Page 67 - CITP Review

Similarly, an effective BPM methodology would be holistic in all that KPIs measure. The balanced
scorecard (BSC) became popular for that very reason — the aspects other than financial that it was able
to measure, and juxtapose four key areas for a holistic measure of how the entity is performing. For that
reason, scorecards are common in BPM systems.

Systems-aided alignment of measures and metrics to organizational objectives
As KPIs are developed, specific targets are established and performance ranges are determined. There
are tools that enable the entity to establish organizational objectives in the tool, then align measures and
metrics against them using the tool.

Financial measures through financial system outputs
The majority of performance measures are financial in nature, and therefore come from financial
systems. A financial budget provides a good example. The traditional budget reports can be designed to
include budgeted figures, actual figures, and encumbrances to provide a holistic set of financial
measures on how each line item, and the various components of financial operations, are performing.

Customer-related measures through financial system outputs
Financial system outputs provide some measures of customer metrics. Accounts receivable and sales
data can measure customer retention, a KPI in most businesses. Likewise, accounts past due can
indicate either poor processes in authorizing customers or customer dissatisfaction.

Monitoring

Information overload can drown out effective monitoring. It is imperative, therefore, that entities
employing BPM not only have monitoring, but also develop a system of monitoring with strategic care.
Measures to monitor should answer the following questions: what do we monitor, why do we monitor it,
and how do we monitor it? Monitoring is naturally tied to timely and effective responses to certain
deviations in performance.

Effective monitoring should include more than actual versus budgeted or expected results. It should be
able to identify and measure underlying assumptions and processes, identify cause and effect
relationships, and determine the overall validity of the strategy. Other factors would include things such
as market demands, availability of parts, and other facts related to assumptions used in the development
of the strategy.

Predictive analytics

Companies need more from finance than accurate financial statements and reports. In today’s business
environment, finance needs to help interpret the available data to provide forecasts and other tools for
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decision making.

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See https://www.oracle.com/solutions/business-analytics/analytics-cloud-for-finance.html., Last accessed
September 10, 2019.

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