Performance Analysis

Performance Analysis
December 12, 2018 Jonny

Performance Analysis

The efficiency, effectiveness or success of an activity or an entire process is referred to as performance. Performance can be measured using various key figures. Such key figures can affect the cycle time or costs of a process, for example. If key figures such as these have been included, they can be used to perform a performance analysis.

What does performance say about my process model?

A high process performance is an indicator for a well set up and well implemented process. This means that the process is based on a powerful process model and has been implemented efficiently.

How can I measure process performance?

Standardization as a Performance Indicator
The higher the standardization, the higher the process performance. High standardization means that the process is implemented in only a few process variants – the main variants. The main variants are the variants that are implemented or run through by most business transactions. In most cases, the main variants correspond to the target process or reference process – in other words, the process as it was originally set up and is intended by process management. Accordingly, the main variants are generally rule-compliant and efficient process implementation. However, process sequences that are not planned often develop over time. After all, not all circumstances or relationships are predictable or calculable. This applies to both internal and external factors. For example, overload, technical problems or supplier problems can be causes for an unplanned process implementation or process run.

A high number of process variants – and thus low standardization – often has a negative impact on performance. A standardized process implementation saves resources and is essential for good process performance.

Cycle Times as Performance Indicators
The cycle time of a case indicates how long the cycle of a business transaction took from process start to end. For instance, how long it took in a manufacturing process to produce a single product. In order to assess the efficiency of the entire process, one looks at the relevant key figures for the cycle time. For example, the average cycle time or all cases that exceed the target duration. The following applies to many processes: the shorter the cycle times, the better – as long as the quality of the service or product does not decrease as a result. Short cycle times, for example, increase customer satisfaction or reduce capital commitment costs.

Product Quality as a Performance Indicator
The most important thing in a business process is the output – i.e. the result that contributes to the added value of the company. These can be end products as results of the processes, but also various services that are offered with the help of the process. Depending on the service or product, there are different methods to measure quality. But in general it can be said that the better the quality of the product or service or the more often the output meets the standard, the more effective the process.

Cost Expenditure as a Performance Indicator
Those costs that are incurred due to the process implementation and not as investment goods can give us information about the process performance.

What information does the cost amount provide about process performance?  In order to answer this question, the relation and causes of the costs must first be checked:

1. Relation: Are the calculated costs higher than at an earlier time or period, for example? Or are the costs higher than those of a comparable product or service?

2. Causes: What caused the costs? Process changes, restructuring or problems and unexpected process development?

Are the calculated costs above relevant comparative values, such as previous values or parameters of comparable products or services? Are they not attributable to temporary factors such as restructuring? Then these costs can indicate a performance deficit. If all factors are excluded that cannot be directly influenced by the company, then the process implementation can be evaluated.


Related terms: Key Figure, Analysis, Process Cycle, Cycle Time

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