The explosion in the availability ofdata and analysis toolsprovides
increasing opportunities for improved business decisions.
Processes, measures and analytics create an important view of an
organisation and its performance.
Whilst process efforts typically focus on workflow and
automation, often too little attention is given to quantifying
process performance - to measure and monitor it - and using
resulting data and information for better decision making.
Organisations that use data analytics to measure business
processes can get impressive results, and gain increased visibility
of performance, risk and control. However, process analytics is not
all about
analytics tools.
Effective analysis is about linking measures to process
improvement initiatives, using analytics outputs to drive day to
day activities, and applying business insight.
Get the framework right
A framework is key to realising measurable business benefits as
it provides clarity of objectives, ownership, and
responsibility.
A typical process measurement framework will include three main
areas. Firstly initiatives, covering strategic, financial,
operational and compliance initiatives. Second, capabilities,
covering reporting, monitoring, analysis and prediction
capabilities. Third objectives, covering performance, risk and
control.
Select the right processes for measurement, and the right
measures to meet your objectives.
Any process that generates high transaction volumes (such as
procurement) lends itself to measurement by data analysis. Once a
process is selected, analytics can be designed to support the
objective of the process measurement initiative. For example, the
procurement process may be analysed with the aim of improving
performance as part of an operational improvement initiative.
Measures and outcomes
It is essential to create strong links between process measures
and desired outcomes. One way to do this is to integrate a set of
tangible measures into the performance of employees.
In the simple procurement example, if the head of procurement is
measured, in part, by the proportion of complete purchasing
transactions processed to incomplete transactions, then he or she
will be more likely to monitor and act on measures such as
"Percentage of purchases without purchase orders". Sustainability
of the measurement initiative is achieved by answering the
question: "What is in it for me?"
Effective implementation of process measures and analytics helps
organisations answer these simple but critically important
questions: what happened why did it happen what will happen what is
the best that could happen?
Towards progress
Just as processes change over time, so should the measures that
are used for decision making. Process measures should be focused on
helping decision-makers understand progress over time, quantify the
impact of issues or opportunities, and identify root causes and
potential solutions.
In the procurement example, if purchases without purchase orders
are consistently identified, the head of procurement may change the
procurement management system, making purchase order numbers a
requirement for payment to be released.
Business goals
Executives should look to process measurement to:
- Improve business performance by increasing liquidity, reducing
costs, improving compliance and contract management.
- Identify and manage risk such as compliance, fraud, litigation,
money-laundering, financial statement close, marketing and contract
issues.
- Enhance controls, helping to bolster financial transparency,
raise stakeholder confidence and increase market value
Erol Mustafa is a technology security and risk services
partner at Ernst & Young