Journal of Scientific & Industrial Research

Vol. 58, March - April 1999, pp 149-159

Building a Process Performance Measurement System:

Some Early Experiences

P Kueng*
University of Fribourg, Rue Facigny 2, 1700 Fribourg, Switzerland
e-mail: peter.kueng@unifr.ch; Fax : ++41 263009726
and
A JW Krahn
A T Kearney (International), Bahnhofstrasse 8, 6300 Zug, Switzerland

In order to gain a competitive advantage many companies are engaging in the reorgani zation of their business processes and
implementing process-based management. However, the effects of such change programmes are often not readily apparent.
Process Performance Measurement Systems (PPMS) can be used to deal with this shortcoming. The authors argue that modern
process-oriented organizations need to establish a system which provides comprehensive and timely information on th e
performance of business processes. Based on the authors' experience with several enterpri ses, an approach to composi ng a
sound PPMS is descri bed and conclusions are reported .

1 Introduction An enterprise which is implementing a process-based

"Measurements are key. If you cannot measure it, you organization, either through a radical or a stepwise
cannot control it. If you cannot control it, you cannot approach, should be able to answer the followin g two
manage it. If you cannot manage it, you cannot improve questions: (I) Is the current performance of the busi ness
it."! And further on, the same author writes process better than it was yesterday? (2) To what degree
"Measurement is fundamental to our way of life. We are the to-be values fulfilled? In order to answer these
measure everything. ( ...) When we were babies, the questions, the so-called Proce ss Performance
doctor measured our height and weight to be sure that Measurement System (PPMS) is needed .
we were healthy. When we started school, our teachers The paper is structured as follows: the main
measured us to understand our weaknesses and help us components of process management are presented in
progress."! Although these statements made by James Section 2. In Section 3 an overview of the state of the art
Harrington - one of the early proponents of business in the field of performance measurement is given.
process restructuring - are almost ten years old and Section 4 outlines the functional requirements for a
have been repeated quite often, they have not lost their PPMS. Section 5 presents a nine-step approach - applied
relevance. Even a cursory examination shows that many in the project PROMOSYS - to compose a PPMS.
organizations have been undergoing business process Finally, Section 6 concludes with some lessons learned.
reengineering (BPR) programmes in the last few years .2 (An earlier version of this paper has been published in
Despite the large expenditures on reengineering the proceedings of the BITWorld conference. 3 )
programmes, few companies are able to assess the
current level of performance of their processes.
Performance measurement at the process level still plays 2. Three Components of Process Management
a minor role. Additionally, those few enterprises which
do have a process-oriented measurement system in place In the past, Taylorism made it possible to build up
usually take only financial and time-related aspects into organizations along functional lines. While this sort of
consideration. organization was an effective way to increa se
productivity during the industrialization era, it was later
"Corresponding au thor recognized that core competencies lie in cross-functional
 150 J SCI IND RES VOL 58 MARCH - APRIL 1999

processes. The refore busin ess process manageme nt was measure me nt syste ms can be found in th e pe ri od of
introduced which includes th e fo ll ow ing compone nts: move ment toward s sc ientific managem en t at the end of
the 19th century. For a long time, the most popu lar
Process d esign: Since many corporations are organized meas ure me nt system was the so-ca ll ed D uPont sc he me,
along fun ctional lin es, they us ua lly have littl e knowl edge introduced in 191 9 by the DuPont company. Even thoug h
a bout th e ir processes . T hus , e stabli s hin g a process - th e DuPont sc he me (w hi c h had as it s main me asure
ori e nted organi zation starts with the ide ntifi cation of the 'return on in vestme nt' ROI) has been c ri tic ized heav i Iy,
processes needed. In o rde r to des ig n, communicate, and it is still be in g tau g ht in its origi na l or in a sli g htl y
impl e ment busin es s processes, process mode ls can be m o difi e d fOfm . Much m ore imp or tantly , in man y
seen as an esse nti a l pre requi site . Ku e ng and Kawale k4 e nte rpri ses, th e co ntro ll e rs still a ssess pe rforman ce
descr ibe a goal-based approac h to bu s in es s process mainl y throug h finan c ia l measures. Moreove r, to the
mo de llin g . It is co mpo sed o f th e fo ll ow ing ste ps : I . ex te nt that managers do focus on finan c ia l parameters,
De fin iti o n o f bu s in ess pro cess- re lat ed goa ls. 2. they have a stron g ince nti ve to m ~\J1ipulate the
De ri vation a nd de finiti o n o f busin ess ac tiviti e s. 3. fi g ures th ey re po rt. ) A furth e r aspec t is rai sed by
Descripti on and ass ignment of rol es . 4. Mode llin g of Letza: " ... tra diti o nal meas ure me nt sys te m s ha ve a
obj ec ts. contro l bi as, that is, th ey spec ify th e parti cular acti ons
th ey want e mpl oyees to take and th e n measure to see
Bllsiness case exec ut ion: Afte r compos in g and w hethe r o r not th e empl oyees have taken these acti o ns-
imple me ntin g the ne w es tabli s hed processes, bu sin ess th ey try to control be hav iour."()
cases (i .e. instances of a proces s suc h as ' loan appl icati on
No . 597 1') are ca rri ed o ut. T he executi on o f busin ess Durin g th e 1980s a nd 1990s the s ituati o n c hanged in
cases re li es u po n th e coo rdin a ti o n , co ntro l, and a s ig nifi ca nt way: se lf- assess me nt s, qua lity awards,
com lllunicati o n of ac tiviti es (wo rkin g steps) . As th e be nchmarkin g, a c ti v it y -b ased cos t in g, capab i li ty
capabilities of in format ion tec hno log ies have improved maturity mode l, balan ced sco recard , workfl ow-based
co n s id e rab ly, th e de pl oy me nt of so -ca ll e d CSCW monito rin g, etc. were the bu zzword s wh ic h dominated
(co mput er-s upp o rt e d coo pe rative wo rk ) too ls is di scuss io ns in the fie ld of pe rformance eva luation. T hese
beco min g mo re and mo re com ll1 o n. Put s impl y, two approach es are dis c u sse d be low and th e ir m a in
ca tegories of CSCW tools ca n be di stin gui shed: workflow characteri stics are sLlmmari zed in Tabl e I.
system s that ca n be effective ly used fo r hi g h Iy structured,
pre-defined processes, and g roup ware tools w hi ch are
a im e d a t supporting ra th e r un s tru c ture d , a d-h oc 3. 1 A ctivity-Based Costin g
processes. Activity-Based Cos tin g (ABC) was deve loped in the
mid 1980s within th e fram ework of Cost Manageme nt
Process m eaSlIreJll ent {[nd illlprovem ent: BPR proj ects System-Programs by Co mputer A ided M anu fac turin g-
usua lly sto p afte r impleme ntin g th e new ly des ig ned Inte rnati o na l, In c . The ir co nce ption came f ro m th e
p rocesses. ]f no furth e r ac t iv it ies took pla ce, th e fo ll ow in g co ns id e rati o ns : Mod e rn m a nufac turin g,
e nte rpr ises a nd th e ir proce ·s ma nag e rs wou ld fa ce log isti cs a nd info rmati o n tec hn o log ies c ha nge, to a
~eve r LtI s ho rtcomin gs: no informati o n o n the ac tu a l co ns id e rab le degree, the process and cos t structures.
perfo rmanc e o f bus in ess processes wou ld be ava ilable, Instead of direc t, va lu e added ma nufac tu ri ng ac ti viti es
dec is ion s about effec ti ve reso urce a ll ocat ion coul d no t
be m ad~ on a sound basi s, d iag nos in g th e wea kn esses
o f bu s in ess processes would be hard , and dec is io n-
makin g rega rdin g co rrec ti ve a c ti o n s w o uld be
mo re and more plannin g, mo nito rin g and contro llin g
activ iti es, in the indirect ran ges, dom in ate in e nterprises.
As a co n ~:equen ce thi s activ ity shi ft bas substanti al effects
o n th e ope r a ti o nal co s t s tru c ture. The g row in g
.-'
I

exceedin g ly diffi cu lt. Dea lin g wit h th ese aspects is the impo rtan ce of fi xed overhead cos ts lea ds to the des ire
aim o faPPMS. fo r bette r cos t transpare ncy by deve lo pi ng A BC. In other
word s, ABC syste ms assi g n the costs of an orga ni za ti o n's
3. Performance Me as urement: S tate Of The A,·t acti viti es more acc ura te ly to its produ cts and produ c t
Perfo rm ance measu re me nt sy stems have been around li nes. ABC sys tems are design ed by firs t id ent ify in g th e
fo r quite so me time. Th e int e ll ectual root s of today 's act iv i ti e s pe rfo rm e d by eac h s u pport an d ope rati ng
 KUENG & KRAHN PROCESS PERFORMANCE MEASUREMENT SYSTEM 151

Table I - Characteristics of selected measurement approaches

Criteria Objects measured Frequency Type of measures Recipients ofresults

Approach

DuPont scheme enterprise recurring financial middle and top

management

Activity-Based Costing activities and recurring financial finance department

(ABC) processes

Balanced Scorecard (BSC) enterprise or recurring financial and mainly top

organizational units nonfinancial, management
quantitative and
qualitative

Self-Assessment (e.g. by enterprise or nonrecurring or mainly nonfinancial middle and top

the EFQM model) organizational units recurring management

Competitive enterprise, nonrecurring or mainly nonfinancial middle and top

Benchmarking organizational units, recurring and quantitative management
processes

Statistical Process Control processes continuously mainly nonfinancial middle management

(SPC) and quantitative and process actors

Workflow-based processes continuously mainly nonfinancial middle management

Monitoring and quantitative and process actors

Capability Maturity Model software processes recurring nonfinancial middle management

(SW-CMM) and process actors

Process Performance processes recurring or financial and middle management

Measurement System continuously nonfinancial, and process actors
(PPMS) quantitative and
qualitative

depa rtment a nd th e n computing th e unit costs of characteri stic ofBSC is th at the too l is concentrated upon
performing th ese activities .7. x corporations or organizational units such as strateg ic
business units. It looks at bu sin ess processes onl y in as
3.2 Balanced Scorecard far as th ey are c riti ca l for achieving cu stomer a nd
The Balanced Scorecard (BSC), developed by Kapl an shareh o lde r obj ec ti ves. 111
and Norton~, was developed to describe an organi zati on's
overa ll pe rformance usin g a number of financial and 3.3 Se lj~ass essfll enf
nonfinancial indi ca tors o n a reg ul a r basis. For thi s The roots of th e so-called self assess men ts ca n be
purpose a framework with four perspectives has been seen in the qu ality move me nt which started in Japan. In
suggested : th e fin a nc ial , th e customer, th e inte rnal 1951 , Japan awarded th e first quality-drive n enterprise
bu s in ess, and th e lea rnin g and growth perspective. with th e so-ca ll ed D e min g Application Prize.
Accordin g to the ori ginators, th e application of thi s too l Encouraged by th e Japan ese success the USA laun c hed
can be seen in three areas: for the purpose of strateg ic th e Malcolm B a ldrid ge Nation a l Quality Award
perfo rmance reportin g; to link strategy with performance (MBNQA ) in 1988 . Finally the European Foundation
measures ; to present different perspectives. An important for Quality Management (EFQM) followed in 1992 with
152 J SCI IND RES VOL 58 MARCH - APRIL 1999

the European Quality Award (EQA). In the American behaviour of the process. To this end, making reliable
approach the criteria used belong to the following seven predictions regarding product quality (i .e. predicting
categories : leadership, strategic planning, customer and whether the product specifications will be met) has
market focus, information and analy sis, human resource become an important tool of competition. 15
de ve lopment, process management, and business
results.11 The EFQM model on the other hand applies 3.6 Capability Maturity Model for Software
the fo llowing nine categories of criteria: leadership, The Capability Maturity Model for Software (SW-
people management, policy and strategy, resources, CMM), was de veloped by the Software Engineerin g
processes, people satisfaction, customer satisfaction, Institute (SEI) of the Carnegie Mellon Universi ty in
impact on society, and business results. 12 These criteria Pittsburgh. The underlying premise of SEI's maturity
can be used separately, i.e. without applying for an award. model is that the quality of software is largely determined
From thi s it follows that a self-assessment, based on the by the quality of the software development process
approaches di scussed, may help to assess process applied to build it. By means of a questionnaire, an
performance , U but one has to keep in mind that the organization can assess the quality (maturity leve l) of
primary focu s is upon organization s , and not on its software process. The five stages, defined by SEI,
processes. are as follow s: ( I) Initial, i.e . the software process is
characterized as ad hoc , and occasionally even chaotic.
3.4 Competitive Benchmarking Few processes are defin ed, and success depe nd s on
" ... we reali sed that benc hmarkin g could be applied individual effort and heroics. (2) Repeatable . (3) Defin ed,
to all aspects of our business , and comparing ourselves i.e. the software process for both managem ent and
aga inst companies outside our immediate competition", engineering activities is documented, standardized, and
is a statement from two Xerox employees, Cross and integrated into a standard software process fo r th e
Iqbal. I ,) It is not accidental that a qu ote from Xerox has organization. (4 ) Managed, and (5) Optimizing, i.e.
bee n c ho se n, s in c e X e rox wa s th e c omp any that continuous pro cess imp ro ve m e nt is enabl e d b y
intr odu ce d th e now w id e ly appli e d c onc e pt of quantitative feedback from the process and from pil oting
benchm arking. In additi on to a systematic evaluation of innovati ve ideas and tec hnol ogies . 16, 17 On e of th e most
business performance, benchmarkin g seeks to achieve a important strength s of the CMM mode l is th at eac h
seco nd goal , th e id entifi cati on of the bes t prac ti ces; but maturity leve l (except leve l one) is decomposed into
thi s is beyond th e scope of thi s paper. W hat is the several key process areas that indica te th e areas an
relevance of co mpetiti ve benc hmarking within th e fi e ld organi zation should focus on to move fro m one leve l to
of process performance measurement? The benefits are the next.
twofo ld. First, it can be llsed to stimul ate the di scuss ion
of perfo rman ce measure me nt. Kn ow in g the process 3.7 Workf low-based Monitoring
pe rfo rman ce leve ls of a n exce ll e nt com pa ny may During the past few years workfl ow systems have been
moti vate not onl y c hi ef executi ves, but also lower-leve l g iven co nsid erable attenti on, both in researc h and in
ma nage rs a nd o rdin a ry s ta ff. Seco nd , co mpe titi ve practi ce . Workfl ow sys tems support automatic or semi-
benchmark in g can be used to set targets for the process automati c executi on of process instances, coordinati on
perfo rmance leve l a compan y wants to ac hieve. betw ee n process ac ti viti es, and th e co mmuni cation
between process ac tors, As a by-product of thi s sup port
3.5 Statistica l Process COlltro l masses of data are gathered . They ca n be evalu ated
Acco rdin g to Juran and G ryna stati sti cal process a ut o mati ca ll y a nd m a y o ffe r u seful info rm a ti o n
cont ro l (SPC) can be defin ed as " .. . the applica ti on of regarding ac tivity-related cos ts, queuin g ti me of process
statisti cal meth ods to th e measurement and an alysis of instances, workl oad of process paTtic ipants, etc . Whil e
vari ati on in any process" l'i. The essence of SPC is to tradition al measurement covers th e fitem in its ent irety,
take as mu c h vari ati on as poss ibl e out of the process. In workfl ow-based monitorin g concentrates u pon business
oth er wo rds, th e main obj ec ti ve of SPC li es in th e processes. A further difference li es in the time peri od
ac hi eve me nt of stable processes throug h a reducti on of reported . Traditi onal co ntro l offers a pos t-h oc view,
process vari ati on. Stability in a process, i.e . a state of whereas workflow-based monitoring has the character
s tati s ti ca l co nt ro l, ma kes it poss ibl e to predi c t th e of real-time reporting. IX The merits of wo rkflow-based
 KUENG & KRAHN PROCESS PERFORMANCE MEASUREMENT SYSTEM 153

Financial
aspects

Innovation Customer
aspects aspects

Societal Employee
aspects aspects

Figure I - Five performance relevant as pects

monitoring li e in the fast reportin g procedure as well as 4. PPMS: The Concept

in its fo cus on business processes. Its limitation s, on the
other hand, are that qu alitati ve perfo rm ance data and In general, a PPMS can be seen as an inform ati on
perform ance data about activities carried out manu all y, system which supports process actor and their colleagues
can hardly be taken into considerati on. A tec hnical view to improve the co mpetiti veness of business processes
is given by th e Workfl ow Management Coalition which sustainably. It is a too l to visualize and to improve
define s the term Workfl ow Monitoring as " ... the ability process performance continuously. Thus, it assists both
to track and report on workflow events durin g workfl ow a total quality management philosophy and a process-
execution . Workfl ow m onit orin g ma y be used, for based approach. One of the main characteri stics ofPPMS
example, by process own ers to monitor the performance is that it presents an integral and holistic view of the
of a process instance during its executi on"IY. performance of business processes. In order to guarantee
a sound view, we apply a stakeho lder-driven approach.
3.8 Comparison of Measurement Approaches The stakeholders we take into account are the foll ow ing:
mon e y le nd e rslin ves to r s, e mplo yees, cu s to me rs
As we have see n in Sec ti o n 2 , process-o ri e nted (suppli ers and buye rs), and soc iety. Each grou p of
organi zati ons need a process management whi ch is abl e stakeholders is re presented by an aspect or a dimension
to measure the current leve l of process perform ance. of performance. Thu s, the aspects of performance we
Therefo re a measurement system is needed whi ch is are looking at are as foll ows: ( I ) financia l aspects (to
f ocused upon p rocesses - and not on organi sati onal measure the degree of sati sfaction of the money lenders/
units such as departments. Since bu siness processes may investors), (2) empl oyee aspects, (3) customer aspects,
cross departments or even divi sions, thi s aspect is central. and (4) soc ietal aspects. As inn ovati on is an essenti al
Additi onall y, effecti ve process management requires a driver of future perfo rmance, a fifth aspect has to be
broad spectrum of performance-relevant da la. Thu s, added - innovati on; (see F igure I ).
fin anc ial and nonfin anc ia l data as we ll as qu antitati ve The main functi onality of a PPMS dea ls wi th the
and qualitati ve data are needed . Fro m Table I we can fo ll ow ing (Figure 2):
see that none of the measurement approaches fulfil these The PPMS coll ects the current va lu es (as-is values)
two criteri a. The aim of a PPMS is to fill thi s gap. of indi v idual , pro cess -s pec ifi c pe rfo rm a nce
 154 J SCI IND RES VOL 58 MARCH - APRIL 1999

Process Perfonnance Measurement System

(PPMS)

gatherperfonnance-

"'' \~~ \ '\

Business process actors

Figure 2 - PPMS fro m a co nceptual view

in d ica tors. (Th e e li c it a ti o n of th e in d icato rs is obvious th at PPMS cann ot be bought in the form o f pre-
di scussed in Secti on 5.) pac ked, o ff-th e s he lf so ft ware. A lth o u g h p op ul a r
• T he PPMS compares current valu es again st target enterpri se resource pl anning (ERP) systems like Baan,
valu es (to-be va lu es) a nd hi sto ri ca l va lu es. It P eo pleS oft , or SAP h ave fac iliti es to genera te
calc ulates the trend , i.e., it establi shes whe ther th e performance reports, they have substanti al shortcomin gs:
gap is w idening or narrow ing . firstl y, the measures co ll ec ted do not take qu a litati ve
T he PPMS calc ul a tes 'cause-effect' relati onships aspects into co nsiderati on. Secondl y, s ince most ERP
be twee n th e a ppli ed pe rfo rm a nce indi ca tors . It syste ms we re built before bus in ess processes became
shows th e de pendencies between the indi ca tors and regarded as a central organi zati onal concept, the objects
g ives hints as to whether a certain indi cator could measured are not always processes. Thirdl y, th e reports
be used as a lead indi cato r o r an early-warnin g generated co mpri se too mu ch de tail whi ch can lead to
indi ca tor. los ing one's bearings .
T he PPMS di ssemin ates the results (current va lues, In ord e r to redu ce th e s ho rtco min gs o f process
hi stori cal va lu es, ta rget valu es, and trend ) to the p e rfo rm a n ce meas ure m e nt , F rib o ur g U ni ve rs it y
process ac to rs . Th e y can use th e infor m a ti o n (Sw itzerland) launched the project PROMOS YS in 1996 .
prov ided in orde r to ide nt ify correcti ve acti ons (e .g. In co-ope rati on w ith four e nterpri ses, we co mp osed
process modi ficati on, stronger IT support, training, e nte rpri se- and process-spec ifi c PPMS prototypes. T he
rearra ng in g inform ati on fl ow, etc.) whic h should four parti c ip atin g ente rpri ses ca n be c harac te ri zed as
lead to a hi g he r leve l of process pe rforma nce . fo llows : The first one is a multina ti onal pharmaceuti ca l
company; the PPMS to be built has to support va rio us
s. Composing A PPMS: 9 Steps processes within th e area o f 'fin a nce ' . Th e seco nd
Takin g in to acco unt th e conce ptu al view a nd th e e nterpri se is a med ium-sized Sw iss commerc ial ba nk;
fun cti onaliti es required as presented a bove, it becomes the process to be supported is ca ll ed ' managing mortgage
 KUENG & KRAHN PROCESS PERFORMANCE MEASUREMENT SYSTEM 155

applications'. The third enterpri se is a small wholesa ler discu ss ion) goals and indicators can be changed to meet
which operates mainly in Switzerland; the process to be the customer's requirements m ore effectively.
supported is ca lled 'acquisition of new customers'. The Step 5: Defining data sources and target values. For
fourth enterpri se produces e lectroni c components and eac h indicator one has to define where data (input) come
has manufacturing sites in four countries; the PPMS will from and how these data can be accessed. Potenti al data
support the ordering process - it starts with 'order entry' so urces are: d a ta b ases of ERP sys te m s, workflow
and e nd s with "c heck ing custo me r's payment". The size management system s or customer su rveys. Furthermore,
of the parti c ipatin g enterpri ses va ri es from 50 to 60,000 target values (to-be values) have to be dete rmined for
employees. eac h indi cator. Omitting the definiti o n of target va lu es
would not o nl y mak e it imposs ibl e to de termin e the
The approac h cons ists o f nin e steps we have c hosen deg ree of goal fulfilm e nt , it would a lso lead to a PPMS
in order to compose a PPMS . without moti vati onal effect. In orde r to set reali st ic but
c hall e ngin g target values the concept of compet iti ve
Step 1: Idelltifyi1lg busi1less process goals. Busin ess benchmarking can serve as a he lpful instrument.
processes and thei r acti viti es have to make a contributi on
to the process goa ls. Therefore process goa ls (sometimes Step 6: Judging technical feasibility alld eco1lomic
referred to as process objec ti ves) have to c larify w hat is efficiency . To assess the current pe rfo rmance level of
to be achieved for a business process to be co mpetiti ve the se lected indi ca tors, differe nt data sources have to be
in th e lo ng te nn . In thi s first step, process goa ls are accessed. Throu g h the identification and definit ion of
estab li shed th roug h a co ll aborati o n between th e vari ous data sources, hint s concerning feasibility and costs can
process parti c ipants , e.g. process manager, th e process be obtained . By co mparin g the costs for gathering th e
actors, the manage me nt of the e nterp ri se, and th e process necessary data aga in st the potential value of an ind icator,
custo me rs (s uppli ers and buyers). As indi cated in F igure economic effic ie ncy ca n be approx imated. If the number
). 3, potential process goa ls are ' littl e wo rkin g cap ita l', o f indi cators has to be reduced, eco no mi c efficie ncy
' hi I::>a h customer satisfac ti o n ', o r 'good working crite ri a (po tenti a l va lu e vs. costs) can be appli ed. What
atmosphe re' . should be done if data on a certa in performance indi cator
are ex tre me ly hard to access? Unfo rtun atel y, there is no
Step 2: Defillillg illdicators for each process goal. c lear answer. As Austin 21J points out , m any important
T hrouohI::>
the use of indi cators it may be judged to w hat (c riti ca l) performance indi cato rs a re difficult a nd
ex tent the process goa ls have been fulfilled. In orde r to expensive to measure, and it is tempting no t to take them
find possible ind icators for a certain goa l, the foll ow in g into co ns iderat ion. On the o th e r hand it would not be
question ca n be asked: Which indi ca tor(s) can be used w ise to meas ure a ll c riti ca l indicators. In short, the
in orde r to measure (o r to get an indication of) the exten t benefits of an indi cato r mu st exceed the costs .
to w hi c h a certain goa l is ful fill ed ? It is obvi o us that
many goa ls cannot be meas ured sufficientl y by a sin g le Step 7: Implem elltillg th e PPMS . O nce indicators, target
aoa ls in the foreoI::> round and do not tak e furth e r aspec ts -
I::> va lu es and data so urces are defined, the in stmments for
whic h are not less impo rtant - into co ns id eration. To c1ata co ll ecti o n, the c1ata management , and the calculati on
broade n th e scope towards the five aspects mentioned procedure should be de termi ned and impl e me nted . Fo r
in F igure I , we supported the d iscuss ion thro ug h a li st the tec hnical part of th e impl e mentation a c li e nt/server
of possible goa ls and indi ca tors for eac h of the five areas. syste m - w ith a n und e rlyin g re lational data base
management system - is usually ap propri ate. Today 's
Step 4: E llsuri1lg acceptall ce . One of the crucia l operati ona l information systems can de liver some input,
req uireme nt s fo r th e e ffe ct ive use of PPMS is the but they are not suitecl to give soun d, process-o ri e nted
acceptance of the chose n indicat o rs - by th e managers informati o n. Therefore, add iti ona l tools ancl in struments
as well as by the othe r process actors. He nce it is esse nti a l (e.g. to support em ployee surveys on a regul ar bas is)
to ensure that process parti c ipants can exp ress w het he r have to be des ig ned to gat her the necessa ry in formation.
or not they cons id e r th e proposed goa ls and indi cators
to be usefu l. Based o n thi s feedback (obtain ed throu g h a Step 8: Using th e PPMS . Usi ng PPMS means measurin g
1uesti on naire , fa ce- to- face-communicati o n , o r g roup th e curre nt va lues of g iven indi cators co ntinu ous ly o r
 Vl
0\

Aspects Process Goals Performance Indicators

Financial aspects little working capital

Cycle time between the activities "release order" and "record payment"

Proportion of orders where period allowed for payment is not exceeded

.....
Customer aspects high customer satisfaction CIl

-nzo
:;0
tTl
CIl

<:
o
r
Employee aspects good working atmosphere Vl
00

Proporti o6"ofprocess actors who say "My work load is too high" 3::
:>
:;0
'-------;1 Proport. of process actors who say "I'm usually suffering from a headache"
n
:r::,
:>
Societal aspects societal responsibility
~
F
\0
\0
Number of realized ecology measures per quarter year \0

Quantity of carbon dioxide emitted per man month

Innovation aspects )-------I{ creative and stimulated process actors

Number of innovations proposed per quarter yeM

Number of innovations implemented per quarter year

Fi gure 3 - An exa mple o f goa l~ and perform ance indicators for a business process

)r -(
 KUENG & KRAHN PROCESS PERFORMANCE MEASUREMENT SYSTEM 157

regularly, comparing these current values against target possibilities exist: ( I) pre-defined, generally valid
values, and feeding back the information gained to the indicators can be applied; or (2) indicators have to
process participants. Some of these functions can be be fitted exactly to a given enterprise and its busi ness
automated but others have to be carried out manually by proce sses. As mentioned above, in all four
personnel who have the necessary domain knowl edge. participating enterprises, the second approach was
chosen - and we are convinced that this approach
Step 9: Improving business processes and modifying was appropriate.
the indicators continuously. Bu siness processes have • From our experience we can also conclude that
to be competitive in the sense that the market with its process goals were a good starting point for
customers and its suppliers is sati sfied . A PPMS aims to gathering the right indicators. However, it turned
achieve this . For that purpose one has to keep in mind out that the identification of the business process
that the market is dynami c: business processes which goals was often very time consuming. This may be
are valid tod ay may be obsolete tomorrow. From thi s it connected with the fact that until recently, in most
follows that business processes as well as indicators have enterprises, goa ls were defined only at the enterprise
to be adapted freq ue ntl y. Throu g h thi s adaptation or divi sion level, but not at the business process
hi storical comparability may suffer "( ... ) but thi s is a level. Thinking in terms of process goals helps both
minor loss. What matters is how a company is doing the process owners and th e process actors to put
compared with its current competitors, not with its own forward the idea of a 'process management '. The
past'" . definition of indicators was also time consuming.
E speci a ll y difficult was finding quantitati ve
6. Conclusions measures for aspects w hich are rather qualitati ve
Having worked two years on the conceptualization in nature (e.g . customer satisfaction , social aspects ,
and impl e m e ntation of Process Performance etc .).
Measurement Systems, th e following conclu sions are • Process indi cators have to be accepted not only by
drawn. the process owner and hi s/her colleagues but also
by the next higher management level. If thi s is not
The role of a bu siness process manager, or process the case performance-relevant data from PPMS will
owner, is essenti al. He or she has to play the ro le of not be regarded as a solid basis, a basis to initi alize
a leader, an entrepreneur and a negotiator. If hi s or or to promote broad correcti ve actions. In order to
her competence is narrowly limited and dec ision- impro ve acceptance , th e process actors were
making power is restricted it will be very time- involved in the task of defining the indic ators:
consuming to implement PPMS , and, additionally, workshops have been organized and questionnai res
PPMS ca nn o t be d e ploy ed effect ive ly if th e have been used to get feedback from process actors.
necessary changes cannot be realized by the process In contrast to the other measurement instruments,
team. such as Balanced Scorecard, PPMS measures the
• If PPMS is perceived as a sys tem dedicated to performance of bu sin ess processes - and not of
managers, resistance to feeding the sys tem (i.e. not corporati ons or organi zati onal units. As PPMS may
enterin g needed data) may result. In other words , offer a ho li sti c view on processes, it may effect ive ly
PPMS mu s t offer a be ne fit for eac h process supp o rt a process-oriented o rga ni za ti on, or an
participant - an incentive to do the job better and to organi zat io n which want s to beco m e process-
be more goal-direc ted . ori ented.
• In order to co mpose PPMS , communi cati on within Th e imple ment ati on of PPMS requires a lot of
the process team and communi cation with different resources and is therefore expens ive. While the cos ts
organi zationa l units (e.g. the IS department) is a for hardware and software (e.g. interfaces to ex isting
key factor. To facilitate communi cati on, the business software, software for presenting the results) mi ght
process should be documented graphica lly. be moderate, the labour cost for the conceptu al part
One of the cruci al aspects in the process of building of the impl ementati on can reac h a leve l where it
PPMS li es in th e identifi catio n of the appropriate becomes difficult to claim that the benefits ofPPMS
performance indicato rs. Generally speaking, two clearly exceed the yie ld .
158 J SCI IND RES VOL 58 MARCH - APRIL 1999

• Managers and busi ness consultants quite often see of the International Conference on Business In/ormatio/1
performance measurement systems as a 'cockpit'.~ Technology Management (Har-Anand Publications. New Delhi )
1998. 422-434.
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business scorecard: an analysis of three com panies in practice.
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work, but a purely mechanistic approach would
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definitely be inappropriate. Industries, Governm ent Entities, and Nonprofit Organizations
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12 EFQM, Guidelill es on Self-Assesslllent, European Foundatio n
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KUENG & KRAHN PROCESS PERFORMANCE MEASUREMENT SYSTEM 159

Peter Kueng is a Research Assos iate of the Uni versity of Fribourg,

Switzerl and. He received hi s Ph D in Information System in 1994.
He recentl y spent two years as Visiting Researcher at Linz Uni versity
and Manchester Uni versity. Hi s research focuses on pl anning and
development of IS , process management , and worktlow system.

Adrian Krahn is a Consultant of A T. Kearney (Internati onal) AG,

Switzerl and. He received hi s Ph D in In fo rmation Systems in 1998
fro m Uni versit y of Fri bourg. Before joining theA T Kearny he worked
fo r three years as a projec t leader at F HotTmann-La Roche AG,
Sw it ze rl and . Hi s current resea rc h int eres ts includ e process
management, and process measurement.