Controlling

Business performance in general is estimated on such financial performance as revenue, profit, cash flow, etc. As a rule, directly it is impossible to affect these indicators as they are a consequence of operational business processes of the company and reflect result of last actions. So that to increase overall effectiveness, the company should concentrate efforts on efficiency ("it is correct to do things") and productivity ("do the correct things") the business processes.

What, as, why also who? These questions of rather specific methods of accomplishment of end-to-end business processes and contractors are set to themselves by heads when try to define the prime causes of the approaching deviations in business indicators. Normal controlling — simple collecting of the key indicators of effectiveness (KIE) without binding to processes — cannot help them with it. He will show, for example, sales reduction in the specific region, but will tell nothing about the reasons of this decrease.

Much more opportunities for management of operational efficiency give process controlling. Its tool — Process Intelligence. This new generation of analytical software and the methods combining technologies of business process management (BPM) and a business intelligence (BI). Analyzing operational KPR (such indicators of processes as runtime, cost, quality, risks) and correlating them to real business processes, Process Intelligence enters new measurement to corporate management.

The efficiency of the processes proceeding in the company becomes transparent. If the set KPR are not executed, for example, the deadlines of shipment of products or connection of subscribers to service set by the agreement are skirted, the company can set the reason of failure at once and eliminate it. It means that the management does not need to wait for the end of quarter to check accomplishment of standards. Every second Process Intelligence controls accomplishment of planned targets by the company. On change crisis management, work in the work involving all hands mode, comes an opportunity to eliminate errors before they lead to serious problems.

One of software products within Process Intelligence ARIS Process Performance Management (PPM). Analytic functions and tools for reports and dashboards ARIS PPM allow to receive an integral picture of processes of the company which forms a basis for performance management. From a control panel ARIS PPM with process KPR before finding of the reasons of the arisen deviations — for only 10 clicks! Use ARIS PPM does not require the preliminary description of business processes.

Operational controlling

Operational, i.e. "non-strategic", controlling is focused on indicators of these or those processes and functional areas. So the concept of controlling can be applied to quality management, to control of indicators of customer service, process management of personnel training and in many other areas.

The main concepts connected with goals management of the company

How the system of operational controlling is created?

Basis for creation of a system of operational controlling is the model of the enterprise. As the enterprise is quite complex system, for its description the different concepts supplementing each other are used. The greatest distribution was gained by the following models.

• Financial and economic model within which the enterprise is considered as the system which is consuming the resources having the determined cost, and turning out products having determined price in the market. The system effectiveness is estimated by a ratio of the gained income from product sales and cost of the used resources.
• The process model defining the enterprise as set of processes. Unlike the previous approach, results of processes are not always measured in a cash equivalent. For example, information, and a performance indicator the number of errors carried to the volume of the processed information can be result of process.
• Model of interaction of concerned parties according to which the enterprise is considered as area of intersection of interests of shareholders, clients, suppliers, employees, local authorities and other concerned parties. The enterprise harmoniously develops when the interests of all parties are balanced. The efficiency in this case is measured by degree of satisfaction of the subjects interacting with the enterprise.

Among other concepts it should be noted:

• The model of an intellectual capital defining the enterprise as a knowledge management system;
• Model of the enterprise as generator of cash flows (the most interesting to shareholders);
• The marketing model characterizing positions of the company in the market;
• Model of the enterprise as the employer characterizing his positions in labor market;
• The model of corporate culture characterizing a value system of the enterprise.

Models of the enterprise on the basis of which controlling indicators can be created

Each of the called models sets a certain projection in which activity of the company is considered and estimated. Certainly, the "volume" picture of business can be received, using rather broad spectrum of projections. The choice of projections depends on the approaches to management used by company management. Now not each head attaches significance it, for example, to aspects of the organization as corporate culture and an intellectual capital. For such heads these projections of the enterprise are out of a management system. At best pay attention to them occasionally.

The system of indicators of controlling is developed for each of the selected projections in a special way. Methods of creation of indicators are defined by specifics of model. Here we will consider as an example the main development stages of a system of indicators for model of processes.

The main development stages of a system of indicators on the basis of model of processes

1. Selection of processes of the top level. At this stage the largest groups of processes are selected. A typical set of processes of the top level for production company includes: purchases (materials, raw materials), production, sales, product delivery to clients, installation (installation, adjustment, start), after-sale service.

2. Detailing of structure of processes to the second or third level. At the same time sales process, for example, can be structured on several processes of the second level: mailing of offers to clients, consultation of clients on phone, holding the presentations for clients, approval of structure of products and services, approval of payment terms, execution of the agreement, payment control, control of the goods delivery.

3. Identification of processes. For each of the selected processes it is necessary to define the client, the supplier, inputs (the used resources), exits (results of process) and also to identify contractors and the owner of process (i.e. the person who is responsible for result and indicators of process and having powers to change process).

4. Measure definition of each process. The indicators characterizing effectiveness, efficiency and performance of process are most useful.

• The indicator of effectiveness reflects quantity characteristics of result of process. For example, for process "Consultation of clients on phone" an indicator of effectiveness will be number of the meetings held with clients after telephone contacts with them (the purpose of telephone sales is the arrangement on a meeting with the client).
• The performance indicator is a ratio between quantity characteristics of results of process and the spent resources. The efficiency is measured by a ratio between number of the held meetings and a pin count on an input in the reviewed example (how many clients called). This indicator is often used for efficiency evaluation of both the certain consultant, and department of telephone marketing.
• The performance measure is a ratio between result and quantity of the renewable resources used in process (the equipment or people). In the same example performance of department of telephone marketing is defined by the attitude of number of meetings towards number of employees of department.
• The indicators of processes defined at this stage are used for planning of activity, control and the analysis of processes.

5. Determination of users of the reporting. It is necessary to define who should obtain information on these or those indicators. Normally it is the owners of the corresponding processes, heads who are above them in an organization structure and also owners of adjacent processes which results depend on the considered process.

6. Development of forms of the reporting. Report forms are developed so that to satisfy needs of specific receivers of the reporting for information on indicators of processes which they control. At the same time frequency of reporting is defined.

7. Development and deployment of processes. On a closing stage of creation of a system of operational controlling of processes procedures of measurement of indicators and report generation should be developed, contractors of these processes are defined.

The short description of a technique of creation of a system of operational controlling of processes of the company provided here covers only one of possible projections of controlling. It is necessary to emphasize that to each projection of a management system for the company there corresponds the specific model and the technique of creation of a system of indicators of controlling following from it for this projection. So, for example, the system of indicators of controlling of corporate culture essentially differs from the system of indicators of processes considered above.

Read Also

• Controlling
• Budgeting
• Planning and budgeting
• Key performance indicators (KPI)
• Balanced scorecards (BSC)

• BSC, KPI and other indicators