It’s All About KPIs, Whatever You’re Trying to Achieve…

May 7, 2009
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Here’s a quick selection of articles from just the last couple of weeks that show that performance management and key performance indicators are becoming mainstream in a variety of areas:

SAP And Enterprise Support

SAP has agreed a set of key performance indicators with its user group SUGEN, in order to measure the effectiveness of the controversial SAP Enterprise Support services introduced last year. And there’s real skin in the game: SAP has agreed to postpone scheduled price increases until the targeted improvements measured by the SUGEN KPI Index are met.

The KPI Index, defined after discussions with customers, is calculated on KPIs in four categories: business continuity, business process improvement, protection of investment, and total cost of operations.

“We are convinced that SAP Enterprise Support delivers unparalleled value to all customers and, as a demonstration of our commitment, we will provide tangible reductions in their operational costs on a defined schedule,” said Léo Apotheker, co-CEO, SAP AG

“SAP’s goal to provide a rating of application support via key performance indicators is innovative and challenging,” said Peter Wesche, research director, Gartner.

Here’s a quick selection of articles from just the last couple of weeks that show that performance management and key performance indicators are becoming mainstream in a variety of areas:

SAP And Enterprise Support

SAP has agreed a set of key performance indicators with its user group SUGEN, in order to measure the effectiveness of the controversial SAP Enterprise Support services introduced last year. And there’s real skin in the game: SAP has agreed to postpone scheduled price increases until the targeted improvements measured by the SUGEN KPI Index are met.

The KPI Index, defined after discussions with customers, is calculated on KPIs in four categories: business continuity, business process improvement, protection of investment, and total cost of operations.

“We are convinced that SAP Enterprise Support delivers unparalleled value to all customers and, as a demonstration of our commitment, we will provide tangible reductions in their operational costs on a defined schedule,” said Léo Apotheker, co-CEO, SAP AG

“SAP’s goal to provide a rating of application support via key performance indicators is innovative and challenging,” said Peter Wesche, research director, Gartner. “The extensive benchmarking phase and mapping of key performance indicators to business value will allow customers to fully understand the benefits of a comprehensive support program.”

Gross National Happiness

The New York Times reports today that the tiny nation of Bhutan has put together a sophisticated set of indicators to try to measure “gross national happiness”:

“…the Bhutanese produced an intricate model of well-being that features the four pillars, the nine domains and the 72 indicators of happiness.

Specifically, the government has determined that the four pillars of a happy society involve the economy, culture, the environment and good governance. It breaks these into nine domains: psychological well-being, ecology, health, education, culture, living standards, time use, community vitality and good governance, each with its own weighted and unweighted G.N.H. index.”

And it’s not as daft as it sounds – as the New York times reported several years ago, average happiness in many countries has hit a plateau even as median incomes have risen. Governments have always taken account of many different considerations when determining policy. To a certain extent, “gross national happiness” is just another way of looking at what voters want when they are looking to elect their democratic officials.

Measuring Government Ministers

Malaysia’s prime minister has announced that his government’s cabinet ministers and civil servants will be measured on KPIs, as part of his “1Malaysia” plan. Many other countries around the world, of course, have already implemented various types of performance-based budgeting, based on achieving a variety of social KPIs.

Stopping Yourself From Being Too Self-Righteous

The New York Times also has an article today about “self-righteousness”. Studies show that we’re hopeless at estimating our own willingness to do what’s morally right, but pretty good at estimating what other people will do. It’s not technically about KPIs, but if we regularly measured the delta between our expectations and what actually happens, we might get better at estimating our own real-life behavior!

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