a new C-level position – the CPO or Chief Performance Officer?  

I’m very interested to hear if others are seeing a similar trend and what the track record of performance improvement these teams are achieving and how they are measuring their ROI.

It’s great to see the increased focus of industry analysts on the importance of putting Key Performance Indicators (KPIs) into the hands of decision makers. As reported by Brad Reed of Network World, Gartner highlights “Business intelligence systems that are used to report on and store key performance indicators to help managers and knowledge workers make smarter and more informed decisions about their businesses. Gartner says that good BI systems can help business leaders make faster, better and more-informed decisions.”

Of course I agree with Gartner’s view, but I’d like to take it a little further. Simple reporting and storing of KPIs is a good start but not really sufficient if decision makers want to improve operational performance. Rather than simple reporting, decision makers need to interactively visualize and analyze KPIs so they can clearly understand all aspects of operations and identify the root cause of performance issues or opportunities for performance improvement. Combining this ability to understand and analyze internal performance with external benchmarks, best practices and methodologies delivers the most effective approach to improving operational performance.

Additionally utilizing cloud computing - another of Gartner’s Top 10 Strategic Technologies for 2009 – to deliver these capabilities provides an excellent mechanism to support large numbers of users cost-effectively. This approach, also referred to as Software as a Service is also very applicable where some of those users are external to the company, either as part of a cooperative supply chain or as part of an indirect distribution network.

It’s great to see the shift in the industry towards the following trends that myDIALS has been promoting and delivering against:

• SaaS is a viable model for BI;
• Operational intelligence / performance management is the next phase of BI;
• Interactive KPI visualization and analysis delivers real value to decision makers and helps them make faster, better decisions.

We’ll keep telling this story at myDIALS, and it is very gratifying to see the industry recognition growing so strongly!

Joshua Greenbaum has an interesting blog this week titled “Software as a Service Grows Up”.  I particularly like the comment “SaaS 2.0 providers can start to offer services and functionality that could never be delivered on-premise for love or money.”  

Many of the areas Joshua points to as potentials for added value are absolutely correct.  These include supply chain management, logistics management, warehouse management and business intelligence.  I like to think of these categories not as separate, distinct areas, but rather that the combination of these areas, facilitated by the SaaS model, can deliver tremendous value that is not possible with traditional on-premise software.

Applying operational BI across the supply chain, warehouse, logistics etc can highlight true cause and effect relationships behind outcomes.  It becomes even more powerful when combined with information such as sales orders, backlog, costs and expenses.  For example, if sales are taking orders but a backlog is building because orders aren’t shipping, is the issue in the shipping department, a problem with inventories in the warehouse, a production problem or a supplier issue?  The root cause of the problem can only be clearly determined by gathering and analyzing metrics across all of these areas.

The SaaS model lends itself to this cross-functional analysis, particularly if part of the value stream around the customer includes multiple companies.  This is typically the case and the ability to extract metrics from multiple cooperating partners and then deliver appropriate, authorized views back to each participant in the value stream is best facilitated by SaaS.  The SaaS vendor acts as a neutral third party and each participating company doesn’t have to worry about other companies coming behind their firewall to view information.

Combine this with Web 2.0 technology to capture, embed and share knowledge and the SaaS offering provides excellent collaboration as well as performance optimization.  This is an exciting time to be a “SaaS 2.0” vendors and I share Joshua’s enthusiasm.

I read a great post by Kristin Baird on Hospital Impact titled “What’s the word on the street for your hospital?”  I found two very interesting aspects to it, apart from the account of a hospital care experience that made me cringe.  The first was the use of the hospitalcompare.hhs.gov website to review alternative hospitals based on quality and patient satisfaction measures, and the second was the assertion that fostering a culture of service excellence is achievable.

I agree with the need to hire, develop and recognize the right people, support them with effective and efficient processes and assist each individual in developing a strong sense of purpose.  In addition, I think hospitals need to ensure that the patient’s voice can be heard immediately an issue arises, and that relevant metrics related to patient care and patient satisfaction are visible to, and can be analyzed by all hospital workers and management.

A great example of this is a new partnership that integrates myDIALS’ performance management platform with Allen Technologies’ VIGO system, an advanced, interactive approach to patient communications.   Together, we can capture aspects of the patient experience in “right time” and use this to interactively display, trend and analyze key performance metrics.

This ability to identify satisfaction and care issues while the patient is still in the hospital is a great way to improve patient outcomes.  At the same time by analyzing the key metrics, the root causes of issues can be identified and addressed through training, process or personnel changes.

In this age of open availability of information through official websites, unofficial web sources and “word of mouth” providing timely, relevant metrics to staff helps ensure appropriate quick responses to situations that might otherwise negatively affect patient care and satisfaction outcomes and hence the hospital’s reputation and future business.

There was a very interesting and timely article by John Westerveld regarding supply chain analytics in Supply & Demand Chain Executive. In it John makes a number of great points highlighting the need for:
• better visibility across all aspects of the supply chain;
• direct information availability to the people who need to make decisions and take actions on a daily basis;
• what-if scenario analysis;
• alignment supply chain performance to corporate performance by driving towards predefined Key Performance Indicators (KPIs).

I agree with John that the technology capabilities required to achieve the above extend beyond ERP systems. What is required is:
• the ability to connect to multiple disparate data sources across collaborating companies that are potentially located in different countries;
• the ability to extract metrics, calculate relevant KPIs and make these available immediately the underlying data changes;
• a very intuitive user interface that makes it very easy to analyze performance and perform what-if scenario analysis in real-time; and
• the ability to be notified of events and alerts immediately they occur.

The new generation of operational performance management or operational intelligence solutions can deliver these capabilities as follows:
• Software as a Service delivery model which is very suitable for both gathering data from supply chain partners and then presenting back appropriate authorized information to those partners;
• Services Oriented Architecture (SOA) which enables multi-faceted integration between the various disparate systems;
• immediate metric processing to ensure information is available when needed rather than waiting for traditional OLAP cube “Crunches”;
• rich, web-based user interfaces that provide interactive visualization and analysis;
• sophisticated rules engines to capture alerts that might be based on the concurrent condition of multiple metrics and KPIs;
• the ability to capture and embed best practices and improvement methodologies that predefine KPIs, alert conditions, diagnostic actions etc within reusable “intelligence modules”;
• cost effective and fast deployment so that widespread usage is viable and value is delivered quickly.

It’s great to see the growing realization of the importance of “right-time” metrics that can be used to identify the drivers of performance, understand current performance and determine the best approaches to improving operational performance.

In the last blog I outlined a number of value streams that are common across industries. The first of these is customer acquisition or Contact to Sales Order. There are four basic steps as outlined below:

These steps occur across most industries, although the way leads are generated, the qualifying process, the delivery of quotes and the nature of orders and how they are recognized and booked will vary. For example, a manufacturer might rely on multiple distribution channels for the selling process, an online insurance company might do everything across the web, and a hospital might look to referrals from physicians for qualified patient leads.

In general there is a common set of relevant Key Performance Indicators (KPIs) and associated Key Performance Drivers (KPDs) associated with this value stream. For example the outcome KPIs might be number of orders, order value, win/loss ratio ration, orders per sales head, order acquisition cost etc. The drivers KPDs are more likely to be number of contacts, contact to lead ratio, cost per lead, lead conversion ratio, pipeline coverage etc.

While the KPIs are reasonably common across industries, the drivers or KPDs will vary. For example, in the case of multi-tier distribution, the channel is handling the lead qualification and sales process, and the relevant KPDs are number of channel partners, market coverage, marketing program spend, number of leads passed to partners, and amount of market development funds allocated to partners.

Similarly, for a hospital the KPDs might relate to number of practicing physicians who are in the catchment area for the hospital, the alignment of physician and hospital specialty and the amount of education provided to physicians by the hospital.

Implementing operational intelligence based on generic value streams refined by identifying the most appropriate KPDs for your industry is a low-risk approach to optimizing operational performance and speeds deployment.

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!