BPM – The Problem with IT as a Solution
Although IT has been touted by the experts as being the bedrock of next generation of business in which large organizations encompassing several thousand employees will seamlessly operate in a global environment, there are a good number of issues to be resolved. However, as we have already seen the merits of using IT solutions as […]
Advantages and Workings of DBMS
DBMS today enjoys one of the most important positions when whole IT Structure of an organization is kept into perspective. For us to know and understand how this position was achieved over the years, we need to look into the advantages this software provides to an organization. Redundancy Control: A data which is stored multiple […]
How Emerging Markets Transformed Themselves Over the Last Few Decades
From Backwaters to Powerhouses At the start of the 1970s a widely held belief in the United States and in Europe was about how there were no markets outside of their regions. The implication was that the Third World countries were not worthy of foreign investment as they were steeped in backwardness, immersed in poverty, […]
Voice of Customer (VOC)
The Voice of Customer is not a tool that is used in Six Sigma process. It is the underlying philosophy of the Six Sigma process which makes it ensures that the entire process improvement exercise is based on the need of the stakeholder group that matter most i.e. the customer. The Voice of Customer is […]
How Chinese Corporations Are Going Global?
China has seen rapid development in the past two or three decades. It has become the export powerhouse of the world. However, Chinese companies were always considered to be the cheap imitators. Chinese companies were earlier contractors for American and European countries who provided cheap labor to assemble their high tech products. However, this has […]
A KPI is a great tool to measure and control the performance of any given process. In management jargon, there is a famous saying which says “That which cannot be measured cannot be managed”. The whole process of control, therefore relies on real time measurement and transfer of information from the site where the task is actually being performed to the control room i.e. the management.
Definition of KPI: The KPI can therefore be thought of as a measurement that tells that management the precise state of operations at any given point of time.
There are 4 components to any KPI.
It is important that these 4 parameters are carefully defined keeping in mind the operational and technical capabilities. Measuring the wrong KPI or measuring the right KPI in the wrong manner can cause more harm than good to the organization that is measuring it.
While a KPI is a measure of performance, the Service Level Agreement or SLA is the ideal state of those measurements. For instance our body temperature is a KPI for our health, while 98.3 degrees Fahrenheit is the SLA i.e. the ideal state of affairs.
Hence, if we were to control our health, we would create a mechanism in which our temperature is being automatically measured. When the KPI deviates from the desired SLA i.e. temperature deviates from 98.3 degrees Fahrenheit, it must send some sort of a message to the management that management interference is required.
The beauty of KPI’s and SLA’s is that it provides required solutions in required time. Hence management can take preventive action instead of having to cure the problems.
Algedonics: While BPM solutions have built in functionalities to report any and every deviation from the SLA, it would not be in the best interest of the management. It is impossible for any process to function at uniform speed, if it is being performed by humans. Even mechanised processes do not function at absolutely uniform speed. Some level of tolerance, therefore needs to be built in the control mechanism.
The KPI’s and SLA’s should therefore allow for +/- 10% changes. Anything which goes above this is serious enough to require management attention.
The 10% is a ballpark figure and may be different depending on the degree of automation and criticality of the process. But the idea is clear, some tolerance level needs to be built in this system or else the managements mailboxes will be flooded with deviation messages which do not even represent an operational problem.
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Continuous Improvement and Business Process Re-Engineering
February 12, 2025
