http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/indicators-to-help-assess-functional-performance/
Extract from strategy+business – Deniz Caglar, Namit Kapoor, and Thomas Ripsam:
Every function’s first priority should be to support the building and management of differentiating capabilities. Therefore, it is essential to define and measure explicitly just how much value each function is delivering. You can use four distinct indicators to assess this value.
1. Quantifiable impact. Measure all the function’s activities against definable business outcomes that are aligned with the company’s strategic priorities and tied to a specific time frame. A centralized consumer insights capability, for instance, might be measured by the reduction in the number of weeks required to develop new products during the next 18 months.
2. Clear drivers of value. Identify the sources of your function’s greatest contributions to the enterprise. Improved demand management might depend, for example, on having sophisticated analytical tools that can provide streamlined access to data, greater scale, and the bundling of expertise. Metrics should establish the degree to which these tools exist and are used.
3. Cost-effectiveness. Continue to track the relationship between expenses and outcomes. Your function’s contribution to the enterprise—measured through financial performance improvement in revenue or profit—must outweigh the cost of its activity.
4. Internal market validation. Seek out and incorporate feedback from your clients and constituents within the company, to drive your function’s effectiveness and efficiency wherever possible. This may include the use of charge-backs, service-level agreements, and make-versus-buy assessments (analysis of whether to build a capability in-house or outsource it).
Leading companies deploy rigorous processes and tools to ensure the alignment of ongoing and proposed functional activities and investments with the functional priorities and the operating model, and to ensure maximum value creation. Within the context of continuing pressure on support budgets, this helps functional leaders allocate their resources to the activities with the highest value.
Continues at http://www.strategy-business.com/article/00158?pg=all
Author Profiles:
Deniz Caglar is a partner with Booz & Company based in Chicago. He focuses on organizational design and cost fitness in the consumer packaged goods and retail industries.
Namit Kapoor is a partner with Booz & Company based in Chicago. He specializes in formulating shared-services strategies and improving the effectiveness and efficiency of sales and marketing functions.
Thomas Ripsam is a partner with Booz & Company based in Munich. He specializes in strategy-based improvement of top-line and bottom-line performance, with particular focus on sales, marketing, and general and administrative functions.
More ... http://www.strategy-business.com/article/00158?gko=3300c
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