Performance Improvement 101

How to Use Metrics to Drive Efficiency and Quality Gains

By Carl Pitasi

July 18, 2006 — CSO —

Many companies use benchmarking as a management technique to investigate and compare performance against internal standards and external peer organizations. As such, benchmarking provides useful information regarding a companyâ¬"s relative standing.

A high-level benchmarking exercise is limited, however, as it merely scratches the surface of performance and yields few insights into underlying causes, or into what can be done to improve.

Root Cause Analysis

Effective performance analysis and improvement involves collecting data (quantitative and qualitative) in the target area, and establishing a hierarchy of metrics to represent the operation or process. A high-level analysis is useful to an extent, as it can show how an organization performs and, in a comparative context, how it performs relative to its peers.

The chart above compares network hardware unit costs for â¬SAcme⬝ (top number) against network hardware costs achieved by top-performing companies (lower number). At first glance, Acme seems to be performing well, since costs are comparable for the high-level measure of network hardware costs ($74 vs. $73).

However, an anomaly appears at the sub-process level, specifically in the area of Acmeâ¬"s voice network hardware costs. But the impact of this anomaly on overall performance is obscured by lower-than-average costs in data network hardware. Moreover, at this level, while the differences in voice and data network hardware costs are indicated, the reasons behind those cost differences are not apparent.

Drilling down further (chart below), we see that PBX costs are somewhat higher for Acme. But to understand the real source of the issue, itâ¬"s necessary to go even further down the metrics hierarchyâ¬to large PBX maintenance costs, where Acmeâ¬"s costs are more than double the Reference Groupâ¬"s.

Once this root cause of Acmeâ¬"s high voice network hardware costs is identified, corrective actionâ¬and a significant improvement in operational efficiencyâ¬becomes possible.

But what specific actions should be taken to lower Acmeâ¬"s high costs in this area?

Compass analyses indicate that high PBX maintenance costs commonly result from one (or more) of the following factors:

• Non-competitive service procurement. In this case, the client organization should renegotiate its maintenance services contract, either through a formal RFP process or through an informal multivendor approach.
• Unnecessary maintenance of non-operating PBX components. Unused port and trunk cards should be removed from the PBXs and consolidated to minimize the number of card shelves; cards that have been removed can then be used as maintenance spares or to support growth in other locations using similar PBXs.
• Unnecessary maintenance of spare PBXs. Leading practices indicate that maintenance services are not necessary for spare PBX components.
• Inappropriate service coverage or response time environments. User organizations should review their PBX service coverage needs (24x7 vs. 12x6 vs. business day, etc.) and buy the level of coverage necessary. Similarly, response time for outage coverage should meet business requirements: Is a one-hour response necessary for a port outage? Or is same-day coverage adequate?

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